A:
General Information That Applies to All Funds
Forced
Enrollment
The
employer has the statutory responsibility for enrolling employees on a timely
basis.
According
to N.J.S.A. 43:15A-7, if an employee refuses to sign or complete an enrollment
application, the employer should complete the application and indicate, "Employee
refused to sign", in the space
for the employee signature. Once the application is received, the employee will
be a "forced" enrollment.
Unless
the member is required to prove insurability, the member's
estate will be his/her designated beneficiary until such time that a Designation
of Beneficiary form is completed and received in the Division of Pensions
and Benefits.
Late
Enrollment
The
employer has a statutory responsibility for enrolling and transferring employees
on a timely basis. (NJSA 43:15A-7)
If
more than one year has elapsed from the time that contributions would have been
required from such persons, one-half of the employees' cost will be required of
the employer plus any additional employer costs as appropriate.
For
PERS, see New Jersey Statutes Annotated (NJSA) 43:15A-7.1; for TPAF, see N.J.S.A.
18A:66-6.1; For PFRS, see N.J.S.A. 43:16A-15.1.
In
order to ensure the timely enrollment of eligible employees, employers are encouraged
to maintain adequate systems and procedures for the periodic review of employees
who are working but not enrolled.
Employers
are further encouraged to ascertain if an individual has an existing active membership
which would require immediate enrollment at the time of hire if all other eligibility
criteria are met.
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Self-employment
Issues
Some persons
you engage to work at your location may claim to be "self-employed,"
"consultants," or "independent contractors," who would be
ineligible for enrollment in any of the Sate-administered retirement systems.
The distinction, however, between an employee and an independent contractor is
sometimes hard to make and many persons are incorrectly classified.
As
a rule, the Division of Pensions and Benefits accepts the tests and standards
used by the Internal Revenue Service and the NJ Department of Labor, Division
of Employment Security Revenue, to determine the employer-employee relationship.
Since penalties levied by the IRS can be severe, both the worker and the employer
should give careful consideration before classifying a worker as an independent
contractor. In addition to IRS penalties and any penalties imposed by the NJ Department
of Labor in the event that an employee has been incorrectly classified as an independent
contractor, there are penalties relating to the pension system as well.
- The employer will be assisted delinquent enrollment
charges for failing to enroll an employee in the retirement system in a timely
manner.
- The employee will be required
to refund all retirement benefits received after the date enrollment should have
occurred.
- The employee must also pay
any retroactive pension contributions due on the new pension account.
The
IRS test to assess the employer-employee relationship includes the following factors:
- Degree of control
- Right
to discharge
- Right to delegate work
- Right to hire and fire assistants
- Payment by the hour
- Furnishing
of training
- Place of work
- Profit
and loss
- Intent of the parties
- Principal
in business
- Sequence of work
- Reports
required
- Same work as others classified
as employees
- Integration
- Industry
custom
While none of the factors are
controlling and response to all must be weighed together, under the common law
definition of "employment," one of the most important factors for consideration
is whether the employer has the right to instruct and control the employee in
respect to details of the work that is performed by the employee. For
additional clarification on this issue, contact the NJ Department of Labor, Division
of Employer Accounts, at (609) 292-2321.
Or
see Fact Sheet #21, Employment
After Retirement (PERS)
Fact
Sheet #28, Employment After Retirement (TPAF)
Fact
Sheet #29, Employment After Retirement (PFRS)
Fact
Sheet #57, Employment After Retirement (SPRS)
Proof
of Age
All members of the State-administered
retirement systems must provide proof of age prior to retirement. It is recommended
that this be submitted along with the completed Enrollment Application.
Acceptable proofs of age include a copy of any of the following: - Birth
certificate
- Baptismal certificate
- Passport
- Naturalization
or immigration papers
- Other records
including military records, census records, school or business records, age recorded
on marriage licenses and insurance, or children's birth records.
Proof
of Insurability (PERS and TPAF)
- Any
employee age 60 or older at the time the enrollment application is received will
be required to prove insurability in order to obtain group life insurance coverage (see below for more information).
-
In addition, if a member's date of birth is not given on the Enrollment Application,
he or she will be required to prove insurability through a medical examination.
- Optional
enrollees must prove insurability if the Enrollment Application is received
more than one year after their date of compulsory enrollment.
- Disability
retirees who return to active employment, and those who converted their group
life insurance to private coverage upon termination of employment must also prove
insurability. The Division of Pensions and Benefits will notify the member in
writing regarding this process.
Group Life Insurance for Members Age 60 or Older (PERS and TPAF)
Employees who are age 60 or older at the time of enrollment are ineligible for both noncontributory or contributory group life insurance coverage until they prove insurability by taking and passing a physical examination.
The date of birth information on the Enrollment Application, submitted by the employer, is used to determine whether or not an enrolling member is ineligible for group life insurance information due to age.
When a member is found to be age 60 or older at enrollment, the following procedure is set in motion:
- The Division of Pensions and Benefits notifies the member in writing of his or her ineligibility for group life insurance coverage until insurability is proven through a physical examination.*
- The Division informs Prudential Life Insurance Company of America, Inc., (the present group life insurance underwriter), about the enrolling member's ineligibility for group life insurance coverage due to age.
- Prudential then provides the new member with information about completing the process of obtaining a physical examination to prove insurability. Prudential authorizes a third party to administer the physical examination.
*The member has 12 months from the date of the Division's written notification to take and pass the required physical examination. Failure to pass the physical examination within the prescribed time frame will render the member ineligible for group life insurance coverage.
Prudential notifies the Division when the member becomes eligible for group life insurance coverage as a result of proving insurability through a physical exam.
At that time, the Division provides certification to both the member and employer. The certification indicates the date on which salary deductions for group life insurance coverage will begin.
Members who fail to prove insurability have 45 days to submit an appeal of the decision to Prudential.
Taxability
of Employer-paid Group Life Insurance Premiums
The
Internal Revenue Service classifies all employer-paid group life insurance coverage
over $50,000 as a fringe benefit subject to taxation. The amount of the life insurance
coverage is not taxable, but the premium required to pay for the life insurance
coverage is taxable. Members may elect to waive Non-contributory Group Life Insurance
coverage over $50,000 at anytime. For further information on this topic, contact
the Division of Pensions and Benefits, or see
Fact Sheet #22 included in this manual.
PLEASE
NOTE: TPAF members are not required to
pay Contributory Group Life Insurance premiums after attaining age 70.
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Payroll
Deductions
After the Division of Pensions and
Benefits receives an application that requires payroll deductions
(enrollment, loan, purchase), the Division will send a Certification
of Payroll Deductions to the employer, which specifies the
amount of the deductions and when the deductions should begin.
For Newly Enrolled or Transferred
Members
Employers are not authorized
to take pension contributions, Contributory Group Life Insurance, back deductions,
arrears, or loan payments in anticipation of receiving a Certification of Payroll
Deductions from the Division of Pensions and Benefits.
Two copies of the Certification
of Payroll Deductions are mailed to the employer: one for
the member and one for the employer's records.
Back Deductions
Back deductions are mandatory pension
contributions subject to IRC Section 414(h). They are the pension
obligations owed from the date of enrollment or transfer to the
date deductions are certified to begin.
Back deductions are calculated on
the member's current annual salary, regardless of when the
member is enrolled. If back deductions are owed for a time
period exceeding 12 months, 8.25% interest is added.
Lump Sum Back Deduction Payments
Made by Members
Members have the option of paying
a back deduction obligation through a lump sum payment, rather
than having this obligation deducted from their monthly or biweekly
paycheck.
To make a lump sum payment, the member
remits the full amount of back deductions owed to their employer.
The Division of Pensions and Benefits will not accept member checks
for lump sum back deductions, due to applicable IRS rules.
The Certification
of Payroll Deductions issued at the time of enrollment
indicates the member's payroll deduction schedule for member pension
contributions, as well as for any back deductions owed. It also
provides the cash discount value for the back deduction balance--the
lump sum amount, with any interest, payable by the member for
total back deductions owed. (Back deductions owed
for a time period exceeding 12 months may accrue interest, as
explained above.)
The member must pay the cash discount
value to his or her employer prior to the date on which
payroll deductions are scheduled to begin, in order for the cash
discount value quoted on the Certification of Payroll Deductions
to be in effect.
For
more information about how to report member lump-sum back deduction
payments on the Quarterly Report of Contributions, please
click here.
Written Requests for the Cash
Discount Value of an Arrears Obligation
When a member wishes to pay a back
deduction obligation after payroll deductions have begun, the
member must make a request, in writing, for an "arrears payoff
quotation" letter for the cash discount value of the remaining
back deductions owed. The amount quoted will include any interest
owed.
This written request should be made
to the Adjustment Section, Division of Pensions and Benefits,
PO Box 295, Trenton, NJ, 08625-0295.
According to New Jersey Administrative
Code [N.J.A.C. 17:1-4.1(b)], members may make only one request
for the cash discount value of outstanding arrears, such as back
deductions, (or
a purchase quotation for previous service) in a calendar year.
For
more information about how to report member lump-sum back deduction
payments on the Quarterly Report of Contributions, please
click here.
Enrollment
Application
There is information
that is required from the member on every enrollment application, regardless of
the retirement system the employee is joining. All applications require the member's
biographical information. (i.e.: name, address, date of birth, Social Security
number, etc.)
All applications require
members to designate a beneficiary (or beneficiaries) for the return of pension
contributions and life insurance. Employers should submit the enrollment application,
completed in its entirety, whenever possible; however, if the member does
not complete the "Designation of Beneficiary" portion of the application,
the Division will accept the enrollment application without the beneficiary information,
in order to process the enrollment in a timely manner, because delayed
and forced enrollments can be costly to the employer.
When
a member does not complete the "Designation of Beneficiary" portion
of the application, the enrollment application will be processed with the member's
estate listed as both group life insurance and pension beneficiaries. In such
cases, an insurance packet and policy rider confirming the estate as beneficiary
will be mailed to the member.
In order
to change the beneficiary information in effect once enrollment has occurred,
the member must submit a separate Designation
of Beneficiary form. The "Designation of Beneficiary" section
of the enrollment application will not be accepted in place of the Designation
of Beneficiary form.
The Division
also requires the employer to certify the member's date of hire, salary, and location.
This information must be verified with the Certifying Officer's signature.
Enrollment
Date
For New Employees
in a Regular Appointment (Civil Service) or Regularly Budgeted Position (non-Civil
Service)
Employers Who Report
Pensions on a Monthly Basis
For employers
who report on a monthly basis, the compulsory enrollment date shall be fixed as
the first of the month for an employee whose regular Civil Service appointment
or date of hire into a non-Civil Service position falls between the first through
the 16th of the month.
The compulsory
enrollment date shall be fixed as the first of the following month for an employee
whose appointment date falls between the 17th and the end of the month. (See N.J.A.C.
17:2-2.4(a)1 and (c)2)
Employers Who
Report Pensions on a Biweekly Basis
For
employers who report on a biweekly basis, the compulsory enrollment date shall
be fixed as the first day of the pay period for an employee whose appointment
date falls on the first through seventh day of the biweekly pay period.
The
compulsory enrollment date shall be fixed as the first day of the following biweekly
pay period for an employee whose appointment date falls on any subsequent date
within that pay period. (See N.J.A.C. 17:2-2.4(a)2 and (c)3)
For
Optional Enrollees
An employee who
is an optional enrollee shall be enrolled as of the first of the month if the
employer reports on a monthly basis, or the first day of the next biweekly pay
period if the employer reports on a biweekly basis following the receipt of the
enrollment application. (See N.J.A.C. 17:2-2(b))
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Change
of Beneficiary Designation
The
Designation of Beneficiary form may be submitted by the member to the Division
of Pensions and Benefits. This does not need to be submitted by the Certifying
Officer. The "Designation of Beneficiary"
section of the enrollment application will not be accepted in place of the Designation
of Beneficiary form.
A
revised Designation of Beneficiary form should be completed any time there
is a change in family status affecting the designation on file. The employer should
advise the member of the possible need to make beneficiary designation changes
when they learn of changes in an employee's family status (e.g., marriage, civil union partnership, divorce,
death of a spouse, eligible same-sex domestic partner or civil union partner, birth of a child, etc.)
Link
to Beneficiary Designation Form for Printing
Link
to Instructions for Completing Designation of Beneficiary Form
Do's
and Don't's of Beneficiary Designation
Multiple
and Dual Memberships
Multiple
Memberships (PERS and TPAF only)
Any
employee who has been or is enrolled in a covered position must also enroll immediately
for any additional eligible positions acquired if all requirements for enrollment
are met. Such an employee who works for more than one public employer and is eligible
for enrollment in the same retirement system with these employers is considered
a "multiple" member.
For example,
if a member is a municipal business administrator and takes an additional position
as a tax assessor at another municipality, "multiple" enrollment will
be mandatory due to the acceptance of the second covered position.
An
employee who establishes "multiple" status will always be considered
a multiple member for the duration of their membership, even if at a later date
the member works for only one employer.
For
TPAF, the position must require certification by the member.
Required
Form
A Report of Transfer/Multiple
Enrollment form("Intrafund" Transfer) is required for each new employer;
the "multiple" box on the top of the form should be checked.
Report
of Transfer form available for download and printing
Dual Memberships
Any
employee who is enrolled and active in a covered position under one State administered
pension system and accepts an additional position covered under a different State
administered pension system, must be enrolled in the second system. The "dual"
member's contributions and benefits are established on the basis of statutes pertaining
to each system independently and are not related in any way to each other.
If
an employee is an enrolled member of a State-administered retirement system and
has applied for Deferred Retirement, has terminated employment from the first
employer and accepts employment in a position covered under a second retirement
system, the member may have the option to make an interfund
transfer. To qualify for an interfund transfer, the member can have no more
than two years concurrent service credit while covered under both funds.
Required
Form
An Enrollment Application
is required for membership in the second pension system, and the employee will
be a member of both funds.
Click
one of these links to go to the Enrollment Application for the appropriate
fund: TPAF, PERS,
PFRS, SPRS.
Interfund
and Intrafund Transfers
Transfers
are of two types: Interfund and Intrafund.
Interfund
Transfers
For
employees who change jobs and accept positions that require enrollment in another
retirement system. This applies even if the employer remains the same.
Statutes
permit any member of a State-administered retirement system the option to transfer
membership to another State-administered retirement system if there is a change
in employment or title that would make the member ineligible to continue contributing
to their original retirement system.
For
example, if a teacher's aide (PERS) accepts a position in a neighboring school
district as a regularly appointed classroom teacher (TPAF), and ceases to work
as an aide, this member would be eligible to transfer membership from the PERS
to the TPAF.
Historical
Note
- Prior to the passage of
Chapter 6, P.L. 2001, a member who had any concurrent service in two retirement
systems could not transfer service credit from one pension fund to another.
-
Effective January 16, 2001, however, those PERS or TPAF members with two
years or less of concurrent service were permitted, under certain conditions,
to transfer all service credit from one fund to another, less any concurrent service
credit.
- With the passage of Chapter
341, P.L. 2001, effective January 5, 2002, those PERS or TPAF members with
three years or less of concurrent service are now permitted, under certain conditions,
to transfer all service credit from one fund to another, less any concurrent service
credit.
Interfund transfers are
limited to pension systems administered by the State of New Jersey.
Members who are actively contributing simultaneously
to two separate State administered retirement systems are not eligible for an
interfund transfer because service is being accrued concurrently in both funds:
They would be considered "dual" members for pension
purposes.
PERS and TPAF Only
An
interfund transfer may be processed if a period of three years of service
or less is concurrent and the member is no longer actively contributing to the
second account. In such a case, only the non-concurrent service—that is,
service not credited under both accounts, may be transferred.
Interfund
transfers can be done at any time prior to an account expiring or being withdrawn.
Vested accounts are also eligible to be transferred
provided they do not have more than three years of concurrent service.
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Required
Forms
- An Enrollment
Application (TPAF, PERS,
PFRS, SPRS)
for the system to which the employee is transferring, and
- An
Interfund Transfer Form, which must be completed by the employee (Part
1) and the former employer (Part 2). Generally, the Application
for Interfund Transfer Form must be first filled out by the member, then
sent to the former employer who is required to return it to the member. The Interfund
Transfer Form should then be submitted along with the completed Enrollment
Application to the Division of Pensions and Benefits. (Form
Instructions)
In situations
when the employer remains the same but the member is transferring to a
different retirement system due to a title change, the employer should stop remitting
contributions under the former system once the employee becomes eligible for membership
in the second system, and wait for a Certification of Payroll Deductions for the
new retirement system.
NOTE:
Interfund transfers are optional. The Division often receives a new Enrollment
Application but does not receive an Application for Interfund Transfer
form. If the Interfund Transfer form is not received within a reasonable
time frame, the Division establishes the new enrollment without the interfund
transfer and the member becomes a "dual member".
An interfund transfer can occur at a later date so long as an Application for
Interfund Transfer has been received prior to the expiration or withdrawal
of an account.
Intrafund
Transfers ("Reports of Transfer")
For
employees who change employer and remain in positions covered by the same retirement
system.
All active members
of a State-administered retirement system who change employers, but continue employment
in positions covered by the same pension fund, are immediately eligible to continue
membership regardless of temporary or permanent status in the new position, so
long as salary and Social Security requirements are met.
The
employee's membership should be in good standing and the account cannot be withdrawn
or expired. If the account has been withdrawn or has expired, a new enrollment
application must be completed.
The Division
of Pensions and Benefits will process the Report of Transfer and will send
a Certification of Payroll Deductions to the new employer indicating the
date pension deductions must begin for the transferring employee.
The
new employer must wait for a Certification of Payroll Deductions from
the Division of Pensions and Benefits before commencing pension deductions. Back
deductions will be certified for the member to make up for any delay in normal
pension contributions.
Required
Form
A Report of Transfer
form must be completed by the new employer.
Report
of Transfer form available for download and printing
Report
of Transfer forms instructions are available here: PERS,
TPAF, PFRS
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Veteran
Status (Applies only
to the PERS and the TPAF)
The definition for those who qualify for Veteran status used here is based upon
NJ Statutes for NJ State pension purposes only. A
veteran is a person who holds an honorable discharge from the military services
of the United States who served the required amount of active duty service during
the following periods (It is important that those who qualify for Veteran status
for pension purposes establish Veteran status well in advance of retirement with
the NJ Department of Military and Veteran's Affairs—see
below to find out how to do so).:
Veteran
status for World War II, the Korean Conflict or the Vietnam Conflict can be granted
as long as the member had at least 90 days of continuous active military service,
of which at least one day falls within the dates listed above.
Any honorably discharged member of the American Merchant Marine who served at
least 90 days during World War II also qualifies for veteran status.
More
Recent Conflicts
To
qualify for veteran status for the Lebanon Crisis, Lebanon Conflict, the Grenada
Conflict, the Panama Peacekeeping Mission, Operation Desert Shield/Storm, Operation
Restore Hope in Somalia, Operations Joint Endeavor/Joint Guard in the Republic
of Bosnia and Herzegovina, or Operation Enduring Freedom (including but not limited
to service in Afghanistan), or Operation Iraqi Freedom in Iraq, the member must
have served at least 14 days in the country or region, or on ships patrolling
in the territorial waters of these nations. If the members military service began
after the starting date of conflict, only one of the 14 days in the areas
of hostilities must have fallen within the service dates specified. If the member's
service started prior to the beginning of the period of hostilities, then
the member must have served at least 14 days within the dates specified.
The
90- or 14-day requirement for service is waived if the veteran was discharged
because of a service-incurred disability. Absent Without Leave (AWOL) periods
must be deducted from active service and if this reduces the active service to
less than the 90- or 14-day service requirement, veteran status will be denied.
Service with the Women's Army Auxiliary Corps (WAAC) and Women's Army Corps (WAC)
qualifies for veteran status.
Exclusions
Veteran
status cannot be granted if an individual received a dishonorable discharge, a
discharge from the draft, disenrollment from the Coast Guard Reserve, or a discharge
from the reserve with no evidence of active service in time of war.
Active
Duty Training, Reserve, or National Guard Service do not qualify as active duty
service.
Additional information is available
for download on Fact Sheet 17,
Veteran Status (PERS and TPAF).
Required
Form
Effective March 1, 2001,
the final arbiter of Veteran Status is the Adjutant General of the NJ Department
of Military and Veteran's Affairs who will inform the Division of Pensions and
Benefits of the determination of Veteran Status (Chapter 127, PL 2000).
If
you qualify for Veteran status for pension purposes, it is important that you
establish Veteran status well in advance of your retirement.
A
copy of the member's military discharge document, Form DD-214, must be
submitted to:
The New Jersey
Department of Military and Veterans' Affairs
ATTN: DVP-VBB
PO Box
340
Trenton, NJ 08625-0340
It will be reviewed to determine eligibility for veteran's
status for pension purposes. Be sure the member includes a note or letter indicating
that the DD-214 is being submitted for the purpose of obtaining veteran status
in the retirement system in which he or she in a member. The member should also
include his or her Social Security number for identification purposes.
To
obtain a copy of his or her Form DD-214 (discharge papers), a member should write
to:
National Personnel
Records Center
Military PErsonnel Records
9700 Page Boulevard
St. Louis MO 63132-5100
Or, a member may visit:
To
obtain copies of discharge papers for the Merchant Marines, the member should
write to:
Maritime Administration
(MAR-250)
400 7th Street S.W., Room 7302
Washington, DC 20590
For
information about the purchase of service credit military service, please refer
to Fact Sheet #1, Purchasing
Service Credit, or see the "Purchase
of Service Credit" section of this manual.
For
information about the qualifications and retirement benefits for a PERS or TPAF
member with veteran status, please see the "Retirement
from the PERS or TPAF" section of this manual, or refer to Fact Sheet
#4, Types of Retirement (PERS
and TPAF)
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