Retirement Application Terms and Conditions

Post-Retirement Employment Restrictions  

If you are considering working after retirement, there are restrictions imposed by laws and regulations governing post-retirement employment in the New Jersey public sector. It is your responsibility to inform a prospective public employer that you are receiving retirement benefits from a New Jersey public retirement system, and to understand the impact such employment will have on those retirement benefits.

In some instances, your retirement benefits may be suspended or even cancelled entirely, and if this occurs, you will be responsible for the repayment of any benefits you were not entitled to receive. You may also be required to enroll in your former retirement system or a different retirement system, and make pension contributions into that system. Additional restrictions may apply.*

INTERNAL REVENUE CODE
The PERS, TPAF, PFRS, SPRS, and JRS are established as qualified governmental defined benefit plans in accordance with the Internal Revenue Code (IRC) Sections 401(a) and 414(d). To preserve the qualified status of these plans and to protect retirees from a 10% excise tax penalty on their retirement benefits, the Division of Pensions and Benefits was required to adopt and to enforce regulations to ensure compliance with the IRC requirements.

N.J.A.C. 17:1-17.14(a)2 states:
"‘Bona fide severance from employment’ means a complete termination of the employee's employment relationship with the employer for a period of at least 180 days.** The following does not constitute a complete termination of the employee's relationship with the employer:

1. Employment or re-employment in a part-time position;
2. Employment or re-employment in a position that is not covered by the Defined Benefit Plan;
3. A change in title;
4. Employment or re-employment as a contract employee, a leased employee*** or an independent contractor; or
5. Termination of employment with a pre-arranged agreement for re-employment.”

The above 180-day requirement does not apply to individuals who are required to retire under the age-related mandatory retirement provisions of the PFRS, SPRS, JRS and certain law enforcement positions covered under the PERS. Administrative Law Judges and Judges of Compensation are also subject to age-related mandatory retirement.

Re-employment by a different unit of the same public entity, whether in a position covered by the same retirement system or a different retirement system, is considered to be employment by the same employer. Additionally, if a PFRS retiree is appointed to a position with a law enforcement unit or firefighting unit with administrative or supervisory duties over police officers and/or firefighters (such as Police Director, Director of Public Safety, etc.) within six months after retirement, even if it is a different employer, the retirement allowance is suspended and the retiree must re-enroll in PFRS (see N.J.S.A. 43:16A-3.1).

If you hold more than one position with the employer, you must separate from all employment in order to retire, even if the positions are covered by different retirement systems, or the second position is not subject to pension contributions.

If you return to public employment with the former employer prior to satisfying the requirements of a bona fide severance from employment, you will be required to repay all retirement benefits you received from the date of retirement and may be required to enroll in the same or a different retirement system. All employee/employer pension contributions related to the new enrollment will be retroactive to the date of re-employment.

The Internal Revenue Service (IRS) does not consider a pre-arranged return to public employment to be a bona fide severance from employment no matter how long the break in employment. If you and your employer make an arrangement prior to your retirement to return to employment in any capacity, at any future time, regardless whether the position is covered by the former retirement system — the employer/employee relationship is not completely severed and the retirement will be invalid. In this event you will be required to repay all retirement benefits received from the date of retirement and may be required to enroll in the same or a different retirement system.

Special Provisions for Disability Retirees
If you retire on an Ordinary Disability or Accidental Disability Retirement, and your condition improves, before you can return to a position covered by your former retirement system you must first be approved for re-employment by the Board of Trustees.  If approved to return, your original retirement system account and membership tier are restored.  Enrollment criteria for the original membership tier also apply.  When membership is restored, pension contributions resume and you are treated as an active employee in all respects.

If you are receiving disability retirement benefits from the PERS or TPAF, your retirement allowance may be adjusted if you have earnings from any employment after retirement. See the disability retirement fact sheets for additional information (Fact Sheet #15, for PERS or TPAF members; Fact Sheet #16, PFRS members; or Fact Sheet #39, SPRS members).

OTHER CONSIDERATIONS
A “bona fide” retirement must also be “due and payable.” Accordingly, retirees are also required to satisfy a separation from service period before returning to NJ public employment with a different employer in a position which would not have been covered by the same retirement system. The Division of Pensions and Benefits will notify you in writing when your retirement is approved by the Board of Trustees. You must wait until at least 30 days after the date of this notification or 30 days following your date of retirement, whichever is later, before you agree to accept employment with another employer in a position which is not covered by your retirement system. During this 30-day period you can still cancel your retirement application. Thereafter, your retirement benefits are finalized and become “due and payable.”

If there was a pre-arrangement at the time of your retirement to commence employment with another employer and the position is covered by your former retirement system, your retirement may be cancelled, and you may be required to continue as an active employee under your original retirement account.

Health Benefits — If your retirement is cancelled, you would be ineligible to continue coverage under the Retired Group of the State Health Benefits Program (SHBP) or School Employees’ Health Benefits Program (SEHBP).

Social Security Benefits — There is an earnings test for people receiving Social Security benefits who are under the full retirement age. Check with the Social Security Administration at 1-800-772-1213 for information on earnings limits before accepting employment.

*If you are required to be re-enrolled in your former retirement system, your retirement allowance and any related retired health benefits will be cancelled for the duration of your employment. In certain instances you may be required to prove insurability to have group life insurance coverage. In the event of your death during the second membership, no benefits from either the previous membership or retirement are payable (except for the return of uncollected contributions). This includes option settlements and death benefits.

**Employees who work a 10-month school year and retire on July 1 or August 1, must count the 180-day severance of employment from the start of the following normal school year in September.

***This includes services provided to all employers who are party to a shared service agreement with your former employer.