Only active contributing members
are eligible to borrow. Members may take a loan for up to one half of their pension contributions, as long as their loan balance does not exceed the maximum allowed — $50,000 (for member eligibility information, click
here). To apply for a loan, the Member Benefits Online System (MBOS) must be used.
Applying for a Loan through the Member Benefits Online System
All eligible members of the PERS, TPAF, PFRS, or SPRS wishing to borrow against their pension account MUST submit the loan request through the Pension Loan Application in the Member Benefits Online System (MBOS).
Using MBOS has many advantages:
- The member may confirm that their Loan Application was received.
- MBOS will provide the date a member's loan check will be mailed.
- MBOS will also calculate various repayment options based upon the amount borrowed.
Please direct PERS, TPAF, PFRS, and SPRS members to sign up for MBOS: MBOS User Information.
Members requiring additional help in using the MBOS Loan Application should be directed to the MBOS User's Guide, Pension Loans.
Paper versions of the Loan Application from eligible members of the PERS, TPAF, PFRS, or SPRS WILL NOT be accepted by mail or by FAX. Few exceptions apply. Printed applications received by the Division will be mailed back to the member with instructions on submitting the loan request through MBOS (see below for specific exceptions).
Exceptions to Online Loan Application Requirement
While the majority of member loan requests will require processing through MBOS, a limited number of members are not able to access the MBOS Loan Application. These member groups include:
- Judicial Retirement System (JRS) members, who should continue to use the paper JRS Loan Application;
- Retirement system members who have established a security freeze on their accounts due to an instance of ID theft (these members must contact the ID Theft Coordinator to request a loan); and
- Employees shown in the loan processing system as inactive from payroll, including:
- Employees who apply for a loan within 6 months of returning from a leave of absence;
- Employees who apply for a loan within 6 months of transferring within the same retirement system to a new employer;
- Employees whose employer was late in submitting the Report of Contributions for the quarterly posting; and
- State employees who are paid on a supplemental payroll schedule.
Members shown as inactive from payroll may still be able to borrow, but a Certified Loan Request form must be submitted by the employer to verify the employee’s active pay status. (Employees from a late-reporting location, after certification, may only borrow amounts based on the previously posted quarter.) Click here to view a sample of the Certified Loan Request form.
The Automated Information System for General Loan Information
The Division of Pensions and Benefits
offers an Automated Information System, at (609) 292-7524,
for general information concerning loans, including the loan amount
a member can borrow, the repayment schedule, and information pertaining
to a particular loan applied for through MBOS.
Loan Provisions and Employer Responsibilities
To be eligible, the member must:
- Be an active, contributing member
of the retirement fund.
- Have three years of contributing
membership POSTED to their account. (This usually occurs three
years and three months after date of enrollment).
- The application must be signed
by the member.
- Members are permitted to take
out a maximum of two loans in a calendar year.
- The loan interest rate and administrative processing fee change annually.
Please Note: Members who are off payroll may not borrow from their account.
Pension Loan Changes
Chapter 92, P.L. 2007 provides for changes to loan interest rates and the possible introduction of administrative fees for pension loans taken by members of State-administered retirement systems that include loan privileges:
- Public Employees’ Retirement System
- Teachers’ Pension and Annuity Fund
- Police and Firemen’s Retirement System
- State Police Retirement System
- Judicial Retirement System.
Under Chapter 103, P.L. 2007 and Chapter 78, P.L. 2011, PERS and TPAF member contribution rates increased ; therefore, higher minimum repayment amounts will be required for pension loans certified after a PERS or TPAF employee’s pension contribution rate changes.
If a member retires with an outstanding
loan balance, under the provisions of Chapter 132, P.L. 1999, the
member has the option to pay off the outstanding loan balance
in its entirety or to repay the loan through deductions from his/her
retirement benefit until the balance of the loan together with
interest is repaid. Payments will be the monthly equivalent of
the amount deducted from the compensation immediately before retirement.
If a member dies before the outstanding
loan balance with interest has been recovered, the remaining balance
will be deducted from the proceeds of any other benefit payable
to the designated beneficiary(ies), including life insurance and
If a member terminates employment
and chooses to withdraw all contributions from the pension fund,
any outstanding loan balance must be satisfied. Usually,
the Division of Pensions and Benefits will deduct any outstanding
loan balance from the amount owed the member through the return
of contributions. The member may choose to pay any outstanding
loan in full with a lump sum payment in order to receive the full
amount of the contribution balance on account.
Once a loan has been processed, two
copies of the certification are sent to the employer. One copy
should be forwarded to the member for his/her records, while the
other is retained for the employer's file. The certification of
payroll deductions contains all the pertinent information regarding
the number of deductions and the amount of each deduction to be
withheld from the employee's payroll check.
Employers are required to follow
the instructions on the certification and begin payroll deductions
as instructed on the form. Failure to comply with payroll certifications
will result in additional interest charged to the member's account.