Withdrawal from the
Retirement System
Introduction
Any member of a State-administered
retirement system who terminates covered employment prior to retirement
may withdraw the pension contributions in his or her account if certain criteria
established by statute are met.
See Fact
Sheet #24, Withdrawal from the Retirement System,
for additional information.
Application for Withdrawal through MBOS Now Required
Effective April 1, 2011, an eligible member who terminates employment and chooses to withdraw from a pension account, must submit the withdrawal application online using the MBOS Application for Withdrawal, which is accessible through a personal account with the Member Benefits Online System (MBOS).
- The Application for Withdrawal will no longer be available as a printed form or through the Division’s Web site.
- Paper Applications for Withdrawal received by mail as of April 1, 2011, will be returned to members with instructions on submitting the withdrawal request through MBOS.
Upon receipt of the online Application for Withdrawal through MBOS (over the Internet),
the Division of Pensions and Benefits will refund the contributions
of eligible members. Withdrawing members receive interest
on their withdrawn contributions at a rate of between two and three
percent, but no interest is payable unless the member has at least
three years of membership credited to the account at the time
of termination.
No interest is credited to accounts
of members of the Police and Firemen's Retirement System
(PFRS) and the State Police Retirement System (SPRS).
There are no provisions for partial
withdrawal.
Instructions for filing a withdrawal claim through the Member Benefits Online System (MBOS) can be found in the MBOS User's Guide.
MBOS registration information and instructions are available on the Division's Web site.
Members requiring assistance registering with or using MBOS should contact the MBOS Help Desk at (609) 777-0534 or send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us
One specific exception allows for the use of the paper Application for Withdrawal:
A limited number of members will not be able to access the MBOS Application for Withdrawal. These are members who have been off payroll for two years or more or whose accounts have been designated as “expired.”
Members with expired accounts can still withdraw their contributions, but must write or send e-mail to the Withdrawal Section of the Division of Pensions and Benefits. Members should include in any correspondence their full name, pension membership number or Social Security number, and current mailing address and e-mail address. Division staff will determine the status of the account and provide additional instructions for completing the withdrawal to the member.
The Division of Pensions and Benefits also
offers an Automated Information System at (609) 292-7524
for general withdrawal information, or information pertaining
to an individual withdrawal claim.
Inactive Membership
Any member who resigns may leave
the accumulated contributions with the pension system and continue
on an inactive status for a period of up to two years. Interest
is credited to the account if the member had at least three years
of service credit during this period of membership (except for PFRS and SPRS members, whose accounts will not accrue interest). After the two-year inactive period, the account is considered expired.
Prior to the completion of the two-year inactive
period, the Division of Pensions and Benefits will send both the
member and the employer an Expiration Notice. A
copy is sent to the former employer in case the employer has
a current address for the member. The employer is asked
to forward the notice since failure to notify the employee may
jeopardize the member's eligibility for retirement benefits, if
any.
Once an account has expired,
the contributions and accrued interest will remain in the expired account until the Withdrawal Section of the Division of Pensions and Benefits receives a written request for the amount of the expired account from the member. Members should include in any correspondence their full name, pension membership number or Social Security number, and current mailing address and e-mail address.
The Division's staff will determine the status of the account and provide additional instructions to the member for completing the withdrawal. Additional Interest will not accrue on expired accounts.
Instructions for filing a withdrawal claim through the Member Benefits Online System (MBOS) can be found in the MBOS User's Guide. Members with additional questions should contact
Client Services at the Division of Pensions and Benefits, at (609)
292-7524.
Extension of Inactive Membership
Period and Leave of Absence
An employee’s membership will not end two years after his or her last contribution if he or she is granted an official leave of absence (the two-year period begins at the end of the leave of absence).
If a member's employment is terminated
through no fault of the member (e.g., abolishment of the position,
layoff, reduction in force), the inactive period will be extended
for an additional eight years for members of the PERS and TPAF
(total of 10), and an additional three years for members of the
PFRS (total of five).
Please note that extensions are
not automatic.
Documentation from the employer showing
that the leave of absence was extended or that the termination
was not voluntary must be submitted to the Division of Pensions
and Benefits. The extension of inactive status up to ten years
only gives the member the right to start contributing
to the retirement system, should they once again obtain PERS/TPAF
employment; it gives the member no other rights or benefits.
In the event an account does not
become active within ten years, the member will be notified in
writing concerning the date that his or her account will expire.
Workers'
Compensation and Withdrawal
Under the
provisions of the statutes as interpreted by court decisions,
pension contributions are made if the employee is awarded Workers'
Compensation benefits. An employer is required to make pension
contributions on behalf of an employee receiving periodic payments
based on temporary or permanent Workers' Compensation awards.
(See Fact Sheet
#45, Workers' Compensation.) The voluntary resignation
or retirement of an employee receiving any kind of Workers' Compensation
frees the employer from pension contributions on behalf of the
member.
Employer Responsibilities:
General Notes
It is the employer's responsibility to complete the Employer's Certification for Withdrawal when a member applies for a withdrawal. Additional instructions and a sample of the required Certification is provided below.
The employer should contact the Division
of Pensions and Benefits if any inactive employee returns to covered
employment within the two-year period or before the account is
expired. The account will be reactivated at the same rate of contribution
and service credit. The period during which the member was inactive
constitutes a break in service.
In the event that an employee is
dismissed from service, a withdrawal claim cannot be paid if the
member is appealing the dismissal. The State Merit System Board
is contacted when a member covered by the merit system is dismissed.
If an appeal has been filed, the withdrawal is not paid until
the appeal has been settled and the status of the employee is
clarified.
An employer is required to make
pension contributions on behalf of an employee receiving any kind
of Workers' Compensation. The voluntary resignation or retirement
of an employee receiving any kind of Workers' Compensation frees
the employer from pension contributions on behalf of the member.
An employer is also responsible for
making pension contributions on behalf of the employee who is
on a Military Leave of Absence when the employee returns to service,
under the prescribed time frames of USERRA.
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