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Enrolling in the
Alternate Benefit Program (ABP)

Enrolling in the Alternate Benefits Program (ABP)

Eligibility

Full-time faculty, officers, visiting professors and certain professional administrative staff required to possess a college degree or its equivalent must participate in the ABP. 

"Full-time" for the ABP is defined to include anyone receiving 50% or more of base salary of a 100% (full-time) position and may include an employee on sabbatical or paid leave of absence.

Please note, however, that in cases where a member of the Public Employees' Retirement System, or PERS, is subsequently hired to fill an ABP-covered position, the employee may have the choice of enrolling in the ABP or remaining in the PERS. Click here for additional information.

Covered Locations

Two Types of Contributions: "Mandatory" and "Voluntary"

There are two types of contributions for ABP: "Mandatory" and "Voluntary"

Mandatory Pension Contribution Rates

The employee's mandatory rate of contribution is established at a flat rate of 5% of base or contractual salary. The employer's rate is currently 8% of a member's base salary.

For full-time members earning 100% of their base or contractual salary, both the mandatory 5% member pension contributions and the 8% employer contributions will be calculated on the base or contractual salary. This is also true for ABP members who are under contract to work "half time" or "three-fourths time", etc. They are considered "full-time" for ABP enrollment purposes, and they are earning 100% of their base contractual salary when they are working the "half time" or "three-fourths time", etc., hours set by contract.

In the case where full-time members earn less than 100% of their base contractual salary, (but not less than 50%), the 5% mandatory member pension contributions will be calculated on the actual salary paid, not the full base contractual salary.

However, on the monthly Employer Contribution Report, the full base contractual salary should be included in the "Total Normal Base Salaries" section, and the 8% employer contributions will be paid on this salary.

For full-time employees earning less than 50% of their full base contractual salary, no deductions should be taken and no employee contributions made. The member's ABP status would be the same as that of a member on a leave of absence without pay.

For full-time ABP employees working more hours than contracted for (including those under contract to work "half time", "three-fourths time" etc.), the employee's additional earnings are regarded as extra compensation and are not subject to pension contributions.

Effective September 1, 1995, pension deductions became mandatory from the employee's eligible enrollment date, and therefore subject to the rules of IRS 414(h).

Voluntary Additional Contributions—Elective 403(b)

Under the voluntary 403(b) portion of the program, members may make additional contributions on a tax-deferred basis. Members are required to complete a Salary Reduction Agreement form with their employer in order to participate. While federal income tax will be deferred on the contributions, State income tax and Social Security taxes will not be deferred. 

To determine the total percentage of salary a member may defer, the employee's carrier of choice must perform a tax deferral calculation. Voluntary, additional 403 (b), contributions will be calculated on the actual base salary paid less the mandatory pension contributions, if the employee earns 50% or more of his/her full base salary. If the employee earns less than 50% of his/her full base salary, no payroll deductions should be taken for the elective 403(b) voluntary additional contributions.

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Approved Investment Providers

The Division of Pensions and Benefits currently approves the following providers to offer annuity investment accounts for ABP members (as of April 1, 2004):

	ING Life Insurance and Annuity Co. 581 Main St., Fourth Floor Woodbridge, NJ 07095 877-873-0321 www.ingretirementplans.com
	The Hartford 303 Lippincott Center, Suite 122 Marlton, NJ 08053 1-800-243-7782 Ext. 54400 Information for the Alternate Benefit Program and Participants: http://www.retire.hartfordlife.com/newjersey401a/index.html Information for the 403(b) ACTS Program and Participants: http://www.retire.hartfordlife.com/newjersey403b/index.html
	AXA Financial (Equitable) 333 Thornall Street, 8th Floor Edison, NJ 08837 866-786-0856 www.equitable.com/nj
	Teachers Insurance and Annuity Association/ College Retirement Equities Fund (TIAA/CREF) 155 Village Blvd, Suite A Princeton, NJ 08540 1-800-842-8412 www.tiaa-cref.org
	Met Life (formerly Travelers/CitiStreet) 581 Main Street, Sixth Floor Woodbridge, NJ 07095 1-800-545-0108 (732) 602-0500 www.travelersla.com
	AIG VALIC 450 Headquarters Plaza Morristown, NJ 07960 (973) 285-8200 1-800-448-2542 www.americangeneral.com/njabp

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Vesting

If an ABP member has an existing retirement account containing employee and employer contributions based on employment in higher education anywhere in the United States, or is an active or vested member of any State of New Jersey-administered retirement system and transfers that membership into the ABP, the member is immediately vested. Vested members of the ABP are eligible to apply for loans from their carrier. Such loans are made from the member’s account balances. Members should contact their authorized carrier for details and repayment procedures.

Examples: (1) A new ABP member has an existing 401(k) account based on employment at an institution of higher education in another state. That ABP member is considered immediately vested. (2) A new ABP member has an account in the TPAF based on employment at a high school in New Jersey. The ABP member withdraws from the TPAF and transfers the service credit and contributions from the TPAF membership into the new ABP account. That ABP member is considered immediately vested.

First Year Participants (Delayed Vesting)

If an employee does not own an existing higher education retirement account or has not transferred from another State of New Jersey administered retirement system, employee (5%) and employer (8%) contributions required during the initial year of participation are held in a "delayed vesting" status. If an employee does not continue eligible employment in the second year, the employee may apply for a refund of employee contributions only from the carrier. The employer contributions revert back to the employer. While in the delayed vesting period, transfers between carriers and loans are not permitted.

Examples: (1) A new ABP member has an existing membership in another state’s defined benefit plan. The ABP member is considered to be in a delayed vested status. (2) A new ABP member has an expired PERS account, i.e., the individual is not vested in the PERS and has not made contributions in over two years. The ABP member is considered to be in a delayed vested status. (3) A new ABP member has an account in the PERS based on continuing employment with another employer. That account is not rolled into the new ABP account. The ABP member is considered to be in a delayed vested status.”

Life Insurance Coverage

All ABP members are covered by employer-paid life insurance, payable to designated beneficiaries, in the amount of three and one-half times the annual base salary. This coverage is available without a medical examination to newly enrolled members under age 60.

Newly enrolled members 60 years of age or older must undergo a medical examination to qualify.

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 insurance coverage over $50,000 at any time; for further information on this topic, please see Fact Sheet #22.

Follow this link for a copy of the form, Election to Waive Non-Contributory Life Insurance in Excess of $50,000.

Follow this link for a copy of the form, Election to Reinstate Noncontributory Life Insurance in Excess of $50,000.

To learn more about insurance coverage under the State-administered pension systems, see the Group Life Insurance section of this manual.

Ineligibility

Individuals who are not eligible for membership in the system include:

• Part-time faculty members.
  
  
• Employees in a career service title as defined by the State Department of Personnel.
  
  
• Faculty members who are temporarily in the United States under an F or J visa.
  
  
• Any employee receiving a retirement benefit from any pension system of the State of New Jersey, including an individual collecting an annuity or cash distribution from the ABP.
  
  
• Adjunct faculty members.
  
  
• An employee who is appointed in a temporary capacity, with the exception of visiting professors, for one semester or for a lesser period.
  

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Required Form

All new employees must complete the Alternate Benefits Program Enrollment Application, Parts I and II. (For the fill in and print version of the Alternate Benefits Program Enrollment Application, click here—Acrobat 4.0 or higher needed.)

Part III is completed by the educational institution to certify the member's appointment, academic rank, service and salary.

Application Process

Eligible employees must complete an Alternate Benefits Program Enrollment Application. (For the fill in and print version of the Alternate Benefits Program Enrollment Application, click here—Acrobat 4.0 or higher needed.) Upon completion of the "Certification of Employing Agency" section by the employer, the application should be filed with the Division of Pensions and Benefits. It is suggested that each new participant complete a Carrier Election and Allocation form, and the application forms for each investment carrier selected, at the same time. A copy of the completed application form for each investment carrier should be forwarded to the appropriate carrier, and the employer should also retain a copy.

• Submit Alternate Benefits Program Enrollment Application to the Division of Pensions and Benefits (For the fill in and print version of the Alternate Benefits Program Enrollment Application, click here—Acrobat 4.0 or higher needed.).

Alternate Benefit Program members who do not designate an investment carrier for program contributions will be enrolled by the institution with the investment carrier designated as the default carrier at the time of enrollment.

The Default Carrier

The default carrier is authorized to accept employer and employee mandatory contributions and will invest the funds in a money market fund. Contributions will continue to be sent to the default carrier until the ABP member designates and completes an application with an investment carrier and notifies the institution of the action. If the member is subject to delayed vesting, and is enrolled with the default carrier, the member is allowed to choose an alternate carrier during the first year and transfer the contributions deposited.

In the event an eligible employee fails to complete a Carrier Election and Allocation form, the employer shall complete the paperwork necessary to enroll the individual with the investment carrier selected as the default carrier for the current plan year.

For additional information, including a list of the default carriers for the years 2001 through 2009, click here.

Certification of Payroll Deductions

The Division of Pensions and Benefits certifies all new enrollments and transfers to the respective employer. Certifications establish that the employee is eligible to enroll in the ABP. It also indicates the membership number, group life insurance status, date of enrollment, and whether the employee is in delayed vesting status or an active participant at the time of enrollment.

Processing Employee Contributions

Once the certification is received, the administrator will need to follow the remittance guidelines for each investment carrier.  

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ABP Investment Options

See Carrier Comparison Guide (color version) or Carrier Comparison Guide (black and white version).

Intrafund Transfers

When an ABP member transfers from one State of New Jersey public institution of higher education to another, an ABP Application for Transfer form is required to continue membership. 

Part I is completed by the member and Part II is completed by the employer. The member should also complete a new Carrier Election and Allocation form for the college's records. 

If the member had a Salary Reduction Agreement with their former employer and wishes to continue the reduction, a new agreement with the new employer is required.

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The ABP and State-administered Retirement Systems: Interfund Transfers   

See the booklet, Choosing between the PERS and ABP

Continuance in a New Jersey State-administered defined benefit retirement system (such as the Public Employees' Retirement System and Teachers' Pension and Annuity Program), with its different benefit and contribution schedules, is permitted as long as the employee waives the right to the benefits provided by the ABP.

Transfers from the PERS

When an employer hires a member of the Public Employees' Retirement System, or PERS, to fill an ABP-eligible position, the employer's responsibility to enroll the new hire in the ABP depends on whether or not the employee chooses to participate in the ABP.

An employee with current PERS membership who is hired for an ABP-eligible position may choose to remain in the PERS or transfer into the ABP (an Interfund Transfer). If the employee's PERS membership will be continuing through other employment, please see below.

The PERS member must select, within 30 days of the date of hire, to participate in either the ABP or the PERS. 

The booklet, Choosing between the PERS and ABP, may help such members in deciding whether to remain in the PERS or enroll in the ABP. PERS members thinking of participating in the ABP may also use the Request for PERS and ABP Retirement Income Illustrations to compare retirement benefits under the PERS with retirement income available under any of the approved ABP investment carriers.

A PERS member wishing to transfer to the ABP makes this selection by completing and filing:

• The ABP Enrollment Application (or the fill-in and print version of the Alternate Benefits Program Enrollment Application—Acrobat 4.0 or higher needed);
• The Application for Withdrawal for the PERS account, and;
• The Election of Retirement Coverage form with the Division of Pensions and Benefits. 

This is an irrevocable decision while employment continues with the same employer. 

If the individual does not file an election form during the initial 30-day period, the employee must enroll in the ABP and will lose the right to have all retirement credit consolidated under one retirement account and may lose those benefits which have not vested.

Dual Membership (PERS and ABP)

A PERS employee who is hired for an ABP-eligible position at another location, but at the same time continues to serve in other PERS-covered employment, may also choose to be covered by PERS or enrolled in the ABP for the ABP-eligible position.

If the employee elects to be enrolled in the ABP for the ABP-eligible position, he/she will have dual membership in the PERS and the ABP.

However, if the employee elects PERS coverage for the ABP-eligible position, he/she will have multiple membership in the PERS rather than dual membership in the PERS and ABP.

Concurrent ABP- and PERS-covered Employment with the Same Employer

N.J.S.A. 18A:66-170 prohibits full-time ABP employees from also enrolling in the PERS on the basis of any PERS-covered employment at the same employing location. Concurrent ABP- and PERS-covered employment with the same employer, however, is permitted.

If one of your full-time ABP employees is also working in a PERS-covered position at your location, you may not enroll them in the PERS or deduct PERS pension contributions from their PERS salary.

Although ABP members may retain their employment and salary from such PERS-covered positions, they will receive no PERS service credit. The salary earned for the PERS position would be considered extra compensation for ABP purposes, and extra compensation is not subject to pension deductions.

Transferring from Other New Jersey State-administered Defined Benefit Programs

If the employee was a member of the TPAF, the employee may transfer to the PERS or the ABP.

When a member establishes 10 years of service or attains age 60, the employee may be eligible for some portion of the employer's Contingent Reserve Fund. 

If the employee elected to enroll in the ABP, employee contributions transfer concurrently with enrollment in the ABP. 

Chapter 342, PL 1981, permits members of the Police and Firemen's Retirement System (PFRS) to transfer their equity to the ABP program.

Pensions from Other States' Retirement Systems

Chapter 276, PL 1991, permits individuals receiving public pensions from non-New Jersey State-administered retirement systems to participate as members of a retirement system administered by the State of New Jersey.

All newly hired employees who meet the eligibility requirements for participation in the ABP are required to enroll without regard to whether they are currently receiving a pension benefit from another state. The date of enrollment will be based on the date of appointment. The service credit for the period from the date of enrollment to the date deductions begin may be purchased through a lump-sum payment within the first year of participation.

All eligible employees hired prior to September 10, 1991 currently receiving pension benefits from other states have the option of enrolling as members of the ABP. The option to enroll will be in effect for as long as they are employed with their current employer. If the employee elects to enroll in the ABP, the date of enrollment will be the first day of the month following the date the enrollment application is received by the Division of Pensions and Benefits. The period from the date of enrollment to the initial date of payroll deductions may be purchased by means of a lump sum payment within the first year of participation. Employment rendered prior to the date of enrollment cannot be purchased.

Employees who did not enroll in the ABP and subsequently accepted another ABP eligible position with any other State college, county college, the Commission of Higher Education, or the Office of Student Assistance, are considered newly hired employees, and are required to enroll as of the date of permanent appointment in the new position.

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