Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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Enrolling in the Police and Firemen's
Retirement System (PFRS)


 
TABLE OF CONTENTS
  Required Employer Training, Enrollment Procedures
  PFRS Membership Tiers
 Eligibility
  Approved Job Titles
    Training Requirements for Enrollment Eligibility
  Obtaining PFRS Board Approval for a Job Title
  When Promotion Out of a PFRS Title Occurs
  Promotion Out of a PFRS Title and Supervision of PFRS Members
 Age Restrictions
 Civil Service vs. Non-Civil Service Positions
 Maximum Age at State and County Locations
 Maximum Age at Municipal Locations
 Medical Requirements
 Required Forms
 History of PFRS Enrollment Age Limits
 Reducing a Member's Age
  For All Employing Locations
   For Municipal Employers
 Candidates Who Exceed the Age Limit
 Candidates Awaiting Permanent Appointment
 Volunteer Firefighters and Pension System Eligibility
 Candidates Employed Part-time, under Age 35
 Contribution Rate
  The PFRS Is a "Qualified Pension Plan"
  PFRS Contributions Are Tax Deferred
    Tier 2 and Tier 3 Maximum Compensation
  PFRS Application for Enrollment and Instructions
  Report of Transfer Form and Instructions
  Interfund Transfer Form and Instructions
 PFRS Mortgage Loan Program

Employer Training

All employers, including Certifying Officers and their immediate supervisors, are expected to complete board approved training on proper Enrollment procedures. This training will be made available over the State Web site. Additional information about this required training is available in the Certifying Officer Letter of May 26, 2011, Enrollment Certification and Training Requirements under Chapter 52, P.L. 2011.

PFRS Membership Tiers

Effective May 21, 2010, PFRS members are now classified by enrollment date, as eligibility requirements for PFRS enrollment and retirement are now different for three distinct enrollment periods, according to the law. The “membership tiers” by enrollment date are:

  • Tier 1 Membership, for members who were enrolled on or before May 21, 2010.
  • Tier 2 Membership, for members who were eligible to enroll between May 22, 2010 and June 28, 2011.
  • Tier 3 Membership, for members who are enrolled after June 28, 2011.

Several important differences for membership under each Tier exist, including:.

For Tier 1 Members, enrolled on or before May 21, 2010, a federal ceiling on pensionable salary applies.

Final Compensation for Tier 1 Members

For a PFRS Tier 1 member enrolled on or before May 21, 2010, Final Compensation means the salary upon which pension contributions were based in the last 12 months of creditable service preceding retirement.

Final Compensation for Tier 2 and Tier 3 Members

For a PFRS Tier 2 or Tier 3 member enrolled after May 21, 2010, Final Compensation means the average salary upon which pension contributions were based for any three fiscal years (July-June) of membership preceding retirement that provide the largest possible benefit.

Retirement allowance formulas for PFRS Service and Deferred Retirements are the same for Tier 1, Tier 2, and Tier 3 members, but Final Compensation calculations are different, according to the above definitions.

However, the Tier 3 PFRS retirement formula for Special Retirements has been changed under Chapter 78, P.L. 2011. Please see PFRS Retirements to learn more.

For all PFRS members, Final Compensation includes the maintenance allowance value for the same period.

Eligibility

Enrollment in PFRS is limited to full-time, permanent firefighters and police officers who hold an approved job title or whose position has been approved by the Board of Trustees of the Police and Firemen's Retirement System. Click here for an updated listing of the current PFRS approved job titles.

Those enrolled before May 21, 2010 are Tier 1 PFRS members.

Those enrolled between May 21, 2010 and June 28, 2011 are Tier 2 members of the PFRS.

Those enrolled after June 28, 2011became members of Tier 3 of the PFRS.

Please note that holders of J-1, F-1, M-1, or Q-1 visas are not eligible for membership in the PFRS.

In addition, there are training requirements for PFRS eligibility and enrollment, as outlined below.

Training Requirements for PFRS Eligibility and Enrollment

To be eligible for participation in PFRS, a position must meet the statutory definition of a “police officer” or “firefighter,” including the mandate that a candidate for a PFRS position must successfully complete specific training requirements (As prescribed in N.J.S.A. 43:16A-1 and 52:17B-66 et seq. for police positions; and in N.J.S.A. 43:16A-1 and 52:17B-66 et seq. for firefighter positions).

All police officers enrolled in the PFRS must be certified in the basic training course for police officers, as prescribed by the Police Training Commission (PTC).

Correction officers enrolled in the PFRS must be certified in the basic training course for correction officers as prescribed by the Police Training Commission (PTC).

County investigators enrolled in the PFRS must be certified in the basic training course for county investigators as prescribed by the Police Training Commission (PTC).

Similarly, firefighters enrolled in the PFRS must complete and receive Firefighter 1 certification through the New Jersey Department of Community Affairs, Division of Fire Safety.

Anyone seeking to become a police officer, correction officer, county investigator, or firefighter who does not successfully complete the PTC or Firefighter 1 certification will not be permitted to participate in the PFRS.

Employers (and PFRS members) had 18 months, from December 31, 2008 through June 30, 2010, to establish that all PFRS employees with membership at their employing location during that window have the required PTC or Firefighter 1 training and certification in order to retain their PFRS membership.

PFRS members who do not have the required certification will face removal from PFRS membership.

Obtaining PFRS Board of Trustee Approval for a Job Title

If a new employee's title does not appear on the list of PFRS approved job titles at the time of enrollment, and PFRS membership is sought, the employer must submit a statement explaining the qualifications and duties of the position/title with the employee's enrollment application. The PFRS Board of Trustees will then render a decision as to the individual's eligibility for PFRS membership, based upon the explanation of qualifications and duties provided by the employer for the title in question.

Promotion Out of a PFRS Position and PFRS Eligibility

If a PFRS member is promoted out of a PFRS title, statutes permit the member to transfer to another State retirement system, such as the PERS, as long as the member meets eligibility requirements for membership in the second system. In this case, the member and employer must submit an Interfund Transfer Form to the Division of Pensions and Benefits, allowing the Division to transfer member contributions and service credit to the State-administered retirement system covering the new position.

Promotion Out of a PFRS Position and PFRS Eligibility When Supervision of PFRS Members Is Involved

If a PFRS member is promoted out of a PFRS title to assume a position in which he/she will be supervising PFRS members, the employer can write to the Division seeking approval to allow the member to remain in the PFRS.

Situations in which age can be "reduced" for purposes of being eligible for enrollment in the PFRS are explained below, under Reducing a Member's Age.

Age Restrictions on Membership in PFRS

Effective February 25, 1997, individuals qualified to enroll in PFRS in all other respects must comply with the maximum age restriction; that is, be appointed on or before the day of their 35th birthday.

Also effective June 30, 1997, PFRS members must retire no later than the first of the month following their 65th birthday.

Civil Service and Non-Civil Service Positions

Civil Service Positions

Individuals hired in a PFRS-eligible title at Civil Service (Title 11) locations on or after February 25, 1997, cannot be older than the day of their 35th birthday as of the announced closing date of the Civil Service examination for that title, in order to be eligible to establish membership in the PFRS. Individuals meeting this age requirement can be hired at any time from a Civil Service list while it is still active, and can be enrolled in the PFRS (N.J.S.A. 43:16A-3(1)).

Non-Civil Service Positions

Individuals hired in a PFRS eligible title at a Non-Civil Service location, on or after February 25, 1997, can be no older than the day of their 35th birthday on the date of hire, to be eligible for membership in the PFRS. (NJSA 43:16A-3(2))

Maximum Age Restrictions at State and County Locations

Individuals employed by any State or County location who do not meet the maximum age requirement described above must establish membership in the Public Employees' Retirement System (PERS) one year after being provisionally employed in the title, or immediately after being permanently appointed in the title (NJSA 43:16A-3(1)).

Note:  Those individuals enrolled under the PERS in Law Enforcement Officer (LEO) titles will be eligible for enhanced benefits under special LEO provisions. See LEO section under "PERS Enrollment Eligibility". 

Maximum Age Restrictions at Municipal Locations

Individuals hired by any municipality in an eligible PFRS title on or after February 25, 1997, who are one day or more past their 35th birthday on the date of hire, cannot establish membership in any State-administered retirement system (NJSA 43:16A-3(2)).

For "Exceptions" to the 35-Year Old Age Limit, see Reducing A Member's Age below.

Medical Requirements

A physical examination must be completed by the employer's physician to prove medical readiness for a PFRS position.

The medical exam must occur within one year of the receipt of the medical form that accompanies the PFRS Enrollment Application.

Employers are no longer required to attach the Report of Examining Physician to the enrollment application, but this form must be kept on file at the employing location in anticipation of audits by the Division of Pensions and Benefits.

Required Forms for Enrollment

In order to enroll a newly hired employee in the Police and Firemen's Retirement System (PFRS), the employer must submit the following:

  1. Either the completed PFRS Enrollment Application OR the EPIC online "PFRS Enrollment Application;" On the application, the employer must also Indicate the date on which the medical requirement was approved by the examining physician.

    The medical exam must occur within one year of the submission.
    It is no longer a requirement to attach the Report of Examining Physician to the enrollment application, but this form must be kept on file at the employer’s location in anticipation of audits by the Division of Pensions and Benefits.

  2. Civil Service locations only: The employer must also provide the closing date of the Civil Service examination for the position for which the individual is being hired. A photocopy of the Civil Service list would be acceptable evidence.

It is important to note that delayed and forced enrollments can be costly to the employer.

Beneficiary Designation

At the time of enrollment, the employee's estate will automatically be designated as beneficiary for any death benefits payable.

If an employee wishes to change that designation, the member must register with the Member Benefits Online System (MBOS), which will enable the member to designate or update their beneficiary information online by using the "Designation of Beneficiary" application. Members wishing to sign up for MBOS at the time of enrollment should be directed to the "MBOS Registration Information" page, at: http://www.state.nj.us/treasury/pensions/mbosregister.shtml

If the member does not make beneficiary designations by using MBOS to designate pension and group life insurance beneficiaries online, the estate of the newly enrolled member will continue be listed as both the group life insurance and pension beneficiary for any death benefit payable.

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, the member must use the MBOS "Designation of Beneficiary" application to make changes.

Fact Sheet #68, Designating a Beneficiary, is available to provide information to members requiring help in making their beneficiary selections for pension and/or group life insurance.

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History of PFRS Enrollment Age Limits

Many have commented on the confusing history of age limits relating to PFRS enrollment. Changes have resulted from legislative initiatives, court rulings, and changes in Administrative Code. It may be helpful, then, to review the history of maximum enrollment age limits.

New Jersey statutes and the New Jersey Administrative Code establish the maximum enrollment age for the PFRS. These provisions were superseded in 1993 by the federal Age Discrimination in Employment Act (ADEA), so that the State statutes and code could not be enforced. In 1996, the federal government eliminated the ADEA restrictions that applied to the PFRS governing statutes, and in Formal Opinion No. 1, published on February 25, 1997, the State Attorney General stated that the age restrictions must be enforced. The following chart highlights these and other changes at a glance.

Enrollment Age Limit History

Dates

Age

6/30/1944 - 4/11/1945

35

4/12/1945 - 9/03/1968

30

9/04/1968 - 7/10/1984

35

7/11/1984 - 2/28/1987

No Age Limit

3/01/1987 - 12/31/1993

35

1/01/1994 - 2/24/1997

No Age Limit

2/25/1997 - present

35

Members who were enrolled in the PFRS while the age 35 restriction was not in force will be allowed to retain membership in the system on the same basis as any other member.

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"Reducing" a Member's Age

There are situations in which age can be "reduced" for purposes of being eligible for enrollment in the PFRS.

For All Employing Locations

Members who meet the definition of a veteran for pension purposes can use "reduce" their age by calculating their present age and reducing it by the amount of active military service in the theater of operations during war time or time of conflict, as stipulated by N.J.A.C. 17:4-2.5 and N.J.S.A. 43:1-1.1, the definition of a veteran for pension purposes. This applies to cases involving State, county, and municipal locations.

For more information see our Fact Sheet #17, Veteran Status.

The Following "Reductions" Apply Only to Municipalities:

  1. Members may also "reduce" their enrollment age for prior service as State trooper, sheriff's officer or deputy, or county or municipal police officer, as stipulated in N.J.S.A. 40-14-127.1. This statute provides that former municipal police officers can "reduce" their age for entry into the PFRS if their actual age, less the number of years of previous service as police officers, would reduce their age to 35 or less.

  2. Service as a municipal police officer in another state may also qualify for use in "reducing" a member's age for entry into the PFRS.

  3. An age reduction may also be granted for persons who have prior service with the police departments of the Delaware River Port Authority, Amtrak, the Burlington County Bridge Commission, or SEPTA.

  4. Prior service in federal law enforcement agencies may also be used to "reduce" a member's age.

However, no person may be appointed who is over the age of 45 except for those who were involuntarily terminated previously from former employment.

Candidates Who Exceed the Age Limit

Individuals employed by any State or county location, who cannot meet the maximum age requirement for membership in PFRS, must establish membership in Public Employees' Retirement System under the following conditions:

  • Immediately upon being permanently appointed to a position with a Civil Service employer.
  • After serving provisionally in an eligible title for one year with a Civil Service employer.
  • After being employed for one year in temporary position with a Non-Civil Service employer.

Individuals hired by any municipality in an eligible PFRS title who are over age 35 on the date of hire, even after "reductions in age" have been taken into account, cannot establish membership in any State-administered retirement system. Since enrollment in the PFRS is a condition of employment (N.J.S.A. 43:16A-3(1)), these individuals are considered illegal hires.

Volunteer Firefighters and Pension System Eligibility

Police and firefighters must meet stringent age criteria in order to be eligible for enrollment in the PFRS: Those who have passed their 35th birthday cannot be enrolled in the PFRS. Those over the age of 35 who are employees of the State or of a county can still be hired in PFRS titles but are enrolled in the PERS. However, State law prohibits the hiring of municipal police officers and fire fighters over age 35.

There are two exceptions for municipal firefighters:

  1. N.J.S.A. 40A:14-44 allows individuals who are over age 35 in a "part-paid" fire department (some of the department's firefighters are paid, the others are volunteers), to be hired to paid positions up to age 40 as long as they served for at least two years as a volunteer in the same fire department immediately prior to the appointment. They are eligible for enrollment in the PERS, not the PFRS. See the PERS Enrollment Section of this manual for instructions on enrolling these individuals into the PERS.

  2. N.J.S.A 40A:14-56 allows individuals who are over age 35 in a "part-paid" fire department (some of the department's firefighters are paid, the others are volunteers), to be hired to paid positions up to age 45, if they are able to obtain an "Exempt Firefighter Certificate". Obtaining the "Exempt Firefighter Certificate" requires such individuals to meet a number of conditions. For more information, including a list of the conditions that must be met to qualify, and a sample "Exempt Firefighter Certificate", please see the Municipal Volunteer Firefighter Exempt Certificate and Conditions. Please note that individuals who qualify for this exemption are eligible for enrollment in the PERS, not the PFRS. See the PERS Enrollment Section for instructions on enrolling these individuals into the PERS.

Candidates Employed Part-time, under Age 35

"Part-time" officers cannot be enrolled in the PFRS. They were previously enrolled in the PERS if otherwise eligible for PFRS enrollment. Part-time officers employed after May 21, 2010 who work below 35 hours per week at State locations, or 32 hours per week at local government locations, can only be enrolled in the DCRP, not the PERS, as they do not work the number of hours required to qualify for PERS Tier 4 membership.

Candidates Awaiting Permanent Appointment

In accordance with N.J.A.C. 17:2-2.8, employees at Civil Service employing locations, otherwise eligible for enrollment, who are "temporary" or "provisional" pending an examination, must be enrolled in the PERS one year after being employed in the title. Once the candidate has attained permanent (RA) status, the member may be enrolled in the PFRS and may transfer eligible PERS service credit into the PFRS account.

Rate of Contribution

The PFRS employee pension contribution rate is currently 10.0 percent of base salary.

The PFRS contribution rate for Tier 1 members is applied to the full pensionable salary, up to the “federal pensionable maximum” explained below.

The PFRS contribution rate for Tier 2 and Tier 3 members is applied to the pensionable salary up to a compensation limit based on the annual maximum wage for Social Security deductions (see below). Tier 2 and Tier 3 members who earn in excess of the annual compensation limit will be enrolled in the Defined Contribution Retirement Program (DCRP), in addition to the PFRS. A contribution of 5.5 percent of the salary in excess of the limit (plus three percent from the employer) will be forwarded to a DCRP account.

Deductions may begin only when a Certification of Payroll Deductions is received from the Division of Pensions and Benefits.

The PFRS is a "Qualified Pension Plan" - Federal Pensionable Maximum

The PFRS is a "qualified" pension plan under the provisions of the Internal Revenue Code, Section 401(a)(17); therefore, the current federal ceiling on pensionable salary ($250,000 in 2012) applies to the base salaries of Tier 1 PFRS members. Salary earned by a member in excess of this amount is not pensionable; that is, it may not be used in determining member contributions and benefits. Additional information about this topic is available at: History of Pensionable Salary Limits.

Maximum Compensation

For Tier 2 and Tier 3 members enrolled after May 21, 2010, the PFRS contribution rate is applied to the pensionable salary up to a compensation limit based on the annual maximum wage for Social Security deductions ($110,100 for 2012). Tier 2 and Tier 3 members who earn in excess of the annual compensation limit will be enrolled in the Defined Contribution Retirement Program (DCRP), in addition to the PFRS. A contribution of 5.5 percent of the salary in excess of the limit (plus three percent from the employer) will be forwarded to the member's DCRP account.

When a PFRS member also becomes a participant in the Defined Contribution Retirement Program (DCRP), the life insurance and disability benefit provisions of that program will become available for that participant.

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.

Extra Compensation

Extra compensation is not included in base salary. Extra compensation means individual salary adjustments granted primarily in anticipation of retirement or as additional compensation for performing temporary duties beyond the regular workday. Extra compensation includes but is not limited to overtime, bonuses, lump sum longevity, vacation pay, holiday pay, and compensation not included in normal routine paychecks. For more information, see Fact Sheet #56, Creditable Compensation - PFRS.

PFRS Pension Deductions are Tax Deferred

Since January 1, 1987, mandatory pension contributions have been federally tax deferred. Under the 414(h) provisions of the Internal Revenue Code, this reduces a member's gross wages subject to federal income tax.

Purchases of service credit are voluntary pension contributions and are not tax deferred. For a fuller discussion of purchasing service credit, click to the section, "Purchasing Service Credit", in this manual.

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Last Updated: April 16, 2013