For members of the State-administered
retirement systems listed below who enter active military service
following enrollment, purchases, loans, back deductions or other
obligations to the retirement systems incurred prior to active military
service shall not bear interest at a rate exceeding 6%, for the
entire duration of the member's active military service. Interest
in excess of 6% per year will be waived.
Members of the following New Jersey
State-administered retirement systems are affected:
- Public Employees' Retirement System
(PERS)
- Teachers' Pension and Annuity
Fund (TPAF)
- Police and Firemen's Retirement
System (PFRS)
- State Police Retirement System
- Judicial Retirement System
In order for a member to have the
interest in excess of 6% per year waived on purchases, loans,
back deductions or other obligations to the above retirement systems:
- The member must request, in writing,
that the purchase, loan, back deduction or other obligation
be subject to the interest rate limitation.
- The request must include a copy
of the military orders calling the member to military service
and any orders further extending military service, and
- The request must be received by
the Division of Pensions and Benefits within 180 days after
the date of the member's termination or release from military
service.
Active military service qualifying
for the waiver of interest in excess of 6% per year shall also
include periods of service in the National Guard under a call
to active service authorized by the President, the Governor, or
the Secretary of Defense, for a period of more than 30 consecutive
days.
For members meeting the above
requirements, the interest on purchases, loans, back deductions
or other obligations must be recalculated, using the 6% rate for
the period of time corresponding to the period of active military
service, and a new certification of deductions would then be produced.
(Of course, in cases where the interest rate for an obligation
is already lower than the 6% maximum, there is no change in interest
rate, and a new certification of deductions is not needed.)
For example, if a State-administered
retirement system member is on active duty for one year and has
a purchase outstanding with an interest rate of 8¾%, then
the interest on the purchase would be reduced to 6% for a one
year period. The repayment schedule would be recalculated based
on the reduction in the interest rate.
This waiver of interest outlined
above is in accordance with the Soldiers' and Sailors' Civil Relief
Act of 1940 (50 U.S.C. App. 501 et seq.) Section 207, as amended
by the Service Members Civil Relief Act of 2003, which requires
that the interest rate on debts incurred before entering active
military service not exceed 6% during the period of active military
service, and the interest in excess of 6% be waived.