A member's retirement
allowance is based in part on the amount of service credit posted
to the member's account at the time of retirement. It may be beneficial,
therefore, to purchase eligible service credit in order to enhance
retirement benefits or to qualify for certain types of retirement.
Purchasing Service Credit through MBOS Required
Beginning April 1, 2011, all purchase requests must be submitted to the Division of Pensions and Benefits using the Purchase Application program of the Member Benefits Online System (MBOS).
MBOS provides registered members with fast, efficient processing of purchase requests, and members receive immediate confirmation and a follow-up e-mail indicating that the application was received.
Information about MBOS and the online Purchase Application can be found in the MBOS Users’ Guide.
MBOS registration information and instructions are available on the Division's Web site.
Members who need assistance registering for MBOS should be directed to call the MBOS Help Desk at (609) 777-0534 or to send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us
MBOS Purchase Application: Exceptions
Most members are required to process purchase requests through MBOS; however, members cannot use the MBOS Purchase Application for the following types of purchase:
Please note that these are the only circumstances where paper purchase requests are permitted.
Limited access to a computer or a member’s reluctance to use MBOS are not considered sufficient circumstances for accepting a paper purchase request
for processing. Paper Applications to Purchase Service Credit received by mail will not be processed and the member will be mailed instructions on submitting
the request through MBOS.
Who May Purchase
Service Credit?
Only members who have active accounts
in one of the State administered retirement systems are permitted
to purchase service credit. Members may request purchases while
on a leave of absence or after termination, so long as their accounts
have not expired.
Normally, an account is no longer
considered active:
- Two years from the end of a leave
of absence,
- Two years from the date of the
last contribution, or
- 30 days after a retirement date
or board approval date - whichever is later.
Members, who are vested, but inactive
for more than two years, are not permitted to request to purchase
service credit; the Division does not consider these members to
be "active" members. Whether or not vesting has been
achieved, members have two years from the date of the last contribution,
or two years from the end of a leave of absence, to make purchase
requests.
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What Types of Service
Are Eligible for Purchase?
| |
Temporary
Service (PERS, TPAF, and PFRS) |
| |
Leave
of Absence without Pay (PERS, TPAF,
PFRS, and SPRS) |
| |
Leave of Absence for Service with Public Employee Unions |
| |
Former
Membership Service (PERS, TPAF,
PFRS, and SPRS) |
| |
Out-of-state
Service (PERS, TPAF, and
PFRS) |
| |
US
Government Civilian Service (PERS,
TPAF, and PFRS) |
| |
Military
Service before Enrollment (PERS, TPAF, and PFRS)
|
| |
Military Service
after Enrollment (PERS, TPAF, and PFRS)
Please see the Certifying
Officer Letter of November 3, 2000. |
| |
Optional
Service |
| |
Uncredited
Service (PERS, TPAF, and
PFRS) |
| |
Local,
County or Municipal Pension Fund Service (PERS and TPAF)
|
| |
Layoff
Time (PFRS) |
| |
Special
Purchase Situations (PFRS
and SPRS) |
Temporary Service (A Shared
Cost Purchase)
Members of the PERS and the
TPAF are eligible to purchase all or a portion of service credit
for temporary, provisional, or substitute employment if the employment
was continuous and immediately preceded a permanent or regular
appointment.
PFRS members are eligible to purchase
temporary employment, provided the service rendered was in a title
eligible for participation in the PFRS, was continuous, and immediately
preceded a permanent or regular appointment.
In addition:
- PERS, TPAF, or PFRS members are
allowed to purchase temporary service rendered under a former
account.
- Part-time, hourly, and substitute
service may be eligible for purchase and must be certified by
the employer to determine if the service rendered is eligible.
- Service with the Job Training
Partnership Act (JTPA) or any of its successors (i.e., Workforce
Investment Act) are not eligible.
- Intermittent employment may be
eligible for purchase under some circumstances.
Leave of Absence without Pay (A
Shared Cost Purchase)
Members of the PERS, TPAF, PFRS, and SPRS
are eligible to purchase all or any portion of service credit
for official leaves of absence without pay. The amount
of time eligible for purchase also depends on what "type"
of leave was taken.
- Up to 2 years may be purchased
for leaves taken for personal illness;
- Up to 3 months may be purchased
for leaves taken for personal reasons.
Conditions that pertain to the purchase
of eligible leaves of absence:
- To be eligible for purchase, each
leave of absence must be shown to have been approved in advance.
- A leave of absence without pay
under a former membership may be eligible for purchase.
- An employee who is paid 10 months
a year who was on an approved leave that includes the month
of September may be allowed to purchase service for the months
of July and August as part of the leave of absence.
- Employers will now have to certify
the amount of time a member was under a doctor's care for leaves
for personal illness.
- Employees are eligible for up
to 3 months for leave for personal illness for maternity. If
a leave is in excess of 3 months, it must be certified by a
physician that the member was disabled beyond 3 months due to the pregnancy.
- Child care leave is considered
a leave for personal reasons and is limited to 3 months maximum
that is eligible for purchase.
Note: The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.
Leave of Absence for Service with Public Employee Unions (A Full Cost Purchase)
Chapter 368, P.L. 2005, effective on January 12, 2006, permits members of the PERS and TPAF to take paid and unpaid leaves of absence for service with public employee unions and also allows full cost purchases of PERS and TPAF credit for the period of leave. This law applies only to union leaves taken on or after January 12, 2006.
To purchase a leave of absence as a union officer or representative, a PERS or TPAF member must complete and submit all required documents to the Purchase Section of the Division of Pensions and Benefits within 30 days after the quarter ends. For example, the first quarter covers January 1st through March 31st. Therefore, the documents must be received no later than April 30st.
Faliure to submit all required documents according to the prescribed time frame will irrevocably void any eligibility for this quarter under the Leave of Absence - Union Representation Laws.
Required Forms
Authorization to Purchase Service Credit — Union Representation
Employer Verification of Leave of Absence for Union Representation
The law had also provided a one year window to allow members to purchase unpaid leaves of absence taken for service with public employee unions prior to the law's effective date of January 12, 2006. That one-year window is now closed.
Unpaid Union Leaves Taken Prior to the Enactment of Chapter 368
A public employee who had been granted and had taken an approved unpaid leave of absence prior to the effective date of Chapter 368 and who had not received PERS credit for that service, was given up to one year after the law's effective date to purchase that period of previous service credit, in accordance with the guidelines below.
- County, municipal, and State monthly employees were permitted to purchase approved unpaid leave that ended on or before 12/31/2005;
- State biweekly employees were permitted to purchase approved unpaid union leave that ended on or before January 6, 2006.
Employees wishing to purchase prior unpaid leaves for union business were required to submit their purchase request by January 12, 2007.
A member applying for retirement who wishes to purchase a leave of absence without pay for union business were required to submit the purchase request prior to his or her retirement date or Board approval date.
Former Membership Service (A Shared
Cost Purchase)
Members of the PERS, TPAF, PFRS, and SPRS
are eligible to purchase all or a portion of the service credited
under a previous membership (PERS, TPAF, PFRS, SPRS) which has been
terminated after two continuous years of inactivity in accordance
with statute, or by withdrawal of the member contributions made
under such membership.
Special Note: Former Membership Service, SPRS Members
Former membership earned under another State-administered retirement system, such as the PERS, TPAF, or PFRS, may be purchased or transferred for credit in the SPRS, but the service time purchased may not be used to qualify for a SPRS Service or Special Retirement.
In addition, the purchase factors used to calculate the cost of purchasing former membership service under a State-administered retirement system other than the SPRS are different than those used for purchasing SPRS service. See purchase costs for SPRS members below for additional information.
Out-of-State Service (A Shared
Cost Purchase)
PERS, TPAF, and PFRS members are
eligible to purchase up to 10 years of public employment rendered
with any state, county, municipality, school district, or public
agency outside the State of New Jersey, provided the service rendered
would have been eligible for credit in a NJ State-administered
retirement system. This service is only eligible for purchase
if the member is not receiving, or eligible to receive retirement
benefits from the out-of-state public pension fund.
PLEASE NOTE: Effective November 1, 2008, Out-of-State service and US Government service credit cannot be used to qualify for employer paid health care benefits in retirement for members of the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS). The purchase of Out-of-State and/or US Government service may be used to increase a member’s monthly retirement allowance.
US Government Service (A
Full Cost Purchase)
PERS, TPAF, and PFRS members are
eligible to purchase up to 10 years of credit for civilian service
rendered with the US government if the public employment would
have been eligible for credit in a NJ State-administered retirement
system. This service is only eligible for purchase if the member
is neither receiving nor eligible to receive retirement benefits
from the federal government based in whole or in part on this
service.
PLEASE NOTE: Effective November 1, 2008, Out-of-State service and US Government service credit cannot be used to qualify for employer paid health care benefits in retirement for members of the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS). The purchase of Out-of-State and/or US Government service may be used to increase a member’s monthly retirement allowance
Click
here for additional information regarding purchases of service
rendered at American International or Overseas Schools.
Military Service Before Enrollment
(A Full Cost Purchase)
Members of the PERS, TPAF, and PFRS
are eligible to purchase credit for up to 10 years of honorable,
active military service rendered prior to enrollment, provided
the member is not receiving or eligible to receive a military
pension, or a pension from any other state or local source for
such military service.
Military Service after Enrollment
For more information about military
service after enrollment, please see the Certifying
Officer Letter of November 3, 2000, "Military Service After
Enrollment".
For members of the PERS, TPAF, PFRS,
SPRS and JRS 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. More information about this
waiver of interest is available through the link, "Military
Service and the Maximum Rate of Interest on Debts Incurred before
Military Service".
Optional Service (A Shared
Cost Purchase for PERS Members)
A PERS member who served in a position
where enrollment was optional and who elected not to become a
member of the PERS at that time may purchase that public service
for credit under his or her active account. Service from the following
categories may be considered for an "optional service"
purchase:
- Non-veterans hired prior to 7/1/66
or the date the employer adopted the resolution to be covered
under the PERS, whichever is earlier;
- Non-veteran elected officials
provided they have not established membership in the retirement
system through other public employment;
- Only non-veteran State employees
in the classified service on 12/1/54;
- Any part-time school crossing
guard receiving periodic retirement benefits from the federal
government, military or civilian pensions (including Social
Security);
- Any employee receiving periodic
retirement benefits from any other state.
Uncredited Service (A Shared
Cost Purchase)
PERS, TPAF, and PFRS members are
eligible to purchase all or a portion of any regular employment
with a public employer in NJ for which the member does not now
have retirement credit, and for which pension membership would
have been compulsory.
Local Retirement System Service
(A Full Cost Purchase for the PERS and
the PFRS, A Shared Cost Purchase for
the TPAF)
PERS and TPAF members are eligible
to purchase all or a portion of service credit established within
a local retirement system in New Jersey if they were ineligible
to transfer that service to the PERS or TPAF upon enrollment.
This service is only eligible for purchase if the member is not
receiving or eligible to receive retirement benefits from that
public pension fund.
Layoff Service, PFRS (A Full
Cost Purchase)
Under the provisions of Chapter 338,
P. L. 1999, PFRS members in a police title are eligible to purchase
up to three years of layoff time provided they were in good standing
at the time of separation from employment (not released for misconduct
or delinquency).
Along with the application submitted
by the member, the employer will be required to provide the following
information:
- The member's name and PFRS membership
number;
- An indication that the member
is applying for a Chapter 338 purchase;
- An indication that the member
was a police officer in a PFRS position when involuntarily separated
from employment and was not separated for cause or under charges
of misconduct or delinquency;
- A confirmation that the member
is currently in a PFRS police service position; and
- The start and end dates of the
entire layoff period, not just the dates the member wishes
to purchase.
The purchase section will request
this information in the form of a letter.
Additional
Opportunities to Purchase Service Credit
PFRS
If a member has at least 20 years
of service credit in the PFRS and leaves, with the employer's
approval, to accept a full-time position in one of the agencies
listed below, the member may purchase a maximum of three years
of such service upon return to covered employment.
- A federal agency.
- An agency of another state or
local government.
- An organization whose principal
function is offering professional, advisory, research educational
or developmental services to governments or universities concerned
with police management.
SPRS
Former membership under another NJ State-administered
retirement system may be purchased during the current membership.
This service cannot be used to qualify for Service or Special
Retirements. It can be used in the computation of a retirement
allowance on the basis of 1% of final compensation for each year
of such service credit, and for earning benefits in addition to
pension (i.e., 25 years of service credit for SHBP eligibility
in retirement).
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Cost and Procedures
for Purchasing Service Credit
Determining the Cost of Purchase
The cost of a purchase is based on
the member's nearest attained age at the time the Division receives
a purchase request, and the highest reported yearly salary posted
to their account as a member of the retirement system. The cost
of the purchase will nearly always increase with an increase in
the member's age and/or salary.
NOTE: For PFRS purchases
made under the provisions of Chapter 338, the salary the member
was receiving at the time of the layoff will be used to calculate
the cost of purchase.
SPECIAL NOTE, SPRS PURCHASES OF FORMER MEMBERSHIP SERVICE
Two different sets of purchase factors are used to determine purchase costs for SPRS members, depending on the service credit type purchased. One set of factors is used to calculate the cost of purchasing SPRS service, including former membership under the SPRS; another is used to calculate the cost of purchases of former membership service under another State-administered retirement system (PERS, TPAF or PFRS).
At retirement, a SPRS member with former membership service credit under a different retirement system will have his or her retirement allowance calculated in two parts; the former membership service credit (under another retirement system) will be included in the computation of a retirement allowance on the basis of one percent of final compensation for each year of such service credit. Please click here for additional SPRS Retirement information.
Estimating the Cost of Purchasing
Service Credit for PERS and TPAF members
The following types of service credit
may be purchased on a "shared cost" basis: Temporary
Service, Former Membership in a New Jersey State-administered
Retirement system, Unpaid Leaves of Absence, Out-of-state Service,
Optional Service, and Uncredited Service.
A "shared cost" purchase
is one where the total cost is shared equally between the member
making the purchase and the employers across the state. The member
will pay the cost of purchase through payroll deductions ("arrears"),
or by making a lump sum payment, or a combination of both. The
employers will pay their share based upon an actuarial assessment
that depends on the future liability the pension fund will face
given the increased retirement benefit the purchased service will
secure for the member at retirement. The employer share of each
purchase cost will be indexed based upon the relative size of
each employer's workforce.
The following types of service credit
may be purchased only on a "full cost" basis:
Military Service, US Government Civilian Service, and Local Retirement
System Service (PERS).
A "full cost" purchase
is one where the member is responsible for the total cost of the
purchase. There is no employer liability as in a "shared
cost" purchase.
A Purchase Cost Worksheet is
available to members in Fact
Sheet #2: Estimating the Cost of Purchasing Service Credit:
Public Employees' Retirement System and Teachers' Pension and
Annuity Fund.
The formulas used to estimate
the cost of purchasing service credit are reproduced here.
Shared
Cost Purchases
Multiply
the factor corresponding to the age of the member, times the current
annual salary or highest reported fiscal-year's salary as a member
(whichever is higher); this equals the cost of purchasing one
year of service credit.
Multiply
the cost of one year of service credit, times the number of years
the member is eligible to purchase; this equals the total estimated
cost of the purchase.
Full
Cost Purchases
Multiply
the estimated cost of a shared cost purchase by two to obtain
the estimated "full cost" purchase price.
The
Age Factor Table is reproduced here. The cost factors have
been rounded so the actual cost may vary.
Application Process
To apply to purchase service
credit, the member should complete the Purchase Application program of the Member Benefits Online System (MBOS)
Instructions for completing the Purchase Application program using the Member Benefits Online System (MBOS) are available in the MBOS Users' Guide.
The employer may be responsible for completing the Employment
Verification Form.
Click
here for instructions for completing the Employer Verification
Form.
Special Note Regarding Purchases for Unpaid Union Leaves Taken Prior to the Enactment of Chapter 368: A public employee who had been granted and had taken an approved unpaid leave of absence prior to the effective date of Chapter 368 and who has not received PERS credit for that service, had up to one year after the law's effective date to purchase that period of previous service credit, in accordance with the guidelines below.
- County, municipal, and State monthly employees may purchase approved unpaid leave that ended on or before 12/31/2005;
- State biweekly employees may purchase approved unpaid union leave that ended on or before January 6, 2006.
Employees wishing to purchase prior unpaid leaves for union business had to submit their purchase request by January 12, 2007.
Issuance of Quote Letter
and Authorization Form
If the Division of Pensions
and Benefits determines that service credit is eligible for purchase,
a letter quoting the cost to purchase service and an authorization
form will be mailed to the member. In order to authorize the purchase,
the member must complete the authorization form and return it
to the Purchase Section of the Division of Pensions and Benefits
before the date specified on the cost quotation letter —
the member is allowed 90 days from the date of the purchase quote
to authorize the purchase. If a member is not interested in purchasing
service credit, no response is required.
Payment Options
There are several conditions
that may affect the payment options available to a member who
wishes to purchase service credit.
- An actively contributing member
who elects to authorize a purchase of service credit has the
following options to pay for the purchase:
- In one lump-sum payment, or;
- By having extra payroll deductions
withheld from regular pay. The minimum deduction is equal
to one-half of the full rate of contribution to the pension
system over a maximum period of 10 years, and includes interest
of 8.25%*; or
- By paying a single down payment
of any amount, and having the remainder paid through payroll
deductions.
- With a direct
rollover or trustee-to-trustee transfer of tax-deferred funds
from a qualified retirement plan. These include:
- 401(a) qualified plan (including 401(k) plan) and 403(a)
qualified annuity
- 403(b) Tax-Sheltered Annuity Plan
- 457(b) State and Local Government Deferred Compensation
Plan
- IRA with tax-deferred funds
- Traditional IRA
- Simple IRA (must be over 2 years old)
- Simplified Employee Pension Plan (SEP)
- Conduit IRA
- Rollover IRA
Note: The Division cannot accept
rollovers from a Roth IRA or a Coverdell Education Savings
Account (formerly known as an education IRA).
*In the case where members of the
PERS, TPAF, PFRS, SPRS and JRS enter active military service
following enrollment, the member's purchases (or 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. In such cases, 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. (More information about this waiver
of interest is available through the link, "Military
Service and the Maximum Rate of Interest on Debts Incurred before
Military Service".)
- Inactive members who wish
to purchase service credit may only pay for purchases by making
a lump sum payment.
- Members who indicate on their online Purchase Application submitted through the Member Benefits Online System (MBOS) that they intend to terminate membership or plan to retire within six months of the request date
may only pay for purchases by making a lump sum payment.
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Direct Rollover or
Trustee-to-Trustee Transfer of Funds for the Purchase of Additional
Service Credit
It is possible, in
some cases, for PERS, TPAF, PFRS, and SPRS members to pay for
the purchase of additional service credit through a direct rollover
of funds from a qualified retirement savings plan (or through
a trustee-to-trustee transfer).
The types of plans
eligible for direct rollover (or trustee-to-trustee transfer)
include:
- 401(a) qualified plan, including
a 401(k) plan, and a 403(a) qualified annuity
- 403(b) — tax-sheltered annuity
plan
- 457(b) — State and local
government deferred compensation plan
- IRA — with tax-deferred
funds
- Traditional IRA
- Simple IRA (must be over 2
years old)
- Simplified Employee Pension
Plan (SEP)
- Conduit IRA
- Rollover IRA
The Division cannot accept rollovers
from a Roth IRA or a Coverdell Education Savings Account (formerly
known as an education IRA).
Members who are unsure about whether
their plan is eligible for this type of rollover should consult
with the administrator of their financial institution or disbursing
plan.
Members must first receive a Purchase
Cost Quotation Letter from the Division of Pensions and Benefits
before submitting a Direct
Rollover/Trustee-to-Trustee Transfer of Funds for the Purchase
of Additional Service Credit form to implement a direct
rollover of funds for a service credit purchase.
For more information about this method
of payment for a service credit purchase, please click on the
form, Direct Rollover/Trustee-to-Trustee
Transfer of Funds for the Purchase of Additional Service Credit.
Paying off a Purchase
Balance
Written Requests
for the Cash Discount Value of an Arrears Obligation
A member choosing to pay for all
or a part of a service credit purchase through payroll deductions
(payment option #2 or #3 above), may elect
to pay off the balance remaining on the service credit purchase,
with interest, at any time after deductions have been scheduled.
To make a lump sum payment of the service credit purchase balance,
the member must make a request, in writing, for an "arrears
payoff quotation" letter for the cash discount value of the
remaining balance owed.
This written request should be made
to the Adjustment Section, Division of Pensions and Benefits,
PO Box 295, Trenton, NJ, 08625-0295.
According to New Jersey Administrative
Code [N.J.A.C. 17:1-4.1(b)], members may make only one request
for the cash discount value of an outstanding arrears balance,
i.e. the balance on a service credit purchase, in a calendar year.
Cancellation and Prorating of Purchases
Changes to the administrative
code governing the purchase of service credit now allow for the
cancellation and/or prorating of service that has previously been
authorized using periodic payments through payroll deductions.
Cancellations will be processed under
the following conditions:
- The cancellation and prorating
will be projected for the next available payroll certification
date. This will be approximately 1 month for "monthly"
members and 3 pay periods for "biweekly" members.
- The member can choose to cancel
one or all purchases and can specify which purchase types they
wish to have canceled.
Prorating will be performed
under the following conditions:
The member MUST make
the request in writing, by fax, or by e-mail. (Written or faxed
requests must include the signature of the member. E-mail requests
MUST come from an e-mail address that bears the member's
name.)
Requests for service to be prorated
for a specific future date will be accepted, but only from members
who have a retirement application on file.
Requests for service to be prorated
for a specific projected amount of service - in order to qualify
for benefits - will be accepted only from members anticipating
retirement or termination of employment within the next 6 months.
Projected Estimates of Service
Upon request, the Division
will estimate the amount of service credit a member will have
after the purchase is prorated. This will be done ONLY
under the following conditions:
- The Division receives a written,
faxed, or e-mail request from the member.
- Only one request will be honored
from a member per fiscal quarter.
- Only one future date for a prorating
or cancellation will be calculated per request.
Additional Purchase Guidelines
The following items have also
been revised due to changes in the administrative code.
- Outstanding arrears balances will
now accrue interest. A letter will be forwarded to those members
who have left their position for two years or more and still
have an outstanding arrears balance. These members will have
the opportunity to purchase the remaining amount in a lump sum;
however, interest will be added to the arrears balance for the
cost of the purchase if the member returns to employment.
- In the case where members of the
PERS, TPAF, PFRS, SPRS and JRS enter active military service
following enrollment, the member's purchases (or 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. In such cases, 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. (More information about this waiver
of interest is available through the link, "Military
Service and the Maximum Rate of Interest on Debts Incurred before
Military Service".)
- Members paying arrears balances
who have filed for bankruptcy cannot automatically suspend their
payments. Members will be able to cancel the purchase. The member
may also complete a request to purchase the same service credit
again at a later date. A new cost quotation will be subject
to the age, salary, and purchasing rules that apply at the later
date.
IMPORTANT NOTES
- Effective November 1, 2008, Out-of-State service and US Government service credit cannot be used to qualify for employer paid health care benefits in retirement for members of the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS). The purchaseof Out-of-State and/or US Government service may be used to increase a member’s monthly retirement allowance.
- A non-veteran may be eligible
to purchase an aggregate of 10 years of service credit for work
outside New Jersey (Out-of-state, Military, and US Government
Service).
- A member who qualifies as a veteran
may be eligible to purchase an additional 5 years of military
service rendered during periods of war for an aggregate of 15
years of service outside New Jersey (Out-of-state, Military,
and US Government Service).
- When statute specifically provides
that the employer shall not be liable for any costs of the purchase,
the member must pay the full cost. Full cost purchases are the
sole responsibility of the member. Therefore, the cost to the
member for purchasing these types of service will be twice the
cost of other types of purchase.
- To qualify for an Ordinary Disability
Retirement, PERS and TPAF members need 10 years of New Jersey
service; PFRS and SPRS members need four years of New Jersey
service. Therefore, the purchase of US Government, Out-of-state,
or Military Service cannot be used to qualify for this type
of retirement.
- Members may obtain a quotation
of the cost for purchasing additional service credit by submitting
the appropriate Application to Purchase Service Credit
to the Division of Pensions and Benefits (see below for address).
These forms are intended to be available from you, the employer,
or by writing to the Division of Pensions and Benefits at the
address below. With the exception of purchase requests for PFRS
Layoff Time and Military Service after Enrollment, members can
receive an estimate of the cost of purchasing service credit
by calling (609) 292-7524.
- Estimates of the cost to purchase
PFRS Layoff Time and Military Service after Enrollment can only
be obtained through written request to the Division of Pensions
and Benefits.
- The payments a member makes toward
the purchase of service credit are considered "voluntary"
pension contributions according to the Internal Revenue Code
414(h). Therefore, payments made towards a purchase cannot be
considered tax deferred. For additional questions, please refer
to a tax advisor.
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Employer Responsibilities
- After members submit the Application
to Purchase Service Credit using MBOS, the
Purchase Section of the Division of Pensions and Benefits will
send the Employment
Verification Form (PDF)
to the employer, along with a letter indicating the dates that
are being requested. The employer
is responsible for completing the verification form
when required by the Purchase
Section. The form should be completed according to instructions
in order to avoid a delay in processing.
For Example: A
member who is hired in a temporary or provisional status on
February 6, 1995 and is not eligible to be enrolled in the
pension system until February 17, 1996, may request a purchase
quotation of the first year of employment. The Purchase Section
would send a verification form along with a letter to the
employer requesting verification of the member's service prior
to February 17, 1996. The employer should certify the members
hire date, title, permanent appointment date, dates of employment,
and salary.
- The information certified
must be supported by official documentation. In the event that
there is a question regarding the information provided, the
Purchase Section may request a copy of the documentation used
to verify the member's service.
- Board of education locations
are to certify time by school year (Sept. - June), not by calendar
year.
- Once a member has authorized
a purchase, and if payroll deductions are elected, a Certification
of Payroll Deductions will be sent to the employer. The
payments will be scheduled as "arrears" and the schedule
should be followed as certified. If there is already an existing
arrears schedule, it will be automatically combined with the
new purchase payment schedule.*
- Deductions for a purchase
should only be taken upon receipt of a Certification of Payroll
Deductions from the Division of Pensions and Benefits. The
schedule must be followed exactly. The only time the employer
should deviate from the schedule is if the member is on an unpaid
leave of absence.*
- If the member returns from
a leave of absence of less than two years, the arrears schedule
should be picked up automatically. If the leave of absence is
longer than two years, the Division should be notified so that
an updated Certification of Payroll Deductions can be forwarded
to the employer.
*In the case where members of the
PERS, TPAF, PFRS, SPRS and JRS enter active military service following
enrollment, the member's 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. In such cases,
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. (More
information about this waiver of interest is available through
the link), "Military Service
and the Maximum Rate of Interest on Debts Incurred before Military
Service".)
Forms Available
for Downloading:
Purchase requests must be submitted to the Division of Pensions and Benefits using the Purchase Application program of the Member Benefits Online System (MBOS). The paper version of the Application to Purchase Service Credit is no longer available.
MBOS provides registered members with fast, efficient processing of purchase requests, and members receive immediate confirmation and a follow-up e-mail indicating that the application was received.
Information about MBOS and the online Purchase Application can be found in the MBOS Users’ Guide, at:
www.state.nj.us/treasury/pensions/mboskit.htm
Members who need assistance registering for MBOS should be directed to call the MBOS Help Desk at (609) 777-0534 or to send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us
Employment
Verification Form