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Division of Pensions & Benefits

Pension Loans

Loan Applications Received During Calendar Year 2022

Interest is charged on a loan at a commercially reasonable rate set by the New Jersey State Treasurer. For eligible borrowers, the interest rate for loan applications received in 2022 is 5.75 percent per annum on the declining balance of the loan. An administrative processing fee of $15 per loan also applies.

The interest rate is determined using the Prime Rate (3.25 percent) plus 2.5 percent. The administrative processing fee is set annually and is based on the actual costs associated with administering the pension loan program.

The loan interest rate is fixed annually, so if you borrow in 2022 you will have the same interest rate for the life of your loan unless you borrow again after the 2022 calendar year has ended. Every time a member borrows against their available loan balance, the entire outstanding balance is re-certified for the current year's interest rate.

For more information you may reference the Loans Fact Sheet.

Application Instructions

PERS, TPAF, PFRS, and SPRS members must submit loan requests using the Loan Application program of the Member Benefits Online System (MBOS). Paper loan applications are not accepted except in the following cases:

  • A member has been on a leave of absence without pay or transferred employers within the last six months
  • A member is paid by State supplemental payroll
  • A member's employer is late submitting the Quarterly Report of Contributions
  • If you have established a security freeze on your pension account due to identity theft

In these cases only, a Certified Loan Application may be remitted.

All pension loans are disbursed by Electronic Funds Transfer (EFT), also known as Direct Deposit. Please see our Pension Loan video and Frequently Asked Questions for additional information.

When using MBOS you can determine your eligibility to borrow, the maximum amount you may borrow, and calculate various repayment options. Upon completing the application you will receive confirmation that your Loan Application is received along with the date of your loan disbursement.

  • To register or log in, please visit the MBOS Registration page.
  • For help with MBOS, please visit the MBOS Registration and Login Issues section of our Video Library.
  • For more details on pension loans, please see our Loans Fact Sheet

All loans must be paid in five years.

Current Internal Revenue Service regulations require that all loans taken have a maximum repayment schedule of five years.

If you have an outstanding pension loan balance and plan to take another loan, you must repay the combined balance of the original loan and all subsequent loans within five years of the issuance date of the first loan.

When can I borrow?

You must have at least three years of service credit and contributions posted to your pension account. Pension credit is "posted" to your account on a quarterly basis. It normally takes 45 to 60 days after the end of a quarter for your membership credit to be posted to your account.

You must be an actively contributing member. Only members who are actively working and making pension contributions may take a loan. If you have recently returned to work after a leave of absence without pay or have changed employers within the last six months, you must obtain a loan application from your employer, who must certify the bottom portion of the loan application that you have returned to employment.

How much can I borrow?

The minimum amount you may borrow is $50. Loans then increase in multiples of $10.

You may borrow up to 50 percent of your posted pension contributions, up to a maximum of $50,000. The maximum is calculated by subtracting your highest balance due (without interest) during the prior 12-month period from $50,000. All loans from employer-provided retirement plans add up to the highest value due, including any other government plans sponsored by or administered by a public sector employer in New Jersey. You must indication if you have any additional loans on the MBOS application. Any amount that you receive over the maximum shall be reported to the IRS as a deemed distribution and subject to additional tax.

Number of loans per year

You may borrow twice in a calendar year. This is determined by the date of the loan check, not the date of the request. For example, if you make a request for a loan on December 27, 2019, and the check is dated January 8, 2020, the loan is considered your first for the year 2020.

For more information you may reference the Loans Fact Sheet.

Repayment Amount

The minimum deduction toward repayment of an new loan is equal to the normal pension contribution rate of your salary at the time you apply for the loan. Usually, your minimum loan repayment amount will be the same whether you borrow $500 or $5,000; however, the repayment of a larger loan will continue for a longer period of time that for a smaller loan.

The maximum deduction toward the repayment of your loan is 25% of your base salary.

All loans must be paid in five years.

IRS regulations require that all loans have a maximum repayment schedule of five years.

Multiple Loans

If you take additional loans before the original loan is completely paid off, you must pay them all off by the first five-year end date. If you have an outstanding balance and wish to take another loan before your current balance is paid off, you may still apply for a loan. However, because of the five-year rule, the repayment amount may be much higher. It is also possible that the maximum amount you can borrow may be reduced, or the loan request may be rejected if the payroll deductions would be more than 25 percent of your pay.

Canceling a Loan

If you are not satisfied with the loan amount or the repayment schedule after your loan is disbursed, you can request a repayment figure for the loan balance, plus any accrued interest prior to the end of the regular repayment schedule.

Timely Repayment

IRS regulations require members to make timely payments toward outstanding loan balances. If you take a leave of absence without pay for more than three months, you will be notified of non-payment toward the balance of your outstanding loan and offered the choice of making a lump-sum payment for the balance plus interest, or repayment of the loan in monthly installments through personal billing.

The number of loan payments and the amount of interest due is based on continuous payments. If you are off payroll for any reason and your loan deductions are not taken as scheduled, additional interest will be added. It is important that the NJDPB is notified immediately upon your return to payroll so your loan plus additional accrued interest can be recertified. Failure to notify the NJDPB in a timely manner will cause additional interest to accrue.

Failure to Repay

Failure to repay a loan as scheduled may result in the unpaid loan balance being declared a taxable distribution. If the loan is determined to be in default, the loan will be considered a distribution from your pension account and reported to the IRS. For the tax year in which the default occurs, the NJDPB will send you a Form 1099-R for tax filing purposes in January of the following year.

For more information you may reference the Loans Fact Sheet.

Third Quarter (July to September) 2022

Fund Posting Date
State Police Retirement System (SPRS) November 1, 2022
Legislative Retirement System (LRS) November 1, 2022
Teachers' Pension and Annuity Fund (TPAF) November 14, 2022
Police and Firemen's Retirement System (PFRS) November 9, 2022
Public Employees' Retirement System (PERS) November 15, 2022

Second Quarter (April to June) 2022

Fund Posting Date
State Police Retirement System (SPRS) August 4, 2022
Legislative Retirement System (LRS) August 4, 2022
Teachers' Pension and Annuity Fund (TPAF) August 12, 2022
Police and Firemen's Retirement System (PFRS) August 11, 2022
Public Employees' Retirement System (PERS) August 15, 2022


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Last Updated: Tuesday, 11/15/22