Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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Withdrawal from the Retirement System


Introduction

Any member of a State-administered retirement system who terminates covered employment prior to retirement may withdraw the pension contributions in his or her account if certain criteria established by statute are met.  

See Fact Sheet #24, Withdrawal from the Retirement System,  for additional information.

Application for Withdrawal through MBOS Now Required

Effective April 1, 2011, an eligible member who terminates employment and chooses to withdraw from a pension account, must submit the withdrawal application online using the MBOS Application for Withdrawal, which is accessible through a personal account with the Member Benefits Online System (MBOS).

  • The Application for Withdrawal will no longer be available as a printed form or through the Division’s Web site. 
  • Paper Applications for Withdrawal received by mail as of April 1, 2011, will be returned to members with instructions on submitting the withdrawal request through MBOS.

Upon receipt of the online Application for Withdrawal through MBOS (over the Internet), the Division of Pensions and Benefits will refund the contributions of eligible members. Withdrawing members receive interest on their withdrawn contributions at a rate of between two and three percent, but no interest is payable unless the member has at least three years of membership credited to the account at the time of termination.

No interest is credited to accounts of members of the Police and Firemen's Retirement System (PFRS) and the State Police Retirement System (SPRS).

There are no provisions for partial withdrawal.

Instructions for filing a withdrawal claim through the Member Benefits Online System (MBOS) can be found in the MBOS User's Guide.

MBOS registration information and instructions are available on the Division's Web site.

Members requiring assistance registering with or using MBOS should contact the MBOS Help Desk at (609) 777-0534 or send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us

One specific exception allows for the use of the paper Application for Withdrawal:

A limited number of members will not be able to access the MBOS Application for Withdrawal. These are members who have been off payroll for two years or more or whose accounts have been designated as “expired.”

Members with expired accounts can still withdraw their contributions, but must write or send e-mail to the Withdrawal Section of the Division of Pensions and Benefits. Members should include in any correspondence their full name, pension membership number or Social Security number, and current mailing address and e-mail address. Division staff will determine the status of the account and provide additional instructions for completing the withdrawal to the member.

The Division of Pensions and Benefits also offers an Automated Information System at (609) 292-7524 for general withdrawal information, or information pertaining to an individual withdrawal claim.

Inactive Membership

Any member who resigns may leave the accumulated contributions with the pension system and continue on an inactive status for a period of up to two years. Interest is credited to the account if the member had at least three years of service credit during this period of membership (except for PFRS and SPRS members, whose accounts will not accrue interest). After the two-year inactive period, the account is considered expired.

Prior to the completion of the two-year inactive period, the Division of Pensions and Benefits will send both the member and the employer an Expiration Notice. A copy is sent to the former employer in case the employer has a current address for the member. The employer is asked to forward the notice since failure to notify the employee may jeopardize the member's eligibility for retirement benefits, if any.

Once an account has expired, the contributions and accrued interest will remain in the expired account until the Withdrawal Section of the Division of Pensions and Benefits receives a written request for the amount of the expired account from the member. Members should include in any correspondence their full name, pension membership number or Social Security number, and current mailing address and e-mail address.

The Division's staff will determine the status of the account and provide additional instructions to the member for completing the withdrawal. Additional Interest will not accrue on expired accounts.

Instructions for filing a withdrawal claim through the Member Benefits Online System (MBOS) can be found in the MBOS User's Guide. Members with additional questions should contact Client Services at the Division of Pensions and Benefits, at (609) 292-7524.

Extension of Inactive Membership Period and Leave of Absence

An employee’s membership will not end two years after his or her last contribution if he or she is granted an official leave of absence (the two-year period begins at the end of the leave of absence). 

If a member's employment is terminated through no fault of the member (e.g., abolishment of the position, layoff, reduction in force), the inactive period will be extended for an additional eight years for members of the PERS and TPAF (total of 10), and an additional three years for members of the PFRS (total of five).

Please note that extensions are not automatic.

Documentation from the employer showing that the leave of absence was extended or that the termination was not voluntary must be submitted to the Division of Pensions and Benefits. The extension of inactive status up to ten years only gives the member the right to start contributing to the retirement system, should they once again obtain PERS/TPAF employment; it gives the member no other rights or benefits.

In the event an account does not become active within ten years, the member will be notified in writing concerning the date that his or her account will expire.

Workers' Compensation and Withdrawal

Under the provisions of the statutes as interpreted by court decisions, pension contributions are made if the employee is awarded Workers' Compensation benefits. An employer is required to make pension contributions on behalf of an employee receiving periodic payments based on temporary or permanent Workers' Compensation awards.  (See Fact Sheet #45, Workers' Compensation.) The voluntary resignation or retirement of an employee receiving any kind of Workers' Compensation frees the employer from pension contributions on behalf of the member.

Employer Responsibilities: General Notes

It is the employer's responsibility to complete the Employer's Certification for Withdrawal when a member applies for a withdrawal. Additional instructions and a sample of the required Certification is provided below.

The employer should contact the Division of Pensions and Benefits if any inactive employee returns to covered employment within the two-year period or before the account is expired. The account will be reactivated at the same rate of contribution and service credit. The period during which the member was inactive constitutes a break in service.

In the event that an employee is dismissed from service, a withdrawal claim cannot be paid if the member is appealing the dismissal. The State Merit System Board is contacted when a member covered by the merit system is dismissed. If an appeal has been filed, the withdrawal is not paid until the appeal has been settled and the status of the employee is clarified.

An employer is required to make pension contributions on behalf of an employee receiving any kind of Workers' Compensation. The voluntary resignation or retirement of an employee receiving any kind of Workers' Compensation frees the employer from pension contributions on behalf of the member.

An employer is also responsible for making pension contributions on behalf of the employee who is on a Military Leave of Absence when the employee returns to service, under the prescribed time frames of USERRA.


 
 

Sample Employer's Certification for Withdrawal

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Instructions for Completing the Employer's Certification for Withdrawal

The Employer's Certification for Withdrawal is to be filled out by the former employer after the member has terminated employment.  Forms completed in advance of termination of employment will not be accepted.  The Employer's Certification for Withdrawal must be completed in its entirety or the claim cannot be processed.

If the employee is a participant in Supplemental Annuity Collective Trust (SACT) or New Jersey State Employees Deferred Compensation Plan (Deferred Comp), and is choosing to withdraw all accumulated salary deductions in the retirement system, a separate application to withdraw from these funds must also be filed with the Division of Pensions and Benefits.

Member Information

The employer first completes the basic member information requested: name, membership number, Social Security number.

Cause and Date of Termination

The certification begins with a statement of the cause (resignation, dismissal with no appeal, dismissal with appeal), date of termination and date of last deduction.  Even if the employee terminated employment years ago, these items still must be completed for the withdrawal application to be processed. 

Workers' Compensation Claim

The question concerning periodic benefits under a claim filed for Workers' Compensation must be answered because it may have pension consequences that affect withdrawal.  Lump sum awards under Workers' Compensation need not be listed because they have no effect on an Application for Withdrawal.

The Certification of Salary Deductions

This section need only be completed if there are recent salary deductions that have not been posted to the member's account. State biweekly employing agencies who use Centralized Payroll need to attach a screen print from Centralized Payroll History or complete a Supplemental Biweekly Certification of Employing Agency

Generally, it takes approximately 45 days from the end of a calendar quarter for all member contributions to be posted to their pension accounts. Therefore, if you are completing a certification for a withdrawal application on behalf of a member who has been off payroll sufficiently long for all deductions to be posted on account, this section need not be completed.

Signature by Certifying Officer

The Certifying Officer must sign and date the certification, listing the name and phone number of the employing agency.

Please be certain to submit this form as quickly as possible.  Any delay in submitting this form will prevent the Division from paying the member's claim for withdrawal in a timely manner.

 

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Last Updated: March 25, 2013