Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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Enrolling in the Teachers' Pension and
Annuity Fund (TPAF)


     
  Required Employer Training, Enrollment Procedures  
 

Eligibility

 
  Membership Tiers  
  Minimum Salary for Tier 3  
  Maximum Compensation Limit for Tier 2,Tier 3, and Tier 4  
  Minimum Weekly Hours for Tier 4  
 

Eligible Titles

 
 

Non-Eligible Titles

 
   
  TPAF Enrollment through EPIC  
   
  Beneficiary Designation  
   
   
    The TPAF is a "Qualified" Pension Plan  
    TPAF Contribution Rates Are Tax Deferred  
    Temporary Reductions in Employee Contribution Rate (Historical)  
   
   
   
     

Employer Training

Effective June 19, 2011, 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.

Eligibility

Any permanent employee working as a teacher or member of a professional staff, certificated by the State Board of Examiners, serving in an eligible title, and earning the minimum salary per year and working the minimum hours per week required for the membership tier applicable to their enrollment date, is required to become a member of the TPAF as a condition of employment. 

Membership Tiers

TPAF members are now classified by enrollment date, as four laws, Chapter 92, P.L. 2007, Chapter 103, P.L. 2007, Chapter 89, P.L. 2008, and Chapter 1, P.L. 2010, make the eligibility requirements for TPAF enrollment and retirement different for four distinct enrollment periods. The “membership tiers” by enrollment date are:

  • Tier 1 Membership, for members who were enrolled prior to July 1, 2007.
  • Tier 2 Membership, for embers who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008.
  • Tier 3 Membership, for members eligible to enroll on or after November 2, 2008 and on or before May 21, 2010.
  • Tier 4 Membership, for members enrolled after May 21, 2010 but before June 28, 2011.
  • Tier 5 Membership, for members eligible to enroll on or after June 28, 2011.

Specific Eligibility Requirements, by Tier

Earnings, Tier 1 and Tier 2 Eligibility

Employees who are eligible for Tier 1 or Tier 2 membership based on their enrollment date must also earn an annual salary of $500 or more.

Earnings, Tier 3 Eligibility

Employees who are eligible for Tier 3 membership based on their enrollment date must also earn a salary that meets or exceeds the minimum salary set for the current calendar year (subject to future adjustment).

The Tier 3 minimum annual salary for calendar year 2012 is $7,800 ($7,700 for 2010 and 2011; $7,500 for 2008 and 2009).

Minimum Weekly Hours Worked, Tier 4 and Tier 5 Eligibility

Employees who are eligible for Tier 4 and Tier 5 membership based on their enrollment date must work at least the minimum number of hours per week required for enrollment (32 hours per week for State education or local education employees).

PLEASE NOTE: Employees who qualify for Tier 4 and Tier 5 enrollment in all respects except for minimum number of hours, or for Tier 3 enrollment in all respects except for minimum salary, may be eligible for enrollment in the Defined Contribution Retirement Program (DCRP), if they earn a salary of at least $5,000 annually.

Maximum Compensation Limit, Tier 2, Tier 3, Tier 4, and Tier 5 Membership

Likewise, employees enrolled in Tier 2, Tier 3, Tier 4, and Tier 5 of the TPAF (or PERS) on or after July 1, 2007 who earn a salary in excess of the established “maximum compensation” limit, may be eligible for enrollment in the Defined Contribution Retirement Program (DCRP) for that portion of their salary which exceeds the maximum compensation limit. The maximum compensation limit is based on the annual maximum wage for Social Security, which is set at $110,100 in calendar year 2012 (was $106,800 for 2010 and 2011). This amount is subject to change at the start of each new calendar year.

This means that a new employee who is enrolled in the TPAF on or after July 1, 2007, and who earns in excess of $110,100 before the end of 2012 will have his or her TPAF base salary capped at that amount, limiting the amount used to calculate benefits and contributions to TPAF for pension or contributory insurance. For calendar year 2012, the annual maximum wage for Social Security is $110,100, which also represents the maximum compensation limit under the TPAF.

Note: The (TPAF and PERS) maximum compensation limit does not apply
to Tier 1 employees, that is, those who were already members of the PERS or TPAF prior to July 1, 2007.

Additional Eligibility Requirements

Employees appointed to positions requiring certification by the New Jersey Department of Education as members of the regular teaching or professional staff of a public school system in New Jersey are required to enroll in the TPAF as a condition of employment.

Employees of the Department of Education holding unclassified, professional, certificated titles are also eligible for TPAF membership.

To qualify for TPAF enrollment, an employee must also earn the minimum annual salary required for enrollment and according to the employee's enrollment date/tier as outlined above. To qualify for Tier 4 TPAF enrollment after May 21, 2010, the member must also work at least 32 hours per week.

As a general rule, if a job is a permanent, regularly budgeted position requiring State certification, and the employee possesses the required State certification, the person will be eligible for enrollment in the TPAF (as long as the annual minimum salary for the applicable membership tier is attained, and for Tier 4 enrollment now in effect, the minimum weekly hours are worked).

Temporary and substitute teachers are not eligible for TPAF membership, nor are replacement teachers, except for replacement teachers who are taking the place of someone on terminal leave; however, they may be eligible for PERS enrollment or DCRP enrollment.

Prior to May 21, 2010, Chapter 24, P.L. 1986 had eliminated the full time requirement for participation in the TPAF. From 1986 to May 21, 2010, part-time teachers were enrolled in the TPAF. However, effective May 21, 2010, a minimum of 32 hours per week must be worked in order to be eligible for TPAF enrollment.

Click here for a listing of some of the more common TPAF-eligible titles.

TPAF Enrollment Online through EPIC — New Employees

An employer must log on to the Employer Pensions and Benefits Information Connection, or EPIC, and complete the online TPAF Enrollment Application in order to enroll a newly hired employee in the Teachers' Pension and Annuity Fund, or TPAF.*

However, if the newly hired employee is transferring into the TPAF from another State-administered retirement system, such as the PERS or PFRS, the printed version of the PERS/TPAF Enrollment Application, along with a fully completed Interfund Transfer Form, can be submitted (see below).

At the time of enrollment, the employee's estate will automatically be designated as beneficiary for any death benefits payable. Please see the "Beneficiary Designation" section below for more information, including how a member can change his or her beneficiary information once enrolled.

*To sign up for EPIC at this time, please view the EPIC Registration Information page. For help in completing the online TPAF Enrollment Application through EPIC, please refer to the EPIC User's Information Guide.

Required Forms for Interfund Transfers

When someone accepts new employment requiring his or her transfer into the Teachers' Pension and Annuity Fund from another State-administered retirement system, like the Public Employees' Retirement System or Police and Firemen's Retirement System, the following two forms can be submitted to the Division of Pensions and Benefits:

However, if the fully completed Application for Interfund Transfer cannot be obtained from the member's former employer in a timely manner, the new employer is encouraged to complete the online TPAF Enrollment Application. The Application for Interfund Transfer can be submitted and processed at a later date.

Employers are reminded to enroll all newly hired employees into the Teachers' Pension and Annuity Fund promptly, so that the Division of Pensions and Benefits can process the enrollment in a timely manner. 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.

Employees wishing to change the beneficiary designation of "estate" which automatically took effect at enrollment can update their beneficiary information in one of two ways:

  1. They may either register with the Member Benefits Online System (MBOS) to use MBOS Beneficiary Designation application to designate beneficiaries, or;

  2. They may complete and submit a printed Designation of Beneficiary form.

Either method may also be employed for subsequent updates of beneficiary information prior to retirement.

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.

Members wishing to sign up for MBOS at this time should be directed to the "MBOS Registration Information" page, at: http://www.state.nj.us/treasury/pensions/mbosregister.shtml

If the member does not complete the Designation of Beneficiary form or designate pension and group life insurance beneficiaries online through MBOS, the estate of the newly enrolled member will remain 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.

Members wishing to update their beneficiary information at any time must either submit a new Designation of Beneficiary form, or use the MBOS "Designation of Beneficiary" application to make the changes.

Non-eligible Titles

Non-eligible titles for the TPAF include replacement teachers (except those replacing teachers on terminal leave), substitute teachers, and long term permanent substitutes. However, in many cases, these titles are eligible for PERS membership, as long as all other PERS eligibility requirements are met, or DCRP membership, if all other DCRP eligibility requirements are met.

Replacement teachers are eligible for PERS enrollment after one year; however, replacement teachers taking the place of teachers on terminal leave are eligible for TPAF membership, as long as all other TPAF member eligibility requirements are met.

Long-term substitutes are eligible for PERS enrollment on the date of hire.

Generally, non-certificated professional personnel are not eligible for membership in the TPAF.

Employees whose job titles focus on serving in supporting capacities to classroom teachers (e.g., teachers aides, classroom assistants), clerical and maintenance staff, and most non-certificated administrative positions are not eligible for membership in the TPAF, but may be eligible for PERS membership if PERS eligibility requirements are met, or DCRP membership if they earn $5,000 or more annually and all other eligibility requirements are met.

Seasonal employees are not eligible for membership in any NJ State-administered retirement system.

Temporary teachers are also not eligible for membership in the TPAF — but may be eligible for PERS membership after one year, or DCRP membership.

Reenrollment Now Required for Interim Appointments of Retired TPAF Members — Repeal of the "Six Month Rule"

Prior to November 3, 2003, local school boards were permitted to appoint a retired Teachers' Pension and Annuity Fund (TPAF) member to any TPAF-covered position on an interim basis — for up to six months — without affecting the individual's retirement allowance, under the rule N.J.A.C. 17:3-2.6.

On October 2, 2003, the Teachers' Pension and Annuity Fund Board of Trustees repealed this rule. Effective November 3, 2003, any retired member of the TPAF — except for those who fall under the reenrollment exemption for certificated administrators and superintendents — who is employed or accepts employment in a TPAF-covered position, must reenroll in the TPAF.

If the reenrolling TPAF member is over age 60, the member must prove insurability for active Non-contributory and Contributory Group Life Insurance coverage. Upon reenrollment, the member's retirement allowance and any benefits associated with that retirement would be suspended until the member retires again.

Certificated administrators and superintendents are permitted to take TPAF-covered positions on an interim basis without reenrolling in the TPAF under statute N.J.S.A. 18:66-53.2, so they are not affected by the rule repeal explained above.

For a fuller discussion of post-retirement TPAF employment issues, see the TPAF Employment after Retirement section of this manual, or see Fact Sheet #28, Employment after Retirement.

Contribution Rate

The TPAF's full rate of contribution is established by the legislature by enacting or amending pension law.

The TPAF employee pension contribution rate is at 6.5 percent, but under Chapter 78, P.L. 2011, which took effect on June 28, 2011, the TPAF contribution rate will be increased to 7.5 percent in phases. Refer to the timetable outlined below.

Beginning in July 2012, an additional increase will be phased in over the next seven years, bringing the total pension contribution rate to 7.5 percent of salary.

Contribution Rate Increase to 7.5 Percent

Beginning in July of 2012, an additional employee contribution rate increase will be phased in over a 7-year period, bringing the total pension contribution rate to 7.5 percent of salary.

The contribution rate will increase by 0.14 percent each year, with the first payroll of July 2012 until the 7.5 percent contribution rate is reached in July of 2018, according to the chart below; please note that a 0.16 percent increase will occur in July of 2018:

Month-Year
Contribution Rate
July 2011
6.50 percent
July 2012
6.64 percent
July 2013
6.78 percent
July 2014
6.92 percent
July 2015
7.06 percent
July 2016
7.20 percent
July 2017
7.34 percent
July 2018
7.50 percent (a 0.16 percent increase)

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

The TPAF contribution rate for Tier 2, Tier 3, Tier 4, and Tier 5 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, Tier 3, Tier 4, and Tier 5 members who earn in excess of the annual compensation limit will be enrolled in the Defined Contribution Retirement Program (DCRP), in addition to the TPAF. 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.

The TPAF is a Qualified Plan - Federal Pensionable Maximum Salary

The TPAF 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 TPAF Tier 1 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. For more information about this topic, please see the History of Pensionable Salary Limits section of this manual.

Maximum Compensation

Chapter 103, P.L. 2007 imposes a maximum compensation upon which contributions will be made for employees who become PERS or TPAF members on or after July 1, 2007 (Tier 2, Tier 3, Tier 4, and Tier 5 TPAF members). The maximum amount will be the amount of base or the contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act.  For 2012, that amount is $110,100. 

A new TPAF member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program, unless the member waives participation when first eligible. The member is permitted to elect to participate at a later time, with such election effective on the January 1 following a request to participate.

In such casses, 5.5 percent of the amount earned over the maximum compensation will be deducted as a contribution for the purposes of the DCRP.

When a TPAF member also becomes a participant in the Defined Contribution Program, the life insurance and disability benefit provisions of that program will be available for that participant.

All voluntary pension deductions (loan repayments, purchases) are based upon the full or normal pension rate. This will not change regardless of any temporary reductions granted for normal pension and back deductions.

Reductions in the employee pension contribution rate are considered temporary reductions. Therefore, the regular pension deduction certifications for new employees would continue to reflect the full or normal rate when such reductions occur. Any changes in deduction rate must be certified by the Division of Pensions and Benefits.

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.

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 and tax implications, see the Purchase Section of this manual.

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Last Updated: July 1, 2014