Chapter 133, P.L. 2001, effective October 1, 2001, changed
the formula used in the retirement allowance calculations for
members of the PERS and the TPAF who are eligible for Early, Service,
or Deferred Retirement; or for a Veteran Retirement with 35 years
of service.
The number of years of a member's years of service is divided
by 55 now, instead of by 60, the formula's denominator prior to the effective date of Chapter 133. The resulting fraction is multiplied by the Final Average
Salary or three Highest Fiscal Years Salary average. (For a Veteran
Retirement with 35 or more years of service, the resulting fraction
is multiplied by the Final Year's Salary.) This new formula yields
a higher Annual Maximum Allowance. When this Annual Maximum Allowance
is divided by 12, the result is a higher monthly pension allowance.
Those members who retired from
the PERS or TPAF prior to the passage of this law with a Service,
Early, or Deferred Retirement; or a Veteran Retirement with 35
years of service, have also received an enhanced benefit, in the
form of a 9.09 % increase, beginning with their November 2001
retirement check.
Members eligible for a Veteran Retirement
with 35 years of service can now retire at the minimum age of
55 instead of 60. Scroll down this page to learn more about the
specifics for each type of retirement; or click on the type of
retirement you want to learn more about from the list at the top
of the page.
Another law, Chapter 353,
P.L. 2001, also effective on October 1, 2001, changed the
formulas used in the retirement allowance calculations for PERS
and TPAF members who retire with an Ordinary Disability Retirement
or with an Accidental Disability Retirement. It brought about a formula
change in the calculation of benefits for both PERS and TPAF members
retiring with a Special Veteran Retirement. This law also changed
the conditions under which a member of the PERS can retire with
a Special Veteran Retirement. Finally, this law increased by
nine percent the monthly pension allowance of those who had retired
under these types of retirement prior to October 1, 2001; beneficiaries
of retired members who have passed away prior to the effective date
of this law will in most cases receive this nine percent increase
as well.
An Ordinary Disability Retirement
benefit for a PERS or TPAF member who qualifies will be calculated
using 43.6 percent of the Final Average Salary or the three highest
fiscal years' salary average.
An Accidental Disability Retirement
benefit for a PERS or TPAF member who qualifies will now be calculated
using 72.7 percent of the actual annual compensation at the time
of the accident.
PERS members can now retire at age
60 with 20 years of service, or at age 55 with 25 years of service,
as was already the case for members of the TPAF. The formula for
PERS and TPAF members who retire with the Special Veteran
Retirement will now be calculated by taking 54.5 percent of the
last or highest year's salary.
Finally, this new law calls for those
PERS and TPAF members who had retired prior to its effective date,
and their beneficiaries who are receiving a monthly benefit, to
receive a nine percent increase in their monthly pension allowance.
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Pension
Allowance Formula for a Service Retirement
Years
and Months of Service/55 X *FAS = Annual Maximum
Annual Maximum/12 = Maximum Monthly Pension Allowance
A member
qualifies for this type of retirement with any number of years
of service, as long as the member has reached age 60.
*FAS stands
for Final Average Salary. The Final Average Salary is the average
of the last 36 months of pensionable salary (or 30 months for
members under ten month contracts). The average of the member's
highest three fiscal years of salary can be used in place of the
FAS; fiscal years do not have to be consecutive.
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Pension
Allowance Formula for an Early Retirement
Years and Months
of Service/55 X FAS* = Annual Maximum
Annual Maximum/12
= Monthly Pension Allowance
*FAS stands for Final Average Salary.
The Final Average Salary is the last 36 months of pensionable
salary (or 30 months for members under ten month contracts). The
average of the member's three highest fiscal years of salary can
be used in place of the FAS; fiscal years do not have to be consecutive.
Early Retirement can be selected
by PERS and TPAF members who have at least 25 years of service
and are under age 60. The member's Pension Allowance is reduced
if the member is under 55 years of age, by a factor of .025% for
each month under age 55.
Revised Early Retirement Benefit for Employees Enrolled on or after July 1, 2007: Under Chapter 103, P.L. 2007, for members enrolled on or after July 1, 2007 who retire with 25 or more years of service before reaching age 60, the retirement allowance will be reduced 1% per year (1/12 of 1% per month) for each year the member is under age 60 through age 55; and by 3% per year (1/4 of 1% per month) for each year the member is under age 55.
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Pension
Allowance Formula for a Deferred Retirement
Years and Months
of Service/55 X *FAS = Annual Maximum
Annual Maximum/12
= Monthly Pension Allowance
*FAS stand
for Final Average Salary. The Final Average Salary is the last
36 months of pensionable salary (or 30 months for members under
10 month contracts). The average of the member's three highest
fiscal years of salary can be used in place of the FAS; fiscal
years do not have to be consecutive.
The member
must have ten years of service credit in order to choose a Deferred
Retirement; the monthly retirement allowance is paid beginning
on the first of the month after the member turns 60 years old.
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Pension
Allowance Formula for a Veteran Retirement with 35 Years of Service,
PERS and TPAF
Years and Months
of Service/55 X *Highest Year's Salary = Annual Maximum
Annual Maximum/12
= Monthly Pension Allowance
*The Highest Year's Salary is the
highest 12 months of salary on which contributions to the pension
system were made. For a ten month contract, the highest ten months
of salary are used.
Those members who qualify as Veterans
with 35 years of service receive an additional benefit due to
this legislation. They may now retire from the PERS or the TPAF
at the age of 55, with their pension based on the formula as stated
above.
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Veteran Retirement
from the Teachers' Pension and Annuity Fund and the Public
Employees' Retirement System at Age 60 with 20 Years of Service
54.5% X Highest 12
Consecutive Months of Salary* = Annual Maximum
Annual Maximum/12
= Monthly Retirement Allowance
*The highest ten consecutive months
of salary are used for members working under a ten month contract.
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Veteran Retirement
from the Public Employees' Retirement System and Teachers' Pension
and Annuity Fund at Age 55 with 25 Years of Service
54.5% X Highest 12
Consecutive Months of Salary* = Annual Maximum
Annual Maximum/12
= Monthly Retirement Allowance
*The highest ten consecutive months
of salary are used for members working under a ten month contract.
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Veteran Retirement
benefit from the Public Employees' Retirement System at Age 62
with 20 Years of Service
Veterans
of the PERS can now retire at age 60 with 20 years of service,
or at age 55 with 25 years of service, as called for under the
new law. See the formulas above for more information.
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Ordinary Disability
Retirement
43.6% X Final Average
Salary* = Annual Maximum
OR
1.64 X Years of Service
X FAS*
*FAS stand for Final Average Salary.
The Final Average Salary is the last 36 months of pensionable
salary (or 30 months for members under ten-month contracts). The
average of the member's three highest fiscal years of salary can
be used in place of the FAS; fiscal years do not have to be consecutive.
The member must be totally and
permanently disabled from carrying out normal job duties to qualify
for an Ordinary Disability. The application must be made within
two years of the date of termination, and the member must have
a minimum of ten years of New Jersey service credit. Out-of-state,
military, and federal government purchases do not qualify as New
Jersey service credit.
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Accidental Disability
72.7% X Salary at
the Time of the Accident = Annual Maximum
Annual Maximum/12
= Monthly Retirement Allowance
To qualify for an Accidental Disability,
the member must be determined to be Totally and Permanently Disabled
as a Direct Result of a Traumatic Event while performing the member's
normal job duties. The member must be enrolled in the PERS or
TPAF on or before the accident date.
If you would like more information
on processing retirement applications for any of the types of
retirement please go to Retirements.