Pension Retiree Life Insurance: Can You Expect An Increase?

New Jersey offers seven pension funds to government employees, with most being defined contribution plans where employees contribute a fixed percentage of their salary. The three main pension funds are the Police and Fire Retirement System, the Public Employee Retirement System, and the Defined Contribution Retirement Program. These pension systems also provide life insurance benefits, but do New Jersey pension retirees' life insurance benefits ever increase?

Group life insurance benefits

Group life insurance coverage for active employees may be of two types: noncontributory or contributory. Noncontributory group life insurance is provided by the employer through the retirement system and is free for the member. Contributory group life insurance, on the other hand, is coverage for which the member pays a premium through payroll deductions.

When an individual retires, goes on a leave of absence, or terminates their employment, their group life insurance coverage ends after 31 days. However, they may be eligible to convert their coverage to an individual policy.

The Defined Contribution Retirement Program (DCRP) is one of the pension funds available to local municipal employees in New Jersey. The DCRP provides eligible members with a defined contribution retirement benefit, along with life insurance and disability coverage. Employees enrolled in specific retirement systems after certain dates and earning a salary above established "maximum compensation" limits are eligible for the DCRP.

Pension funds for government employees

In the state of New Jersey, there are seven pension funds offered to government employees. Most of these are defined contribution plans, where the employee contributes a fixed percentage of their salary, and the employer's contributions are based on actuary reports.

The three main pension funds available to local municipal employees are:

• Police and Fire Retirement System (PFRS): All police officers and firefighters appointed after June 1944, in municipalities where local police and fire pension funds existed, are required to become members of the PFRS. Certain state and county law enforcement job titles are also covered.
• Public Employee Retirement System (PERS): The PERS is open to state, county, municipal, authority, and school board employees who are not covered by any other NJ state pension system (e.g. teachers, police, state police, judicial).
• Defined Contribution Retirement Program (DCRP): The DCRP provides eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Eligibility for the DCRP includes employees enrolled in the PFRS or State Police Retirement System (SPRS) who earn a salary above the "maximum compensation" limit, as well as employees who do not meet the minimum work hours for PERS or Teachers Pension and Annuity Fund (TPAF) enrollment but earn at least $5,000 annually.

The other four pension funds managed by the state are:

• The Judicial Retirement System (JRS): A defined benefit pension fund established in 1973 for all members of the State Judiciary.
• The State Police Retirement System (SPRS): A defined benefit pension fund for all full-time troopers and officers of the New Jersey Division of State Police appointed after July 1, 1965.
• The Teachers' Pension & Annuity Fund: A pension fund for employees of boards of education and the state who must be certified or credentialed as a condition of employment.
• The Alternate Benefit Program (ABP): A tax-sheltered, defined contribution retirement program for higher education faculty and certain administrators, providing retirement benefits, life insurance, and disability coverage.

The New Jersey Division of Pension and Benefits administers pension and other benefits for most public employees in the state, including teachers, state employees, and employees of political subdivisions that have elected to participate. The Division maintains nine pension plans, with the PERS, Teachers' Pension & Annuity Fund, and PFRS comprising more than 98% of all active members. Assets are managed by the state treasurer.

Pension funds for local municipal employees

In the state of New Jersey, there are seven pension funds offered to government employees. Most of these are defined contribution plans, where the employee contributes a fixed percentage of their salary, and the employer's contributions are based on actuary reports.

The three main pension funds available to local municipal employees are:

Police and Fire Retirement System (PFRS)

All police officers and firefighters appointed after June 1944, in municipalities where local police and fire pension funds existed, or where the PFRS was adopted by referendum or resolution, are required to become members of the Police and Firemen's Retirement System. Certain state and county law enforcement job titles are also covered.

Public Employee Retirement System (PERS)

The Public Employees' Retirement System is open to state, county, municipal, authority, and school board employees who are precluded from any other NJ state pension system (e.g. teachers, police, fire, state police, judicial).

Defined Contribution Retirement Program (DCRP)

The Defined Contribution Retirement Program provides eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage.

Individuals eligible for membership in the DCRP include:

• Employees enrolled in the PFRS or SPRS after May 21, 2010, who earn a salary in excess of established "maximum compensation" limits ($137,700 for 2020).
• Employees enrolled in the PERS or TPAF on or after July 1, 2007, who earn a salary in excess of established "maximum compensation" limits ($137,700 for 2020).
• Employees otherwise eligible to enrol in the PERS or TPAF after May 21, 2010, who do not work the minimum number of hours per week required for PERS or TPAF Tier 4 or Tier 5 enrolment (35 hours per week for state employees or 32 hours per week for local government or local education employees) but who earn a salary of at least $5,000 annually.
• Employees otherwise eligible to enrol in the PERS or TPAF on or after November 2, 2008, who do not earn the minimum annual salary for PERS or TPAF Tier 3 enrolment ($8,4300 in 2020, subject to adjustment in future years) but who earn a salary of at least $5,000 annually.
• State or Local Officials who are elected or appointed on or after July 1, 2007.

In addition to the above, teachers and educational support professionals in New Jersey contribute a percentage of their salary and receive credit for the time they serve public school students in a pension plan that provides a guaranteed income in retirement. This is deferred compensation that members earn as part of their compensation package.

Retirement System Eligibility and Enrollment Information

The State of New Jersey offers seven pension funds to government employees, most of which are defined contribution plans. The three main pension funds available to local municipal employees are the Police and Fire Retirement System (PFRS), the Public Employee Retirement System (PERS), and the Defined Contribution Retirement Program (DCRP). Each fund has specific eligibility requirements that must be met for enrollment.

The PFRS is for police officers and firefighters appointed after June 1944 in municipalities with local police and fire pension funds or where the system was adopted by referendum or resolution. Certain state and county law enforcement job titles are also covered under PFRS.

The PERS is open to state, county, municipal, authority, and school board employees who are not eligible for any other New Jersey state pension system, such as teachers, police, fire, state police, or judicial retirement systems.

The DCRP provides eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Eligibility for the DCRP includes employees enrolled in PFRS or the State Police Retirement System (SPRS) who earn a salary above the maximum compensation limits, as well as employees enrolled in PERS or the Teachers Pension and Annuity Fund (TPAF) who meet similar salary requirements.

The State of New Jersey also offers the Teachers' Pension and Annuity Fund, which is open to employees of boards of education and the state who must be certified or credentialed as a condition of employment. Additionally, the Judicial Retirement System (JRS) is a defined-benefit pension fund for members of the state judiciary.

The Alternate Benefit Program (ABP) is a tax-sheltered, defined contribution retirement program for higher education faculty and certain administrators, providing retirement benefits, life insurance, and disability coverage.

Detailed information about retirement system eligibility and enrollment can be found in the Public Employees' Retirement System Member Guidebook, Legislative Retirement System (LRS) Guidebook Addendum, and other relevant guidebooks and fact sheets on the New Jersey Division of Pensions and Benefits website. These resources provide specific information on enrollment requirements, transfer options, and the steps to consider before applying for retirement.

Post-retirement medical benefits

In New Jersey, retirees who have worked for local, state, or federal government are entitled to certain health benefits. The State Health Benefits Program (SHBP) and School Employees' Health Benefits Program (SEHBP) offer employees and their covered dependents access to a Direct Primary Care doctor's office at no additional cost. This is available as part of the Horizon Blue Cross Blue Shield plans. Direct Primary Care doctors provide a full range of services including preventative, urgent, and sick care, health and wellness coaching, chronic disease management, and care coordination.

The New Jersey Education Association (NJEA) believes that post-retirement medical benefits are an important element of an employee's deferred compensation. On July 1, 2020, Governor Murphy signed the NJEA's long-sought Ch. 78 relief plan into law. This plan, P.L. 2020, ch. 44, lowers the cost of health insurance for school employees while also reducing costs for school districts.

The State Health Benefits Program (SHBP) offers retired group eligibility to qualified retirees from the state, including state colleges and universities, and participating local government employers. SHBP Medicare-eligible retirees can enrol in several Aetna Medicare Advantage plans, including PPO and HMO options. These plans provide access to providers nationwide, with the same benefits in or out of network, and no referrals required.

The New Jersey Division of Pensions and Benefits provides many opportunities to help members with their retirement planning, including information on health benefits for retired members.

Frequently asked questions