Date: July 29, 2011
To: All Employees
From: Vivian Fernández
Vice President Faculty and Staff Resources
Subject: Pension and Health Reform

As many of you may be aware, Governor Christie signed Chapter 78, P.L. 2011 into law, effective June 28, 2011. This law will result in significant changes to certain provisions of the State-administered retirement systems, and to the State Health Benefits Program (SHBP). In order to assist you in assessing the impact of these changes, UHR has developed the Pension and Health Reform webpage which provides detailed information for affected employee groups. We also have created the SHBP Employee Health and Prescription Premium Calculator to help you determine your future health premiums. I encourage you to take the time to review this important information. In addition, UHR will be conducting information sessions for employees on all three campuses. We will be providing the locations and dates of these sessions in a future communication.

Pension Reform

The law has modified the employee contribution rate and retirement benefit for the two Defined Benefit pension plans offered to Rutgers Employees, the Public Employees Retirement System (PERS) and the Police and Fireman’s Retirement System (PFRS).

  • Public Employees Retirement System (PERS) pre-tax employee pension contribution will increase from 5.5% to 6.5% effective in the October 14, 2011 pay period. The employee pre-tax pension contribution rate will have additional increases over a seven year period until the employee contribution rate is 7.5% of the base contractual salary.
  • Police and Fireman’s Retirement System (PFRS) pre-tax employee contribution will increase from 8.5% to 10% effective in the October 14, 2011 pay period.
  • The legislation does not affect employees in the Alternate Benefits Program (ABP).

Health Benefits

Current Employees
Currently, employees who participate in the State Health Benefits Program (SHBP) contribute 1.5% of their base salary toward health insurance and/or prescription regardless of the level of coverage. The new law introduces a sliding fee scale premium structure for the SHBP medical and prescription plans which will be phased in over a four year period for current employees. Under the new law, if an employee’s current contribution rate is higher than what they would pay with the new premium structure, the employee will continue to contribute 1.5% of base salary until such time that the new premium exceeds the 1.5% contribution rate. Please note that under no circumstances will the SHBP contribution rates be reduced as a result of this change in premium contribution structure.

Changes in SHBP premium contributions are tentatively set to be in effect by the last pay period in October. We will notify you of the exact date as soon as more information is available.

Employees Hired on or After June 28, 2011
Information regarding health plan contributions for new employees hired on or after June 28, 2011, will be forthcoming.

Retirement Benefits Eligibility
Employees who have attained 25 years or more of pension service credit on or before the passing of the law on June 28, 2011 are grandfathered for retiree health based on the date they attained 25 years of pension service credit.

Employees with 20 or more years of pension service credit on or before the June 28, 2011 are also grandfathered providing that they have 25 or more years of pension service credit at the time of retirement.

Useful Resources

The SHBP Employee Health and Prescription Premium Calculator has been developed for you to easily obtain an estimate of what your new SHBP premium will be from the commencement of the new premium structure until June 30, 2015.

The 2011 Pension and Health Reform FAQs provides additional information regarding the pension and State Health Benefits Program (SHBP) changes.

The NJ Division of Pensions and Benefits is in the process of implementing the provisions of this law and providing information to the state employers. Any additional information regarding the changes will be communicated as soon as it is provided to Rutgers University by the state.

If you have any questions regarding the pension and health reform changes, please contact a Benefits Specialist at 732-932-3020, ext. 4077.