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FAQ - Retiree Health Benefits Reform Provisions

Are there any changes to the PERS retirement formulas?

Yes, the changes do not apply to members enrolled in PERS prior to June 28, 2011.

Did the Law change the eligibility requirements for retiree health coverage or the premiums?

Employees who have attained 25 or more years of pension service credit on or before June 28, 2011 are grandfathered and are governed by the terms applicable on the date in which they attained their 25 years of pension service credit.

Employees with 20 years or more of pension service credit as of June 28, 2011 are also grandfathered. The retiree health contribution will remain at the 1.5% of the retirement monthly allowance when the employee retires with 25 or more years of pension service credit.

Employees who are not grandfathered but attain 25 or more years of pension service credit at retirement will pay a percentage of the retiree premium based on the amount of their retirement allowance. A minimum contribution amount of 1.5% will be required.

Has the retiree health contribution amounts changed for current retirees?

No, the Health Benefits Reform did not change the insurance contribution for current retirees.

May I purchase pension service credit to use to be grandfathered for the retiree health coverage premium?

Only Applications for Purchase Service Credit received and qualified by the NJ Division of Pensions and Benefits on or before June 28, 2011 may be used toward pension service requirements for grandfathered retiree health insurance premiums. The state also requires that the purchase cost must be paid or payroll deductions started before the Purchase Quotation letter has expired.

What are the changes to the retirement formulas for PERS members in Tier 5?

The Early Retirement formula for Tier 5 members is a reduction of 3% for each year the member is under age 65. Tier 5 members must have at least 30 years of pension service credit in order to be eligible for an early retirement.

What are the PERS tiers and the pension benefit associated with each tier?

The pension benefit varies based on the dates when a member was enrolled in the pension plan. Each tier has a date range which specifies the benefit available to the members within the tier. For a listing of the PERS membership tiers view the PERS Tier Chart.