PENSION BENEFITS REPORT
What is the Defined Contribution
Retirement Plan?
If you are a Tier 2 or Tier 3 member, you are all
eligible to enroll in the Defined Contribution
Retirement Plan (DCRP). The DCRP was established under the provisions of Chapter 92, P.L.
2007 and Chapter 103, P.L. 2007, and expanded to
include members of the PFRS under provisions of
Chapter 1, P.L. 2010. The DCRP provides PFRS
members with a tax-sheltered defined contribution retirement benefit. Those members who were
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in the PFRS after May 21, 2010, and who
ANDREYEV enrolled
earn salary in excess of the social security maximum wage compensation limit of $118,500 for
2016, are eligible for enrollment in the DCRP. Members will contribute five-and-a-half percent of the excess salary into the DCRP,
and their employers will match at three percent.
Members who participate in the DCRP will receive additional
retirement income based on their contributions from excess salary
above the maximum social security wage compensation limit
invested in the DCRP.
Members can enroll in the DCRP when their annual salary
exceeds the maximum compensation limit, or when their salary is
increased to exceed the maximum compensation and their
employer reports the excess to the Division of Pensions directly, or
through quarterly reports of contributions.
In other words, you can enroll once you have reached top-salary
in your contract, should it exceed the social security maximum
wage compensation limit, or once you get promoted during your
career, and the salary you receive in your capacity as a supervisor
exceeds the social security maximum wage compensation limit.
The maximum wage compensation can increase year to year; it
happened that between 2015 and 2016, there wasn’t any increase of
the $118,500 amount.
Enrollment is voluntary and, if you choose to enroll, you may
want to notify your employer so they can set up the account for you
in advance of collection of your contributions. Your contributions
are required from your DCRP eligibility date, and, if you owe any
back deductions, your employer must schedule the deductions,
then send them to the DCRP along with your regular deductions.
Once you are enrolled in the DCRP, you immediately are vested
in the DCRP and, as a vested member, you have the right to your
retirement benefit based on both employee and employer contributions. Upon retirement, you can receive your retirement
allowance from funds that have both employee and employer contributions, along with interest. Once a retiree starts to receive these
funds from the DCRP, they will be considered retired and thus ineligible to re-enroll in the DCRP, or participate in any other stateadministered retirement system. d
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