24
PENSION AND BENEFITS REPORT
NEW JERSEY COPS â– JANUARY 2015
Pension Tiers and you
Peter
Andreyev
As many of you know, our Police and Fire
pension system has been divided into tier
levels. Obviously, this has changed the way
some of our members can receive their Special Retirement. Special Retirement is considered when members of the PFRS
regardless of age retire after 25 years of credible service.
For all our members that were active officers enrolled in the PFRS on or before May
21, 2010, you are considered Tier 1 members. For those
members that were enrolled after May 21, 2010 and on or
before June 28, 2011, you are Tier 2. The officers enrolled
after June 28, 2011, are Tier 3.
Tier 1 members are the ones that will, regardless of age
retire after 25 years of credible service, receive 65 percent of
their compensation based on their last 12 months of salary
as well as 1 percent of compensation for every year of credible service beyond 25 years. Tier 1 members who go on to
work 30 years of credible service, regardless of age, will
receive 70 percent of their final compensation based on the
final 12 months of salary. The maximum pension benefit is
70 percent of final compensation for Tier 1 members.
Tier 2 members receive the same pension benefits as Tier
1 members but will now have their pensionable salary calculated with the final three years of final compensation.
Tier 3 members have the biggest differences in their pension benefits. Tier 3 members of any age who have at least
25 years of service credit in the PFRS are eligible for 60 percent of their final compensation based on their last three
years of salary plus 1 percent for each year of creditable
service over 25 years, not to exceed 30 years. The maximum
allowance is therefore 65 percent of your final compensation.
Remember, final compensation means the average salary
pension contributions will be based for the final three years
of salary preceding retirement that provides the largest possible benefit to Tier 2 and Tier 3 members. In other words,
Tier 2 and Tier 3 members’ pension benefit will be calculated on the last three years of pensionable salary.
I can be reached at the state office or by email to answer
any questions you may have regarding the tier levels in the
Police and Fire Retirement System.