New Jersey Teacher Benefits

nj teacher benefits

According to the Bureau of Labor Statistics, New Jersey teachers earn high salaries compared to other professionals. Teachers with a master’s degree are paid even more.

Teachers contribute a portion of their salaries to the State of New Jersey Teacher Pension and Annuity Fund (TPAF). They also enjoy comprehensive health insurance.

Defined Benefit Pension Plan

New Jersey offers a defined benefit pension plan, which provides you with a guaranteed retirement income based on the years of service you’ve worked. The state and most local school districts contribute to the pension system on behalf of teachers.

The pension system consists of the state Teachers’ Pension and Annuity Fund (TPAF). Teachers are required to pay a percentage of their salary to TPAF, which is then used to calculate your monthly pension payments upon retirement. You must work for a minimum of 10 years to be fully vested in your pension.

Many pension systems, however, fail to recognize workforce trends, including the fact that teachers will often change careers multiple times over their lifetimes. As a result, the Bellwether analysis shows that only seven states offer a fully portable primary teacher pension. New Jersey’s TPAF is rated “red” in the analysis, meaning the system is at risk of not meeting its liabilities. This is an issue that will impact all teachers and their families.

Health Benefits

Working as a teacher in New Jersey also allows you to build financial security through the state’s deferred compensation plan. The plan empowers you to save on a pre-tax basis and allocate investments with broad flexibility. You can discover the many options available by visiting the Treasury Department website.

The amount you pay toward the cost of your health insurance varies by district and what your union has negotiated. School districts typically cover the majority of the costs, with employees paying some portion of them.

On July 1, the state legislature passed a law (P.L. 2020, c. 44, S-2273/A-20) to change how school employee premium contribution rates are determined. The bill creates a chart that will link the percentage of salary paid toward your NJEHP and GSHP premium to an amount of the total premium, resulting in lower premium rates. Depending on your plan choice and salary, you may see premium rates fall between 3% and 35%.

Retirement Planning Services

Managing a complex retirement plan can be difficult for teachers. The intricate rules of Social Security can be especially confusing. We are here to help teachers understand and plan their benefits.

Those benefits include a defined benefit pension and health care coverage, which are part of their compensation package. Teachers can also contribute to tax-sheltered defined contribution plans, including 401(k)s and 403(b)s, as well as their state TFSA account.

The new insurance plan, a result of a negotiation between Senate President Stephen Sweeney and the New Jersey Education Association teachers’ union, will save districts $300 million a year. The savings will eventually be reflected in local school tax levies. But it isn’t without its critics. The NJSBA said the increase in premium rates will force districts to slash programs and may undermine student achievement. Its representatives on the panel that approves the premium rates voted against the change. The NJEA defended the move, saying it is not an unfunded mandate.

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A teaching career is not only rewarding in terms of personal fulfillment, but teachers also deserve financial security. That is why New Jersey offers lifetime pensions and health benefits for teachers.

As with any benefit, the choice of whether to enroll is the individual’s decision. The district does not have control over the rates, which are approved by panels that include both government and union representatives.

The Chapter 78 employee contribution requirement was phased in over a four-year period, and could be negotiated until the contract under which the full phase-in occurred expired. Similarly, the GSHP could be negotiated, but it must be offered at the same rate as the NJEHP and cannot be lower than that rate.

For the 2021 plan year, new hires will be able to select from the NJEHP and the GSHP. However, they will not be able to waive medical and Rx coverage until they have done so for one year and updated waiver forms are submitted annually.