Teachers in New Jersey have a unique mix of retirement income sources. This makes it important for them to plan carefully.
Educators are covered by a state-sponsored pension system, the TeachersaEUR(tm) Pension and Annuity Fund (TPAF). It offers lifetime retirement benefits.
TPAF
Teachers and other educational support professionals contribute a percentage of their salary to the Teachers’ Pension and Annuity Fund (TPAF), which provides deferred compensation for their time serving public school students. These benefits include lifetime health insurance coverage and retirement planning services.
TPAF also offers members the opportunity to purchase post-retirement medical benefits in addition to their deferred compensation. This type of health insurance plan has become an important component of a teacher’s retirement package.
New Jersey’s teacher pension crisis continues to worsen, as educators are left ill-prepared for retirement. A new report reveals that the leader of the state’s largest teachers union has a better-funded, more generous pension than the one that many New Jersey teachers are enrolled in.
Teachers who switch jobs are ill-prepared for retirement under the current system, because their contributions do not transfer to their new employer’s plan. It’s important for all New Jersey teachers to know their retirement options and make the right decisions when it comes to their pension.
NJEA
Over the past 15 years, New Jersey public school employees have faced a variety of challenges, but many employment rights and benefits remain in place, often exceeding what other employees receive in the private sector.
The NJEA, the state’s largest teachers union, is a powerhouse advocate for school employees and their students. They’ve been defending members’ collective bargaining rights, health care benefits and pensions for decades, earning the respect of educators throughout the country.
In addition to a robust pension plan, NJEA members also enjoy a host of professional development opportunities, including leadership conferences and workshops. Those who participate in these programs are reimbursed for their out-of-pocket expenses.
In addition, NJEA offers professional development for teachers at its Voorhees County office. These sessions are free to all members. Moreover, members are encouraged to attend the 3-day teacher’s convention in Atlantic City. These events help teachers get their PD hours and connect with colleagues from across the state.
ERISA
ERISA is the Employee Retirement Income Security Act, and it was enacted to address problems in the pension industry. At the time ERISA was enacted, pension funds were often mismanaged and employees’ benefits were not guaranteed even in the event of a company going out of business.
Currently, ERISA protects the interests of workers in most employer-sponsored benefit plans that include retirement, health and welfare benefits. It requires disclosure of important information, establishes minimum standards and gives participants the right to sue if their rights are violated.
ERISA is regulated by the federal government through a division of the Department of Labor known as the Employee Benefits Security Administration (EBSA). It covers all employer-sponsored retirement and health benefit plans. EBSA works to ensure compliance with ERISA and educates plan sponsors, employers and participants on the law’s requirements. It also administers the Pension Benefit Guaranty Corporation, an insurance fund to secure certain retirement benefits plans. The agency provides a broad range of assistance and education to plan participants, employers and administrators.
Taxes
If you’re deciding whether or not to retire in New Jersey, it’s important to understand your taxes. Not only are there a variety of state taxes you need to be aware of, but you also need to take into account property and sales tax rates.
If a state has a high property tax, for example, your retirement income could be significantly lower than you might think. On the other hand, if a state has a low income tax, you’ll likely have more money to enjoy in retirement.
Another big impact on a teacher’s retirement is the WEP rule, which reduces Social Security benefits if a pension was earned at a job where a person paid Social Security tax. It can be tricky to figure out how much the WEP will affect you, but it’s something you can phase out if you work enough part-time before you retire. It could be worth it, especially if you’ve worked a long time in a job where you’ve earned a lot of money, but never paid into the Social Security system.
