Current Pension Topics: Now Must Seek All N.J. Pension Loans On-Line

Current Pension Topics
Now Must Seek All N.J. Pension Loans On-Line
ATTENTION: Members of a New Jersey State Administered Retirement System:

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net.

The New Jersey Department of the Treasury, Division of Pensions and Benefits has implemented a significant change to the pension loan application process. As of Nov. 1, 2008, all pension loan requests must be submitted on-line using the Loan Application program of the Member Benefits Online System (MBOS). This requirement applies to all eligible members of the Public Employees' Retirement System (PERS), Teachers' Pension and Annuity Fund (TPAF), Police and Firemen's Retirement System (PFRS), and State Police Retirement System (SPRS) who wish to borrow against their pension account. MBOS is a set of Internet applications that allows registered members access to pension contributions account information.

— MBOS provides you with the fastest, most-efficient method for requesting a pension loan. In most cases, a loan application submitted through MBOS before the close of business (4:30 p.m.) on a Friday is processed and mailed on the following Wednesday.

— With MBOS you receive immediate confirmation on screen and by follow-up e-mail that your loan application has been processed.

— If you are already a registered MBOS user, you currently have access to the on-line loan application through your MBOS account.

— If you are new to MBOS you can access MBOS after you register with both the MyNewJersey Web site and MBOS. Registration is free at: www.state.nj.us/treasury/ pensions/mbosregister.htm. Registration requires several steps — new users should read and carefully follow the MBOS Registration Instructions.

In addition, as of Nov. 1, 2008:

— Loan Application forms will no longer be available as printed forms or on the Division's Web site.

— Paper Loan Applications that are received by mail as of November 1, 2008, will be returned to members with instructions on submitting the loan request through MBOS.

— The loan application fax number, which has been phased out of use since the introduction of loans through MBOS, will be completely disabled.

If, after following the MBOS Registration Instructions, you still need assistance registering for or using MBOS, call the MBOS Help Desk at (609) 777-0534 or send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us.

Members of New Jersey public-sector retirement and pension systems are limited to two pension loans per year with the combined total not to exceed one half of the member's accumulated pension contributions or $50,000 which ever is less.

Loans must be paid off in 60 months. You must have at least three years of service credit and contributions posted to your pension account. Pension credit is "posted" to your account on a quarterly basis. It normally takes 45 days after the end of a quarter for your membership credit to be posted to your account.

Interest and Fees: Interest is charged on the declining balance of the loan at a commercially reasonable rate set annually by the New Jersey State Treasurer. An administrative processing fee also applies to all pension loans.

— For loan applications received in 2008, the interest rate is 4.69 percent on the declining balance of the loan. The administrative processing fee is $8.00. It is set annually and is based on the actual costs associated with administering the pension loan program.

— The interest rate is determined using the average closing yield of five-year U.S. Treasury Notes on the run as of the last business days each September, October, and November. Seventy-five basis points (0.75 percent) is also added as a credit risk.