A somber yet necessary topic

Pension Benefits Report 

I have received several calls of late asking, “What will my spouse, children or beneficiary receive in the event of my death, and what do they have to do?” First, whether you are active or retired, make sure your beneficiary information is updated. Second, keep your Police and Fire Retirement System (PFRS) records and membership number, along with your date of birth and Social Security number, with your other important paperwork. Make sure those whom you have chosen to handle your affairs know where to find those records.

In the event of your death, whether active or retired, those handling your affairs are to contact the NJ Division of Pensions and Benefits (NJDPB) at 609-292-7524 and provide your full name, Social Security number and pension membership number or retirement number. The NJDPB will require the date of death and the mailing address as well as the phone number of the individual handling your affairs. The time to process a death claim is approximately 90 days but depends on when the NJDPB receives a certified death certificate and all claim forms. Notification and claim forms will be mailed to the survivor or beneficiary on file with the NJDPB.

The death benefit from the NJDPB is twofold: It provides for a survivor benefit for your eligible spouse, civil union partner, domestic partner, child or parent, and a life insurance payment for your named beneficiary. The survivor benefit continues for the rest of the survivor’s life or until they remarry or enter another civil union or domestic partnership. Life insurance is a one-time benefit. A child is defined as unmarried and under the age of 18 or still in high school, or as one who is disabled because of mental or physical incapacity. Your parent is eligible if you were providing at least one-half support to them within the 12 months preceding your death

The survivor benefit is based on your last 12 months of creditable salary (final compensation) for Tier 1 members and the average of your last three years of creditable salary (final compensation) for Tier 2 and 3 members. It is subject to income tax and divided over 12 monthly payments. The life insurance benefit is based on the last 12 months of salary; it is not taxed and is paid in one lump sum. Both the survivor and life insurance benefits are available to both active members and retired members with at least 10 years of service or who are retired on a disability pension.

Active members: Upon your death as an active member, your surviving spouse, civil union partner or domestic partner is eligible
to receive a survivor pension benefit equal to 50 percent of your final compensation, payable over 12 months. For example, if your final compensation was $100K, the survivor pension benefit would be $50K, payable over 12 months. If there is no surviving spouse/
partner, 50 percent of your final compensation will be paid to one eligible child or paid in equal shares to two or more eligible children. If there is no surviving spouse, partner or children, 40 percent of your final compensation will be paid to your parents or 25 percent of your final compensation will be paid to one parent. If there is no surviving spouse, partner, children or parents, your contributions into the PFRS will be paid to your named beneficiary or, in the absence of a beneficiary, to your estate.

If your death occurs while in active service, your named beneficiary or estate receives a life insurance payment in one lump sum equal to 3½ times your final 12 months of creditable salary for all Tiers (1, 2 and 3). For example, if your final 12 months of compensation is $100K, the life insurance benefit is $350K, payable in one lump sum.

Retired members: Upon your death as a retired member, your surviving spouse, civil union partner or domestic partner is eligible to receive a survivor pension benefit equal to 50 percent of your final compensation, payable over 12 months, plus 15 percent of your final compensation to one eligible child or 25 percent to two or more children. If your final compensation was $100K, the survivor pension benefit would be $50K, payable over 12 months, and the benefit for one child would be $15K, or $25K for two or more children. If there is no surviving spouse/partner, 50 percent of your final compensation will be paid in equal shares to three or more eligible children, or 35 percent to two children, or 20 percent to one child.

If your death occurs while you are retired, your named beneficiary or estate receives a life insurance payment in one lump sum
equal to 50 percent of your final 12 months of compensation for all Tiers (1, 2 and 3). For example, if your final 12 months of compensation is $100K, the life insurance benefit is $50K, payable in one lump sum. If you retired on a disability retirement, the amount payable is equal to 3½ times your final 12 months of compensation until age 55, when it is reduced to 50 percent of your final 12 months of compensation.

Accidental death benefit: If you die because of an accident during the performance of your duties (line-of-duty death) and it was not the result of willful negligence, your family may be entitled to an accidental death benefit. Your surviving spouse, civil union
partner or domestic partner is eligible to receive a lifetime survivor pension benefit equal to 70 percent of your final compensation,
payable over 12 months. If your final compensation was $100K, the survivor pension benefit would be $70K. If there is no surviving
spouse/partner, 70 percent of your final compensation will be paid in equal shares to your eligible children. For purposes of accidental death, a child is defined as a member’s unmarried child under 18, or 18 years old and enrolled in a secondary school, or under age 24 and enrolled in a degree program at an institution of higher education for at least 12 credit hours each semester, or any age if disabled because of mental or physical incapacity. If there is no surviving spouse, partner or children, 40 percent of your final compensation will be paid to two eligible parents, or 25 percent will be paid to one eligible dependent parent. If there is no surviving spouse, partner, children or parents, your contributions into the PFRS will be paid to your named beneficiary or, in the absence of a beneficiary, to your estate.

If you die because of an accident during the performance of your duties, your named beneficiary or estate receives a life insurance payment equal to 3½ times your final 12 months of creditable salary. For example, if your final 12 months’ compensation is $100K, the life insurance benefit is $350K, payable in one lump sum.

In addition to the benefits for accidental death, under State Law 43:16A-10, the State of New Jersey shall pay to the member’s employer-sponsored health insurance program all health insurance premiums for the coverage of the member’s surviving widow or
widower and dependent children.

Also, the U.S. Department of Justice provides additional enhanced benefits through the Public Safety Officers’ Benefits Program (PSOB), and the member’s dependents may be eligible for an additional one-time life insurance benefit, disability benefits and education benefits for higher education. For more information, visit https://bja.ojp.gov.

Active and retired death benefits isn’t a sexy or exciting topic, to say the least, but it is one we should all educate ourselves on. I’ll leave you with one final thought from Albert Einstein: “Life is a preparation for the future, and the best preparation for the future is to live as if there were none.”

As always, feel free to call or email me with any pension-related questions. I look forward to seeing you at the next pension seminar.