The New Jersey Division of Pensions has announced it has found errors in some retirees’ pension loan deductions and pension calculations. These mistakes have resulted in errors in pensioners’ retirement checks. The total number of people affected is yet to be determined because the state Division of Pensions is still auditing accounts.

Why has this happened?

Drastic cuts have been made to state agencies in recent years, including the Division of Pensions. The division claims that because of these cutbacks, they’ve been too understaffed to rigorously check pension calculations. Because accounts were not being rigorously reviewed, members are receiving correspondence from the division on these issues.

Pension loan deduction errors

When a member retires with an outstanding loan balance, he or she is given a choice of paying the entire outstanding loan balance or continuing to have the monthly payment taken out of his or her pension check. Unfortunately, with the staff cutbacks, some of these active loans were not transferred so that they could continue to be taken out of the retiree’s pension check. The state has now caught this error and has written to members, seeking the balance of the loan(s) plus interest.

Pension loan overpayment

When a member submits an application for retirement, an initial pension calculation is done by the Division of Pensions based on a certification submitted by the retiring member’s school district. A final calculation and audit is then completed, just prior to the retirement date. Again, as a result of the staff cutbacks, some of these calculations were not performed properly. The mistakes fall into two categories:

• Those made by the individual school districts in the certification of salary.

• Those made in the division’s pension calculations.

As of press time, the Public Employees’ Retirement System (PERS) Board had not yet announced its course of action in the cases where there have been pension overpayments. However, the Teachers’ Pension and Annuity Fund (TPAF) Board has outlined how it will proceed with recovering the amount of the pension overpayments:

• If the mistake was the fault of the district and the retiree, the overpayment will be recouped from the member over a five-year period by reducing retirement checks. The pension deductions going forward also will be recalculated to the lower amount.

• If the mistake was made by the division, it will not recoup overpayment, but will adjust the pension payment going forward.

At this time, no instances of underpayment have been publicly announced. However, if you believe that your pension has been underpaid, please contact the New Jersey Division of Pensions at 609-292-7524.

If the division sends you a letter indicating that an error was found in your pension loan deductions and/or pension calculations, you should contact the Division of Pensions and ask it to provide you with any information related to your account, as well at how both the incorrect and correct calculations were made.

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