Retirement Program for Unclassified Employees

Alternate Benefit Program (ABP)

The Alternate Benefit Program (ABP) is a defined contribution retirement program for eligible employees of the public institutions of higher education in New Jersey. In addition to retirement benefits, the ABP provides members with life insurance and disability coverage.

The program allows members to direct their own retirement accounts while offering portability of accumulated contribution balances. Vested members are permitted to allocate and transfer employer and employee contributions to any one or combination of authorized investment carriers. The variety of investment choices and distribution methods offered by the authorized carriers provide members flexibility in meeting their retirement goals.

  • Member contributions on a tax-deferred basis
  • Tax-deferred employer contributions
  • Employer-provided group life insurance for eligible active and retired members
  • Disability benefits if permanently disabled
  • Loans through the member’s investment carrier(s)
  • A variety of retirement plan options, including lump sum distribution
  • State-paid health insurance coverage in the State Health Benefits Program if the member retires and has 25 years of ABP service.

Mandatory Contributions

The member and employer make regular tax-deferred contributions toward retirement savings. Members contribute 5% of base salary and employers contribute 8% of base salary.

Voluntary Additional Contributions

Under the voluntary 403(b) component of the program, members may make additional contributions on a tax-deferred basis. Members are required to complete a Salary Reduction Agreement to participate. Federal income tax will be deferred on the ABP contributions. However, the calculation of State income taxes, Social Security taxes and other benefits based upon compensation will not be affected.

Life Insurance (Active)

Employer-paid group life insurance is provided for all eligible members. No medical examination is required unless the member attained the age of 60 prior to enrollment. Coverage equals three and one half times base salary.

Life Insurance (Retired)

Retired members are eligible for paid group life insurance coverage of one-half of base salary if all of the following criteria are met: 

  • 10 years or more of pension service credit
  • At least age 60 at retirement
  • Take an annuity distribution within 12 months of the termination of employment, and
  • Covered by ABP group life insurance plan immediately prior to retirement

Life Insurance Conversion

When life insurance coverage reduces or ends (at retirement, termination of employment or approved leave of absence), members can convert all or a portion of group life insurance to an individual policy within 31 days by contacting Prudential at 1-800-262-1112 with the policy number G14800.

Long-term Disability

Members are eligible for employer-paid long-term disability after one year of participation in ABP. Benefits begin after six months of continuous disability. The plan pays 60% of monthly base salary (reduced by other periodic benefits such as short-term disability or Social Security), if totally and permanently disabled. The minimum benefit is $50 per month.

In addition, the basic 5% contribution that the member would have been required to make while actively working, is made by the carrier (Prudential Insurance Company). The employer continues to contribute 8% of base salary.


Vested members of the Alternate Benefit Program are eligible to receive loans based on their account balances. Members should contact their investment carrier(s) for applications and repayment procedures.

Retirement and Cash Distributions

A member of the ABP becomes eligible to commence distributions at any age upon termination of employment or retirement. Members may receive benefits in the form of an annuity or cash distribution. Annuity benefits will be calculated by the investment carrier(s) based upon the account accumulation, life expectancy and the distribution option selected. Cash distributions to members under the age of 55 are limited to their employee contributions and accumulations. The remaining employer contributions and earnings are available for distribution upon attaining age 55.

Once a member starts collecting benefits from their ABP account (annuity or cash) they are not eligible to enroll in any New Jersey state-administered retirement system nor are they eligible to re-enroll in the Alternate Benefit Program.

Employment After Retirement

Retired ABP members can return to public employment (including employment covered by ABP) and continue to receive benefits. However, retired members are not eligible for group life insurance or disability insurance. Additionally, retired members will not accrue service credit toward employer-paid health coverage.

Certain restrictions may apply to the benefits and features described. For more information, contact The Office of Human Resources or the Division of Pensions and Benefits.

Health Coverage at Retirement

Any employee retired from a State-administered pension fund will be eligible to continue participation in the State Health Benefits Program, provided they were eligible for coverage immediately preceding the effective date of retirement. A Retired Status Application furnished by the Division of Pensions and Benefits must be completed in its entirety by the employee for continuation of health coverage during retirement. This coverage includes medical and prescription drug plans only. The dental, prescription, and vision care programs may be continued through COBRA.

a. State-Paid Health Benefits in Retirement

Previously, State law provided State-paid health benefits for state employees enrolled in the State Health Benefits Program (SHBP) who retired with 25 years of service in the retirement system. That law was changed by Chapter 8, P.L. 1996 to allow negotiation between the State and unions on payment of premiums for retirees. Those already retired are not affected by this change in law. The effect of Chapter 8 is outlined below.

For those with at least 25 years of service credit in the retirement system on June 30, 1997, the State will pay the cost of whatever State Health Benefit plan you select for you and your covered dependents, whenever you retire, up to the cost of the Traditional Plan. Those retiring on a deferred retirement are not normally eligible for SHBP coverage in retirement. These benefits represent no change from what was provided employees prior to the enactment of Chapter 8, PL 1996.

For those who attain 25 years of service credit in the retirement system on or after July 1, 1997, State payment of State Health Benefit Program costs in retirement will be in accordance with the union contract which applies to you at the time you reach 25 years of service credit in the retirement system, regardless of the date you retire. If you are not in a title eligible for union representation, the State Health Benefits Commission will determine the State's payment of State Health Benefits costs in retirement by applying the terms of one of the union contracts in effect at the time you reach 25 years of service credit in the retirement system.

Medicare Coverage at Age 65

Retired group members eligible for Medicare must enroll in Parts A and B of Medicare and attach a photocopy of their Medicare card to the application for SHBP coverage. Upon enrollment in Medicare, the SHBP becomes a secondary provider. If the retiree and their spouse are age 65 at retirement and have not enrolled in both parts of Medicare, they should contact Social Security to apply for full Medicare coverage at this time.

What happens to a spouse's health coverage if the retiree predeceases?

Upon the retiree's death the spouse will be sent a letter offering continuation of the SHBP coverage which was in effect at the time of the retiree's death. If premiums were being deducted through monthly annuity payments and if the spouse will be receiving a monthly check large enough to cover the cost, the cost will be deducted monthly. If the retiree was paying SHBP directly, or if the spouse will not receive a pension check, or if the pension check is not large enough to cover the cost, the spouse will be billed quarterly for the premiums. If the retiree and their spouse were receiving employer paid health coverage prior to the retiree's death, the spouse must now pay for the continued coverage.

Lump Sum Payment of Unused Sick Leave

Upon retirement from a State administered pension fund, The University will make a lump sum payment to retirees as supplemental compensation for earned and unused sick leave. The following employees will be eligible: all classified employees of the State and all unclassified administrators of the State. Faculty who have served in an administrative capacity are eligible for this payment for the time served in an administrative capacity only. Such employees, if eligible, shall be entitled to payment based on sick leave and salary earned while serving in the administrative title.

The amount to be paid to eligible employees for unused sick leave shall be computed at the rate of one-half the employee's daily rate of pay for each day of earned and unused accumulated sick leave up to a maximum of $15,000. The daily rate of pay is based on the employees annual base salary received during the last full year of active employment. Overtime pay or other supplemental pay and periods of leave of absence without pay shall not be included in the computation.

An individual eligible for lump sum unused sick leave payment may defer the payment for up to one year from the effective date of retirement.