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New Jersey Public Employees – Things to know about your Retirement Income


As public employees for the great state of New Jersey, there are some important factors to consider when it comes to your retirement income.

Regarding Your Pension:

New Jersey Pensions fall into two categories: “I contribute to my pension” or “I do not contribute to my pension”

  • For those employees who say, “I do not contribute to my pension” the entire portion of your pension in retirement will be taxable to New Jersey.
  • For those employees who say, “I do contribute to my pension”, when you retire, a portion of your pension will be taxable and a portion of your pension will be excluded from New Jersey state tax. Note: This is the reason your gross income is higher on your New Jersey tax return if you contribute to a pension. The federal government allows pension contributions to be deducted, but NJ State does NOT allow your pension contributions to be deducted.

Regarding Social Security:

Your Social Security may be greatly reduced if you have only worked as a public employee your entire life. The calculated estimates can be difficult, so it is important to speak with your financial planner about the possible impact a pension may have on your social security income.

As always, feel free to reach out if you have any questions:

Nicholas J. Scheibner, CFP®

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