Can retired policeman collect unemployment and pension?


Q. If a retired policeman from a local municipality in New Jersey loses his post-retirement job, can he collect unemployment in addition to collecting his pension?
— Making ends meet

A. The answer is maybe.

In New Jersey, if you lose your job while you are collecting a pension, you may be able to collect unemployment compensation, said Laurie Wolfe, a certified financial planner and certified public accountant with Lassus Wherley, a subsidiary of Peapack-Gladstone Bank, in New Providence.

She said it all depends on who contributed into the pension plan. This could reduce, wipe out or have no effect on the amount of your unemployment compensation.

If your employer contributed 100 percent into the pension plan, then your unemployment compensation will be reduced by 100 percent of the amount of your pension payment, she said.

If both you and your employer contributed, it could be reduced by 50 percent of your pension benefit.

She offered this example. Let’s say you’re collecting a pension of $2,000 per month, or $500 per week, and that you and your employer both made contributions to the plan. Further assume that your unemployment benefit is $650 per week. The $650 would be reduced by 50 percent of your weekly $500 pension amount, or $250, Wolfe said. So you would then be receiving $400 in unemployment compensation and $500 from your pension for a total of $900.

Lastly, assume that you made 100 percent of the contributions into the pension plan. In this case, your unemployment compensation would not be reduced, she said.

“There is a way out of this with a little planning,” Wolfe said. “If you roll over your pension into an IRA, New Jersey will not reduce your benefits as they do not consider the IRA to be a pension.”

Sounds like you should make an appointment with your local unemployment office to discuss your circumstances, but also speak to a financial advisor before making any changes to your pension.

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This story was originally published on May 27, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.