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Pensions and Benefits
CERTIFYING OFFICER LETTERS 2003
Subject Date
Adjunct Professors December 2003
Implementation of Chapter 172, P.L. 2003 - Health Benefits for Part-Time Employees December 2003
State Transportation Benefit December 2003
Employer Liability- 2004 Pension Adjustments November 2003
Member Pension Contribution Rates November 2003
New Pension Loan Policy - State Certifying Officers November 2003
New Pension Loan Policy - Pension Certifying Officers November 2003
Repeal of Rule: N.J.A.C. 17:3-2.6 Ineligible Positions; Interim Appointment to Boards of Education November 2003
Eligibility of the Title, Sheriff, for Enrollment in the PFRS September 2003
Report of Contributions, Third Quarter 2003 (July 1st to September 30th) -
TPAF, PERS and PFRS
September 2003
Report of Contributions, 3rd Quarter 2003 - Autonomous State College/University September 2003
SHBP Open Enrollment 2003 - State Monthly Employers September 2003
SHBP Open Enrollment 2003 - State Biweekly Employers August 2003
SHBP Open Enrollment 2003 - Local Education Employers August 2003
SHBP Open Enrollment 2003 - Local Government Employers August 2003
Chapter 119, P.L. 2003 State Health Benefits Program Provisions August 2003
Open Enrollment For The New Jersey State Employees Tax Savings Program (Tax$ave 2004) - Monthly - State University and College Benefits Administrators August 2003
Open Enrollment For The New Jersey State Employees Tax Savings Program (Tax$ave 2004) - Biweekly - State Department Human Resource Directors August 2003
Early Retirement Incentive Program Cost Information - Local Authorities and Agencies August 2003
Early Retirement Incentive Program Cost Information - County Colleges August 2003
Early Retirement Incentive Program Cost Information - Municipalities and Counties August 2003
Early Retirement Incentive Program Cost Information - Local School Boards, Education Services Commissions, and Jointure Commissions August 2003
Early Retirement Incentive Program Cost Information - PFRS-Participating Local Employers July 2003
Early Retirement Incentive Program - Local Authorities and Agencies July 2003
Early Retirement Incentive Program - PFRS-Participating Local Employers July 2003
Early Retirement Incentive Program - Municipalities and Counties July 2003
Early Retirement Incentive Program - County Colleges July 2003
Early Retirement Incentive Program - Local School Boards, Education Services Commissions, and Jointure Commissions July 2003
Proposed Repeal of Rule Regarding Retired TPAF Members Returning to Interim TPAF Employment June 2003
New Legislation for Alternate Benefit Program June 2003
PFRS members employed in titles not approved by the PFRS Board of Trustees June 2003
Report of Contributions, Second Quarter 2003 (April 1st to June 30th) June 2003
Report of Contributions, 2nd Quarter 2003 June 2003
Report of Salary Change Instructions June 2003
Volunteer Emergency-Worker's Survivors Pension (VESP) May 2003
SHBP Notice of Privacy Practices April 2003
Prosecutors Part of PERS on the Quarterly Report of Contributions March 2003
Report of Contributions, First Quarter 2003 (1/1/03 to 3/31/03) March 2003
Chapter 3. P.L. 2003 - Amended Health Care Waivers February 2003
Health Care Waivers February 2003

CERTIFYING OFFICER LETTERS FROM OTHER YEARS

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2009 CO Letters 2008 CO Letters 2007 CO Letters 2006 CO Letters 2005 CO Letters
2004 CO Letters 2003 CO Letters 2002 CO Letters 2001 CO Letters 2000 CO Letters
1999 CO Letters 1998 CO Letters 1997 CO Letters    


December 30, 2003

To: Certifying Officers, Public Employees' Retirement System, State Colleges and Universities and County Colleges

From: William H. Kale, Assistant Director, Client Services

Subject: Adjunct Professors

The Division of Pensions and Benefits is surveying employers regarding adjunct professors to gather information about employment patterns and pension enrollment. Please complete the attached survey using the most recent data available to you. If you are unable to access hard data, give us your best estimate and note on the survey that your response is based on estimated information. Please use an additional sheet of paper if you need to expand or explain any of your answers and reference the question number. We welcome any additional information you may provide about the use of adjunct professors at your institution. Please return the completed survey by January 30, 2004. You may fax your response to (609) 393-4606. You can find the survey below, or click here for a printable PDF version. If you prefer, you may copy it into a Word document and e-mail your response to Mindy Smith-Sopko (mindy.smith-sopko@treas.state.nj.us).

Please direct any questions to Mindy at (609) 292-3405.

Thank you for your assistance.


ATTACHMENT

Adjunct Professor Survey

1. With how many individuals did you contract as adjunct professors during the last full academic year? _________

2. Of those individuals, how many adjunct professors were contracted for in the fall semester _________, in the spring semester _________?

3. What percentage of your adjunct professors are enrolled in the Public Employees' Retirement System? _________ How many of your adjuncts become eligible for the PERS each year? _________

4. Are adjunct professors contracted on a semester-by-semester basis, academic year basis, or both? _________

5. On average, how many credit hours does an adjunct professor teach per semester? _________

6. What is the maximum number of credits any of your adjunct professors teaches in a semester?_________

7. What percentage of your adjunct professors usually returns in the fall semester? ________

8. How many adjunct professors teach courses that do not last for the entire semester? _________

9. How many adjunct professors teach courses during the intersession? _________

10. How many adjunct professors teach courses during the summer session? _________

11. How many adjunct professors usually teach the full academic year? _________

12. If an adjunct professor works a short semester, is salary reported over the course of the short semester ______or is salary reported over the course of the full semester ________?

13. With how many adjunct professors does your institution have a continuing relationship, that is, teach every semester for three or more years? ______

14. Are adjunct professors paid biweekly ______, monthly ______, quarterly ______, by the semester ______, or otherwise ___________________________?

_________________________________ _________________________________
Name of College or University Name of Person Completing Survey
_______________________________ _______________________________
E-Mail Address Phone Number

December 12, 2003

TO: State Biweekly Benefits Administrators, State Monthly Benefits Administrators, County Community College Benefits Administrators

FROM: Florence J. Sheppard, Deputy Director, Benefits Operations

SUBJECT: Implementation of Chapter 172, P.L. 2003 - Health Benefits for Part-Time Employees

This letter provides implementation instructions for offering employee-paid coverage in the State Health Benefits Program (SHBP) to eligible, part-time employees under the provisions of Chapter 172, P.L. 2003.

Eligibility

Part-time employees of the State and part-time faculty at institutions of higher education that participate in the SHBP are eligible for Chapter 172 coverage if they are members of a State-administered pension system. The definition of part-time employees of the State includes those paid through Centralized Payroll and employees of State colleges and universities, the Palisades Interstate Parkway Commission, the New Jersey Building Authority, the State Library, and the Commerce and Economic Growth Commission.

Coverage Available

Eligible part-time employees and faculty members can enroll in the SHBP's NJ PLUS medical plan and the SHBP's Employee Prescription Drug Plan. Eligible part-time employees and faculty members cannot enroll in prescription drug coverage unless they also enroll in the NJ PLUS plan.

Cost of Coverage

The employees will pay the full cost of their coverage including administration fees. (Premium Rate Charts for active, COBRA, and retired coverage are enclosed). The Division of Pensions and Benefits will bill enrolled employees on a monthly basis and payments must be made directly to the Division. Payment will not be made through payroll deductions.

Coverage Start Date

Initial coverage for all eligible part-time employees and faculty will begin on March 1, 2004. After this initial enrollment period, coverage will start in accordance with standard SHBP waiting period rules for State monthly employees. (Note for State Biweekly administrators: since all payments will be through direct billings, all coverage under Chapter 172 will be on a monthly, not a pay period, basis.)

Coverage for ten-month employees hired at the beginning of the fall semester will be effective on September 1st. If the ten-month employee works the full ten months, coverage will be extended through July and August. Coverage for all twelve-month employees and for ten-month employees hired at any other time of the year will start after a sixty-day waiting period.

Employees who do not enroll when first eligible can then enroll only during the regular, annual, open enrollment period.

Enrollment Process

Chapter 172-eligible employees must complete a special enrollment application that is different than the standard State Health Benefits Enrollment Application. A master copy of the application is enclosed for your use. You may reproduce it for your eligible employees or you may direct them to use the application package that is available from the Division Web site (www.state.nj.us/treasury/pensions). After the employee completes the application, the employer benefits administrator must certify on the form the eligibility of the employee for the coverage. This is particularly important for part-time employees who are newly eligible for pension membership, but who have not yet been enrolled by the Division. The normal due date for submission of Chapter 172 applications is the 5th of the month following the month of hire, the same as it is for full-time monthly employees. The certified applications for the coverage to begin on March 1, 2004 must be received at the Division of Pensions and Benefits by January 30, 2004.

Administration

Employees enrolled in Chapter 172 coverage will be enrolled under a separate location number for each employer as shown below.

Location numbers for State Monthly and Community College Employers: The location number for your employees enrolled under this program will be your current four digit location number followed by a dash (-) and the number 70. For example, if your current location number is 1240-00, your location number for part-time employees will be 1240-70. You will need to place this location number on all documents (SHBP Part-time Enrollment Application, Part-time COBRA Application, Transmission of Deletions form) requiring an employer location number. The Division will send you a separate Alpha List with this location number for employees enrolled under the program. You will need to consult this list to know if you must send the Health Benefits Bureau notice of termination of coverage when an employee terminates employment (in case we dropped their coverage because of failure to pay premiums) and also to determine whether a COBRA Notice will be required.

Location numbers for State Biweekly Employers: Currently, all State bi-weekly employers have Location #0001-00 for their SHBP full-time employee group. To identify your part-time employee group you are being assigned Location #0001-70, followed by your Payroll number. For example, if your Payroll number is #102, your Employer Location for this program is #0001-70, Payroll #102. You will need to place this location number on all documents (SHBP Part-time enrollment application, Part-time COBRA application) requiring an employer location number.The Division will send you a separate Alpha List with this location number for employees enrolled under the program. You will need to consult this list to know if you must send a COBRA Notice when a COBRA event occurs.

Termination of Coverage

The coverage end date is the first of the month following the first full month in which no salary was paid to the employee. State monthly employers and community colleges should report the termination of employee coverage on a Transmittal of Deletions form separate from that used for full-time employees.State biweekly employers do not need to notify the Division of termination of coverage; Centralized Payroll will do this. If a covered employee fails to pay required premiums, the Division will terminate the coverage as of the end of the last month for which premiums were paid.

If a Community College ends its participation in the SHBP, coverage for its part-time faculty members will end under this program as of the effective date of the end of participation in the SHBP.

COBRA

Coverage under Chapter 172 is subject to the same federal COBRA rules as apply to full-time employees with SHBP coverage. When an employee enrolls in the program, you are responsible for providing the employee and covered family members with an initial COBRA Notice. If the employee or family member loses health benefits coverage because of a COBRA event, you must send them a specific COBRA Notice for that loss of coverage. Loss of coverage due to non-payment is not a COBRA event. That is why you will need to consult the Alpha List to determine if the employee still has coverage upon termination of employment or upon going on an unpaid leave of absence.

HIPAA

Coverage under Chapter 172 is subject to the same federal Health Insurance Portability and Accountability Act (HIPAA) rules as apply to full-time employees with SHBP coverage. When an employee enrolls for coverage under Chapter 172, you are responsible for sending them the SHBP's Notice of Compliance with the HIPAA (that you should be sending with your initial COBRA notices). You are also required to send the Certificate of Coverage when an employee loses health coverage.

Information for Employees

A copy of Fact Sheet #66, SHBP Coverage for State Part-Time Employees, Adobe PDF (17K) is enclosed. This fact sheet describes the Chapter 172 health coverage program and can be used to educate eligible employees.

Also enclosed for your use is a set of frequently asked questions about this benefit program. If you have any specific questions after reading this letter, the fact sheet, and the FAQ, contact our Office of Client Services at (609) 292-7524 or e-mail us at Pensions.nj@treas.state.nj.us or write to the address on the letterhead.

Enclosures

  1. Part-time Premium Rate Charts
  2. Part-time Employee SHBP Application Adobe PDF (26K)
  3. Chapter 172 FAQ
  4. Fact Sheet #66 Adobe PDF (17K)

December 1, 2003

TO: State Benefits Administrators

FROM: John D. Megariotis, Deputy Director, Finance

SUBJECT: State Transportation Benefit

You are invited to attend an orientation for benefits/payroll administrators of State employees paid through Centralized Payroll on the State's new Employee Transportation Benefit at the State Library Auditorium on Tuesday, January 6th or Wednesday, January 7th at 9:45 AM. Reservations are not required.

The State recently awarded a contract to TransitCenter, Inc. to administer the new employee benefit that will start early in 2004. TransitCenter is a nonprofit corporation that has been providing transportation benefit services to employers in the NY/NJ/PA region for over 15 years.

The new State benefit is being offered under the provisions of the Internal Revenue Code Section 132(f). It will allow employees to use pre-tax dollars to pay for mass transportation (train, bus, & vanpool) used to commute to and from work and for parking at work or at mass transit stations. The first benefits will be offered in April 2004 with enrollment taking place during the first 15 days of February. Unlike the Tax$ave Program (Section 125) that requires one annual election, the transportation benefit allows an employee to opt in and out or change amounts on a monthly basis.

The program has been designed in a similar manner as the Tax$ave Program to minimize your active involvement in the administration of this program. However, since you are one of the individuals in touch with and responsible for dealing with all your Department's other employees about their benefits, you will have to be aware of the transportation benefits being offered and how they will be administered. Additionally, you will have to coordinate any access of TransitCenter representatives to your employees during the initial enrollment period.

Staff from the Division of Pensions and Benefits, Centralized Payroll, and TransitCenter will be providing the orientations for all State benefits administrators on the new transportation benefit at the State Library Auditorium. The orientation is scheduled for two hours, but will go as long as needed to answer any questions raised. We will introduce you to the TransitCenter staff, who will administer this program for the State, and provide you information on:

  • The benefits being offered,

  • Which employees are eligible,

  • How your employees and the State will benefit from participation in this program,

  • The timing of the initial and on-going enrollments,

  • How and when money will be taken from employee paychecks for this program,

  • Where your employees will be able to go for information about the program,

  • How you can arrange for workshops for your employees on the benefit,

  • How your employees can enroll, and

  • How the benefits will be delivered to employees.

We look forward to your attendance at one of these sessions.


November 19, 2003

TO: All Employing Agencies

FROM: Frederick J. Beaver, Director

SUBJECT: Employer Liability- 2004 Pension Adjustments

The Pension Adjustment Act, Chapter 143, P.L. 1958, as amended and supplemented by Chapter 139, P.L. 1971 and Chapter 306, P.L. 1977, provides for cost-of-living increases to retired public employees and eligible survivors. Public employers of the Consolidated Police and Firemen's Pension Fund are liable for the cost of pension adjustments for their former employees or their survivors.

By law, the Director of the Division of Pensions and Benefits is to certify the amount which should be appropriated by each public employer for the fiscal year following the fiscal year in which the certification is made.

Enclosed is the invoice for the year 2004 in duplicate and a supporting list of employees and survivors that your location is responsible for paying the pension adjustment cost. The accounting for the 2003 appropriation, if any, is shown on the bill and any unexpended amount is credited against the amount due for 2004.

Please return one copy of the invoice with your remittance. Checks should be made payable to the State of New Jersey, Pension Adjustment Fund, and should be forwarded no later than March 30, 2004 by employers whose fiscal year runs from January through December and by July 30, 2004 for those whose fiscal year runs from July through June.

The payment of pension adjustments to your former employees or their survivors is contingent upon the receipt of funds from you. Therefore, it is imperative that you pay this invoice on or before the due date. The law requires that interest at 6% per annum be levied on the unpaid balance if payment is not received within 30 days of the due date. If the period of delinquency exceeds 30 days, the pension adjustments will be suspended and the pensioners will be notified of the reason for such suspension.

Please direct any inquiries to the Ledger Control/Financial Statements Section, Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey 08625. The telephone number is (609) 984-4520.

Enclosures


November 6, 2003

TO: Certifying Officers, Teachers' Pension and Annuity Fund, Public Employees' Retirement System

FROM: John D. Megariotis, Deputy Director, Finance

SUBJECT: Member Pension Contribution Rates

Effective January 1, 2004 the Teachers' Pension and Annuity Fund (TPAF) member contribution rate will return to the normal rate of 5%. Effective July 1, 2004, the Public Employees' Retirement System (PERS) member contribution rate for State employees will return to the normal rate of 5%. Therefore, please be sure to deduct the 5% contribution amount on the first pay-day on or after the effective date of the respective changes.

Rates for PERS local, the Prosecutors Part, Workers' Compensation Judges and Legislators will remain unchanged and stay at 3%, 7.5%, 5% and 5% respectively.

Reductions in member rates for the TPAF and PERS were authorized in statute and were based on the existence of surplus pension assets in the retirement systems. However, also per statute, when there are no longer surplus pension assets, the member rate for TPAF and PERS will return to the normal rate of 5%.


November 10, 2003

TO: State Certifying Officers

FROM: John D. Megariotis, Deputy Director, Finance

SUBJECT: New Pension Loan Policy

New Internal Revenue Service regulations, effective January 1, 2004, are requiring the Division of Pensions and Benefits to change its pension loan policies. Under the new IRS regulations, members who take multiple loans must repay the outstanding balance of the original loan, and all subsequent loans taken before the original loan is completely paid off, within a period not to exceed 5 years from the issuance of the first loan taken after
January 1, 2004.
Failure to repay the loan within the five-year period will result in the unpaid balance being declared a taxable distribution.

This change does not affect the first loan the member takes after January 1, 2004. However, if another loan is taken before the first loan taken after January 2004 is paid off, the new regulations may result in either a substantial increase in the member's repayment amount or it may even limit the amount that the member can borrow if the payroll deductions to repay the loan were to exceed the 25% of pay restriction in State law.

The attached letter provides an explanation of this policy change. We will be distributing copies of this letter for your employees through Centralized Payroll paycheck distribution for the November 21, 2003 pay date. If you prefer to distribute this information electronically, the letter can be downloaded from our Web site (www.state.nj.us/treasury/pensions). Use the Certifying Officer Letters link in the box at the right side of the home page.


November 10, 2003

TO: Pension Certifying Officers

FROM: John D. Megariotis, Deputy Director, Finance

SUBJECT: New Pension Loan Policy

New Internal Revenue Service regulations, effective January 1, 2004, are requiring the Division of Pensions and Benefits to change its pension loan policies. Under the new IRS regulations, members who take multiple loans must repay the outstanding balance of the original loan, and all subsequent loans taken before the original loan is completely paid off, within a period not to exceed 5 years from the issuance of the first loan taken after
January 1, 2004.
Failure to repay the loan within the five-year period will result in the unpaid balance being declared a taxable distribution.

This change does not affect the first loan the member takes after January 1, 2004. However, if another loan is taken before the first loan taken after January 2004 is paid off, the new regulations may result in either a substantial increase in the member's repayment amount or it may even limit the amount that the member can borrow if the payroll deductions to repay the loan were to exceed the 25% of pay restriction in State law.

The attached letter provides an explanation of this policy change. Please copy and give it to your employees. If you wish to distribute this information electronically, the letter can be downloaded from our Web site (www.state.nj.us/treasury/pensions). Use the Certifying Officer Letters link in the box at the right side of the home page.


November 5, 2003

To: Certifying Officers, Teachers' Pension and Annuity Fund

From: William H. Kale, Assistant Director, Client Services

Subject: Repeal of Rule: N.J.A.C. 17:3-2.6 Ineligible Positions; Interim Appointment to Boards of Education

On October 2, 2003, the Teachers' Pension and Annuity Fund (TPAF) Board of Trustees repealed the rule, N.J.A.C. 17:3-2.6; Ineligible Positions; Interim Appointment to Boards of Education. This rule permitted a school board to appoint a retired TPAF member to any TPAF-covered position on an interim basis for up to six months without affecting the individual's retirement benefit.

The rule repeal was published in the New Jersey Register on November 3, 2003 and became effective on that date. You may also view the rule repeal on the Division's Home page (www.state.nj.us/treasury/pensions) by clicking the link in the box to "Proposed Rule Changes". Therefore, any retired member of the TPAF, with the exception of those who fall under the re-enrollment exception for certificated administrators and superintendents found at N.J.S.A. 18:66-53.2, who is employed, or accepts employment in a TPAF covered position, will have to be reenrolled in the retirement system. If over age 60, the member would also have to prove insurability before non-contributory and contributory group life insurance coverage as an active employee could be effective. The retirement allowance would be suspended and any benefits associated with that retirement would not be in effect until such time as the member retired again.

I have included Fact Sheet #28, Employment After Retirement, Adobe PDF (38K) for your information. If you have any questions regarding this memorandum, please contact the Client Services Bureau at (609) 292-7524.


September 10, 2003

To: Certifying Officers, Police and Firemen's Retirement System, County Locations

From: William H. Kale, Assistant Director, Client Services

Subject: Eligibility of the Title, Sheriff, for Enrollment in the PFRS

The PFRS Board of Trustees is conducting a review of the title, Sheriff, to determine whether the position is eligible for inclusion in the PFRS. Please answer the following questions regarding the specific duties and responsibilities of your Sheriff. Please use an additional piece of paper and reference the question number if you need to explain any of your answers. Return the completed information by October 6, 2003. You may also fax your response to (609) 393-4606 or e-mail your response to me at the following address: mindy.smith-sopko@treas.state.nj.us

Please direct any questions to Mindy Smith-Sopko at (609) 292-3405. Thank you for your assistance.


1. Is the Sheriff elected ________ or appointed _________?
(Please check one, and if appointed please explain regarding terms of appointment including duration.)

2. Does the Sheriff's duties include day-to-day supervision of employees engaged in investigation, apprehension or detention activities? If yes, please explain. Yes _____ No _____

3. Does the Sheriff have Police Powers? That is, is the Sheriff required to engage in investigation, apprehension or detention activities if necessary? Yes _____ No _____

4. Is the Sheriff authorized or required to carry a firearm? Yes _____ No _____

5. Does the Sheriff carry a firearm? Yes _____ No _____

6. Is the Sheriff required to successfully complete the training requirements prescribed by N.J.S.A. 52:17B-66 et seq.? Yes _____ No _____

7. Is the Sheriff subject to physical and mental fitness requirements of a police officer? Yes _____ No _____

8. Is the Sheriff's position full-time? Yes _____ No _____

9. Is the Sheriff's position permanent? Yes _____ No _____

10. Is your Sheriff enrolled in the PFRS? Yes _____ No _____

11. If so, what position did your Sheriff previously hold? ________________________________

12. Would your answers to questions 1 through 9 be the same for your previous two sheriffs? If no, please explain what is different. Yes _____ No _____

______________________________ ______________________________
County Certifying Officer
______________________________ ______________________________
E-Mail Address Phone Number

September 5, 2003

TO: State Monthly Human Resource Directors/Benefits Administrators

FROM: Florence J. Sheppard, Assistant Director for Health Benefits

SUBJECT: SHBP Open Enrollment 2003 - State Monthly Employers

The State Health Benefits Program (SHBP) Open Enrollment period for all State employees will begin on October 1, 2003 and end on October 31, 2003. All changes to coverage made during this open enrollment will be effective on January 1, 2004 for employees of State universities, State colleges, and State authorities.

Completed employer certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. (The last day that certified applications must arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 7, 2003.)

Enclosed is a milestone chart that lists the critical dates of the Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the Open Enrollment.

In keeping with its current policy, the SHBP will not provide health fairs during this year's Open Enrollment.

RATES FOR 2004

The State Health Benefits Commission has approved new health and dental rates for the 2004 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2004 costs are based upon the actual claims experience of the group. Effective January 1, 2004, SHBP health plan rates for the State Active Group will see the following aggregate percentage of increase:

PLAN TYPE RATE INCREASE
(Aggregate percentage)
NJ PLUS 12.2%
Traditional Plan 4.2%
HMO Plans 8.4%
State Prescription Drug Plan 15.5%
Dental Provider Organization (DPO) Plan 5.4%
Dental Expense Plan No Increase

PREMIUM SHARING

Unions representing most State employees have new contracts in effect that provide for premium sharing arrangements with the State. These arrangements remain unchanged from the last contract. For those employees subject to premium sharing:

  • There is no premium cost to any employee who enrolls in NJ PLUS.

  • Employees will pay 5 %of the premium cost if enrolled in an HMO.

  • Employees will pay 25% of the premium cost if enrolled in the Traditional Plan.

These percentages apply regardless of salary level or date of hire.

PLAN INFORMATION

Active Employees

  • Certain employees hired on or after July 1, 2003, are prohibited from enrolling in the Traditional Plan. This group includes non-aligned employees and State employees covered by the following bargaining organizations: CWA, AFSCME, and the IFPTE. The tentative agreement between the State and the AFT also includes this provision, but has not yet been ratified. Once ratified, this provision will also apply to employees represented by the AFT.

  • No new enrollments will be allowed for Unity Dental Health Services, Inc., a Dental Plan Organization currently participating in the State Employee Group Dental Program. The State Health Benefits Commission has frozen new participant enrollment in Unity Dental. Therefore, for calendar year 2004 - including the 2003 Open Enrollment period - no one will be allowed to newly enroll in Unity Dental. Current members may remain enrolled.

  • The Dental Expense Plan and all participating Dental Plan Organizations will now be covering services described by new Current Dental Terminology (CDT) codes issued by the American Dental Association to identify and standardize dental procedures (see "Dental Program Handbook").

Retirees

  • In accordance with the provisions of the retiree pilot project agreement, effective January 1, 2004, for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, retail copayments for a 30-day supply will increase to $6 for generic drugs; $13 for preferred brands; and $26 for all other brand prescription drugs. The mail order copayments for a 90-day supply will increase to $6 for generic drugs, $19 for preferred brands, $32 for all other brand prescription drugs. The out-of-pocket maximum will increase to $474.

  • Mail order prescription drug copayments for retirees participating in Oxford Health Plans now meet the standard three-tier approach set for HMO plans that are part of the SHBP. Beginning January 1, 2004, the copayments for a 90-day mail order supply are as follows: $5 for generic drugs; $10 for preferred brands; and $20 for all other brand prescription drugs.

Other than the items listed above, there are no other changes to plan benefits for this Open Enrollment. Employees, however, should be made aware that plan benefit changes, based on collective bargaining agreements, are scheduled for July 2004. These will be specifically addressed through a Special Open Enrollment in the Spring of 2004.

DENTAL PROGRAM NOTE

Employees must maintain enrollment in a dental plan choice for a minimum of 12 months before they are permitted to change plans. Therefore, if an employee was not enrolled in a dental plan as of January 1, 2003; they cannot make a dental plan change during this open enrollment period.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

RATE CHARTS -Enclosed you will find rate charts for your use, as well as sample Open Enrollment announcement fliers that provide a list of medical and dental plans and the premium sharing costs for State employees. These fliers are master copies that can be reproduced for distribution to your employees. The fliers are provided for three different payroll schedules (Monthly, 24 Pay Periods, and 26 Pay Periods). Choose the flier that corresponds to your payroll schedule.

These fliers are designed to assist your employees in making informed decisions concerning their health and dental care. Please distribute them to your employees prior to the start of the Open Enrollment.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment period to employees and presents important information and changes that may affect their benefit selection. The newsletters are scheduled for delivery to monthly employers in mid-September. Please distribute them to your employees prior to the start of the Open Enrollment.

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

HEALTH PLAN COMPARISONS AND HANDBOOKS - Because there are no major plan changes for this Open Enrollment, employers should continue to use their supplies of the current SHBP Summary Program Description booklet, SHBP Plan Comparison Summary chart, and health and prescription drug plan member handbooks. These publications are not being revised for the Open Enrollment.

DENTAL PROGRAM HANDBOOK - Employers will be receiving a supply of the State Employee Group Dental Program Member Handbook which is being revised for this open enrollment to include new Current Dental Terminology (CDT) codes issued by the American Dental Association to identify and standardize dental procedures. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandates use of standard procedure codes in electronic processing. The new CDT codes were effective January 1, 2003 but will be implemented October 16, 2003 by the State Employee Group Dental Program plans. After that date, all participating dental plans must process all claims using only the CDT codes.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment will also be available for both employers and employees during the Open Enrollment period. Once Open Enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP plans is available in the Unified Provider Directory (UPD). The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans. Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

TAX$AVE

The State Employees Tax Savings Program (Tax$ave) Open Enrollment runs concurrent with the SHBP Open Enrollment (October 1 - 13, 2003). Tax$ave is a benefit program, available to State employees who are eligible for the SHBP. Tax$ave can save your employees tax money by paying health and dental benefit premiums and eligible unreimbursed medical and/or dependent care expenses from before-tax dollars. See the Tax$ave Open Enrollment materials for more information.

Internal Revenue Service (IRS) rules require that for an employee covered by the Premium Option Plan, payroll deductions for health and dental plan benefits remain the same for the entire plan year. Therefore, no coverage level changes can be made which result in a change in the amount of an employee's health and/or dental plan deduction unless a Qualifying Event has occurred.

ADDITIONAL INFORMATION

If you have any questions about the Open Enrollment or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call.

Thank you for your assistance in making the Open Enrollment a success for your employees.

Enclosure:

2003 SHBP Open Enrollment Milestone Chart
Health and Dental Plan Rate Charts/Flier
Health / Dental Plan Marketing Contacts


August 28, 2003

TO: State Health Benefits Program Participating Local Education Employers

FROM: Florence J. Sheppard, Assistant Director for Health Benefits

SUBJECT: SHBP Open Enrollment 2003 - Local Education Employers

The State Health Benefits Program (SHBP) Open Enrollment period for local Board of Education employees will begin on October 1, 2003 and end on October 31, 2003. All changes to coverage made during this open enrollment will be effective on January 1, 2004.

Completed employer certified health benefit applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. (The last day that certified applications must arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 7, 2003.)

Enclosed is a milestone chart that lists the critical dates of the Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the Open Enrollment.

In keeping with its current policy, the SHBP will not provide health fairs during this year's Open Enrollment.

RATES FOR 2004

The State Health Benefits Commission has approved new rates for the 2004 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2004 costs are based upon the actual claims experience of the group. Effective January 1, 2004, SHBP health plan rates for the Local Education Active Group will see the following aggregate percentage of increase:

  NJ PLUS Traditional Plan HMO Plans
(Composite Change)
Employee Prescription Drug Plan
Local Education Employers with Separate Rx Coverage 8.2% 3.3% 10.8% 16.9%
Local Education Employers without Separate Rx Coverage 10.4% 8.1% 10.8% N/A

PLAN INFORMATION

Mail order prescription drug copayments for members participating in Oxford Health Plans now meet the standard three-tier approach set for HMO plans that are part of the SHBP. Beginning January 1, 2004, the copayments for a 90-day mail order supply are as follows: $5 for generic drugs; $10 for preferred brands; and $20 for all other brand prescription drugs.

In accordance with the provisions of the retiree pilot project agreement, effective January 1, 2004, for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, retail copayments for a 30-day supply will increase to $6 for generic drugs; $13 for preferred brands; and $26 for all other brand prescription drugs. The mail order copayments for a 90-day supply will increase to $6 for generic drugs, $19 for preferred brands, $32 for all other brand prescription drugs. The out-of-pocket maximum will increase to $474.

Other than the items listed above, there are no other changes to plan benefits for this Open Enrollment.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

RATE CHARTS - Enclosed you will find approved rates for SHBP health and prescription drug plans. We have included rate charts for employers with and without prescription drug coverage. The listed rates are effective January 1, 2004 through December 31, 2004.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment period to employees and presents important information and changes that may affect their benefit selection. The newsletters are scheduled for delivery to employers in mid-September. Please distribute them to your employees prior to the start of the Open Enrollment.

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

HEALTH PLAN COMPARISONS AND HANDBOOKS - Because there are no major plan changes for this Open Enrollment, employers should continue to use their supplies of the currentSHBP Summary Program Descriptionbooklet, SHBP Plan Comparison Summary chart, and health and prescription drug plan member handbooks. These publications are notbeing revised for the Open Enrollment.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment will also be available for both employers and employees during the Open Enrollment period. Once Open Enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP plans is available in the Unified Provider Directory (UPD). The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans. Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

ADDITIONAL INFORMATION

If you have any questions about the Open Enrollment or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call.

Thank you for your assistance in making the Open Enrollment a success for your employees.

Enclosure:

2003 SHBP Open Enrollment Milestone Chart
Health Plan Rate Charts
Health Plan Marketing Contacts


August 28, 2003

TO: State Health Benefits Program Participating Local Employers

FROM: Florence J. Sheppard, Assistant Director for Health Benefits

SUBJECT: SHBP Open Enrollment 2003 - Local Government Employers

The State Health Benefits Program (SHBP) Open Enrollment period for local government employees will begin on October 1, 2003 and end on October 31, 2003. All changes to coverage made during this open enrollment will be effective on January 1, 2004.

Completed employer certified health benefit applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. (The last day that certified applications must arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 7, 2003.)

Enclosed is a milestone chart that lists the critical dates of the Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the Open Enrollment.

In keeping with its current policy, the SHBP will not provide health fairs during this year's Open Enrollment.

RATES FOR 2004

The State Health Benefits Commission has approved new rates for the 2004 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2004 costs are based upon the actual claims experience of the group. Effective January 1, 2004, SHBP health plan rates for the Local Government Active Group will see the following aggregate percentage of increase:

  NJ PLUS Traditional Plan HMO Plans
(Composite Change)
Employee Prescription Drug Plan
Local Government Employers with Separate Rx Coverage 4.3% 11.4% 10.8% 16.9%
Local Government Employers without Separate Rx Coverage 5.9% 13.1% 10.8% N/A

PLAN INFORMATION

Mail order prescription drug copayments for members participating in Oxford Health Plans now meet the standard three-tier approach set for HMO plans that are part of the SHBP. Beginning January 1, 2004, the copayments for a 90-day mail order supply are as follows: $5 for generic drugs; $10 for preferred brands; and $20 for all other brand prescription drugs.

In accordance with the provisions of the retiree pilot project agreement, effective January 1, 2004, for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, retail copayments for a 30-day supply will increase to $6 for generic drugs; $13 for preferred brands; and $26 for all other brand prescription drugs. The mail order copayments for a 90-day supply will increase to $6 for generic drugs, $19 for preferred brands, $32 for all other brand prescription drugs. The out-of-pocket maximum will increase to $474.

Other than the items listed above, there are no other changes to plan benefits for this Open Enrollment.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

RATE CHARTS-Enclosed you will find approved rates for SHBP health and prescription drug plans. We have included rate charts for employers with and without prescription drug coverage. The listed rates are effective January 1, 2004 through December 31, 2004.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment period to employees and presents important information and changes that may affect their benefit selection. The newsletters are scheduled for delivery to employers in mid-September. Please distribute them to your employees prior to the start of the Open Enrollment.

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

HEALTH PLAN COMPARISONS AND HANDBOOKS - Because there are no major plan changes for this Open Enrollment, employers should continue to use their supplies of the current SHBP Summary Program Descriptionbooklet, SHBP Plan Comparison Summary chart, and health and prescription drug plan member handbooks. These publications are not being revised for the Open Enrollment.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment will also be available for both employers and employees during the Open Enrollment period. Once Open Enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP plans is available in the Unified Provider Directory (UPD). The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans. Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

ADDITIONAL INFORMATION

If you have any questions about the Open Enrollment or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call.

Thank you for your assistance in making the Open Enrollment a success for your employees.

Enclosure:

2003 SHBP Open Enrollment Milestone Chart
Health Plan Rate Charts
Health Plan Marketing Contacts


August 28, 2003

TO: State Departmental Human Resource Directors, State Biweekly Human Resources Representatives

FROM: Florence J. Sheppard, Assistant Director for Health Benefits

SUBJECT: SHBP Open Enrollment 2003 - State Biweekly Employers

The State Health Benefits Program (SHBP) Open Enrollment period for all State employees will begin on October 1, 2003 and end on October 31, 2003. All changes to coverage made during this open enrollment will be effective on December 27, 2003 for State biweekly employees paid through State Centralized Payroll Unit.

Completed employer certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. (The last day that certified applications must arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 7, 2003.)

Enclosed is a milestone chart that lists the critical dates of the Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the Open Enrollment.

In keeping with its current policy, the SHBP will not provide health fairs during this year's Open Enrollment.

RATES FOR 2004

The State Health Benefits Commission has approved new health and dental rates for the 2004 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2004 costs are based upon the actual claims experience of the group. Effective January 1, 2004, SHBP health plan rates for the State Active Group will see the following aggregate percentage of increase:

PLAN TYPE RATE INCREASE
(Aggregate percentage)
NJ PLUS 12.2%
Traditional Plan 4.2%
HMO Plans 8.4%
State Prescription Drug Plan 15.5%
Dental Provider Organization (DPO) Plan 5.4%
Dental Expense Plan No Increase

PREMIUM SHARING

Unions representing most State employees have new contracts in effect that provide for premium sharing arrangements with the State. These arrangements remain unchanged from the last contract. For those employees subject to premium sharing:

  • Employees will pay 25% of the premium cost if enrolled in the Traditional Plan.

These percentages apply regardless of salary level or date of hire.

PLAN INFORMATION

Active Employees

  • Certain employees hired on or after July 1, 2003, are prohibited from enrolling in the Traditional Plan. This group includes non-aligned employees and State employees covered by the following bargaining organizations: CWA, AFSCME, IFPTE, and AFT.

  • No new enrollments will be allowed for Unity Dental Health Services, Inc., a Dental Plan Organization currently participating in the State Employee Group Dental Program. The State Health Benefits Commission has frozen new participant enrollment in Unity Dental. Therefore, for calendar year 2004 - including the 2003 Open Enrollment period - no one will be allowed to newly enroll in Unity Dental. Current members may remain enrolled.

  • The Dental Expense Plan and all participating Dental Plan Organizations will now be covering services described by new Current Dental Terminology (CDT) codes issued by the American Dental Association to identify and standardize dental procedures (see "Dental Program Handbook").

Retirees

  • In accordance with the provisions of the retiree pilot project agreement, effective January 1, 2004, for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, retail copayments for a 30-day supply will increase to $6 for generic drugs; $13 for preferred brands; and $26 for all other brand prescription drugs. The mail order copayments for a 90-day supply will increase to $6 for generic drugs, $19 for preferred brands, $32 for all other brand prescription drugs. The out-of-pocket maximum will increase to $474.

  • Mail order prescription drug copayments for retirees participating in Oxford Health Plans now meet the standard three-tier approach set for HMO plans that are part of the SHBP. Beginning January 1, 2004, the copayments for a 90-day mail order supply are as follows: $5 for generic drugs; $10 for preferred brands; and $20 for all other brand prescription drugs.

Other than the items listed above, there are no other changes to plan benefits for this Open Enrollment. Employees, however, should be made aware that plan benefit changes, based on collective bargaining agreements, are scheduled for July 2004. These will be specifically addressed through a Special Open Enrollment in the Spring of 2004.

DENTAL PROGRAM NOTE

Employees must maintain enrollment in a dental plan choice for a minimum of 12 months before they are permitted to change plans. Therefore, if an employee was not enrolled in a dental plan as of January 1, 2003; they cannot make a dental plan change during this open enrollment period.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

RATE CHARTS - Enclosed you will find rate charts for your use, as well as a sample Open Enrollment announcement flier that provides a list of medical and dental plans and the premium sharing costs for your employees. This flier is designed to assist your employees in making informed decisions concerning their health care coverage during this open enrollment.

State employees paid through the State's Centralized Payroll Unit are being provided with the Open Enrollment announcement flier with their September 26 paychecks.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment period to employees and presents important information and changes that may affect their benefit selection.

On September 26, the Health Capsule newsletter and Open Enrollment flier will be distributed with paychecks to all employees paid through the State's Centralized Payroll Unit.

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

HEALTH PLAN COMPARISONS AND HANDBOOKS - Because there are no major plan changes for this Open Enrollment, employers should continue to use their supplies of the current SHBP Summary Program Description booklet, SHBP Plan Comparison Summary chart, and health and prescription drug plan member handbooks. These publications are not being revised for the Open Enrollment.

DENTAL PROGRAM HANDBOOK - Employers will be receiving a supply of the State Employee Group Dental Program Member Handbook which is being revised for this open enrollment to include new Current Dental Terminology (CDT) codes issued by the American Dental Association to identify and standardize dental procedures. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandates use of standard procedure codes in electronic processing. The new CDT codes were effective January 1, 2003 but will be implemented October 16, 2003 by the State Employee Group Dental Program plans. After that date, all participating dental plans must process all claims using only the CDT codes.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.ht

Web-based presentations on the SHBP Open Enrollment will also be available for both employers and employees during the Open Enrollment period. Once Open Enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP plans is available in the Unified Provider Directory (UPD). The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans. Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

TAX$AVE

The State Employees Tax Savings Program (Tax$ave) Open Enrollment runs concurrent with the SHBP Open Enrollment (October 1 - 13, 2003). Tax$ave is a benefit program, available to State employees who are eligible for the SHBP. Tax$ave can save your employees tax money by paying health and dental benefit premiums and eligible unreimbursed medical and/or dependent care expenses from before-tax dollars. See the Tax$ave Open Enrollment materials for more information.

Internal Revenue Service (IRS) rules require that for an employee covered by the Premium Option Plan, payroll deductions for health and dental plan benefits remain the same for the entire plan year. Therefore, no coverage level changes can be made which result in a change in the amount of an employee's health and/or dental plan deduction unless a Qualifying Event has occurred.

ADDITIONAL INFORMATION

If you have any questions about the Open Enrollment or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call.

Thank you for your assistance in making the Open Enrollment a success for your employees.

Enclosure:

2003 SHBP Open Enrollment Milestone Chart
Health and Dental Plan Rate Charts/Flier
Health / Dental Plan Marketing Contacts


September 2003

TO: Certifying Officer: Teachers' Pension and Annuity Fund, Public Employees' Retirement System &
Police and Firemen's Retirement System

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Contributions, Third Quarter 2003 (July 1st to September 30th)

This memorandum has pertinent information concerning the completion of your Report of Contributions. Please read this memorandum before you make any changes to the Report.

DEADLINE FOR FILING

Teachers' Pension and Annuity Fund October 10, 2003
Public Employees' Retirement System October 10, 2003
Police and Firemen's Retirement System October 10, 2003

REPORTING PROCEDURES

Through the Transmittal Electronic Payments System (TEPS), employers must submit monthly transmittal remittances of approximately 1/3 of the total quarterly amounts due for pension contributions, contributory life insurance premiums and regular SACT. Token payments are not acceptable. Your September 2003 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through TEPS. The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. The TEPS remittance is also due by October 10, 2003.

With the Report of Contributions, you must complete and return the Transmittal Summary form for the 3rd quarter 2003. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

When you receive your quarterly Report, you should review it immediately. If you think you will have a problem in meeting the filing deadline, or if there is anything you do not understand, contact the Audit/Billing Section at (609) 292-3630. Normally reporting inquiries can be resolved with a telephone call. Please make all necessary corrections to the Report before you return it to the Division of Pensions and Benefits. Verify that all changes are explained, the Report is added correctly, and the totals agree with the sum of the transmittal remittances.

Please show on the quarterly Report the telephone number of the individual to be contacted if our auditors have questions concerning any items.

SIGNATURE

Your quarterly Report of Contributions must be signed. Any Report not bearing a signature will be considered delinquent until an affidavit is submitted by the Certifying Authority attesting to its contents. Initials will not be accepted.

CHANGE TO MEMBER PENSION RATES - TEACHERS' PENSION AND ANNUITY FUND

Chapter 133, P.L. 2001 reduced the member's pension rate from 4.5% to 3% for members of the Teachers' Pension and Annuity Fund. The pension rate for calendar year 2003 will remain at 3%. This is not a permanent change to the normal contribution rate of 5% of salary. The minimum repayment for pension loans and the minimum deduction for the purchase of service credit, which is based on the full 5% contribution rate, will not change.

Retroactive increases paid on or after January 1, 2002 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2002.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%. The pension rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change. The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS, CHAPTER 247, P.L. 1999

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date. Employees of local boards of education may participate in the SACT 403(b) program or a 403(b) plan administered by their employer. This law impacts both arrangements.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law. Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES

(Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees at its November 17, 1999 meeting adopted a rule change for N.J.A.C. 17:2-4.7 that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month. Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal shortage statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every Notice of Change is prenoted to ensure that the Division has the correct banking information. This normally takes 12 to 15 days.

CHANGE TO BASE SALARY

It is important to review the salary shown in column 6 and verify that it correctly reflects the member's base salary for the quarter. If the salary shown is not correct, draw a line through it and write the correct salary above it. Pension Contributions, Contributory Insurance, SACT, and Tax-Sheltered Annuity deductions must be changed to reflect amounts due on the new salary.

If your employees received a salary increase that is retroactive to a prior quarter, change column 6 to reflect the COMBINED TOTAL of:

(a) the new base salary for the quarter, plus,

(b) the additional base salary for the retroactive period.

The new quarterly base salary should be written in column 1 of the Report. This salary will be projected in column 6 of your next quarterly Report. This will eliminate the need to make numerous changes on your 4th quarter Report of Contributions. Also, in the "Remarks Column" of the current Report you should indicate that the members had a salary increase and the effective date.

REPORTING RETROACTIVE SALARY AFTER RETIREMENT

If a member receives a retroactive salary adjustment after retirement, do not write the member's name on the Report of Contributions. Complete a new Certification of Service and Final Salary and indicate that it is a retroactive adjustment after retirement by writing on the top of the Certification "Revised Due to Retro." Deduct the pension contributions and contributory life insurance, if applicable, from the retroactive check and remit that amount on behalf of the member to the Audit/Billing Section of this Division.

STATEMENTS OF OVERAGES/SHORTAGES

Overages and shortages that affect a member's Annuity Savings Fund identify whether or not the pension contributions are subject to the 414(h) provision. These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h). All overage and shortage statements that cover a period prior to January 1, 1987 are not subject to the 414(h) provision. Please note that all member shortages are to be paid by separate check. Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone us at (609) 292-3630.

Enclosures:

1. Quarterly Report of Contributions
2. Transmittal Summary for 3rd Quarter 2003
3. Envelope for Report


September 2003

TO: Certifying Officer, Autonomous State College/University

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Contributions, 3rd Quarter 2003

Your 3rd quarter 2003 tape Report of Contributions applicable to the Teachers' Pension and Annuity Fund, Public Employees' Retirement System, and Police and Firemen's Retirement System is due October 10, 2003. Your September 2003 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through the Transmittal Electronic Payments System (TEPS). The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. Your TEPS remittance is also due by October 10, 2003.

With the tape Report of Contributions, you must complete and return the Transmittal Summary form for the 3rd quarter 2003. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report. The Control and Certification form must also accompany your quarterly tape Report. This is essential as it attests to the accuracy and validity of the submitted documentation.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. A tape Report of Contributions will be considered received when it is submitted in an acceptable format, passes all EDP edits, and can be used to update members' accounts. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

CHANGE TO MEMBER PENSION RATES - TEACHERS' PENSION AND ANNUITY FUND

Chapter 133, P.L. 2001 reduced the member's pension rate from 4.5% to 3% for members of the Teachers' Pension and Annuity. The pension rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after December 15, 2001 should be deducted at 3% including any portion of the retroactive salary that covered a period prior to December 15, 2001.

This TPAF employee contribution rate will remain in effect through 2003 and will continue thereafter as long as the excess assets of the TPAF permit. This is not a permanent change to the normal contribution rate of 5% of salary. The minimum repayment for pension loans and the minimum deduction for the purchase of service credit, which is based on the full 5% contribution rate, will not change.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%. The rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change. The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS, CHAPTER 247, P.L. 1999

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law. Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES

(Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees adopted a rule change for N.J.A.C. 17:2-4.7, that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, and not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month. Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal shortage statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every Notice of Change is prenoted to ensure that the Division has the correct banking information. This normally takes 12 to 15 days.

STATEMENTS OF OVERAGES/SHORTAGES

Overage and shortage statements, which affect a member's Annuity Savings Fund, identify whether or not the pension contributions are subject to the 414(h) provision. These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h). Please note that all member shortages are to be paid by separate check. Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone Sal Cirigliano at (609) 292-2366.

Enclosures:

1) Transmittal Summary for 3rd Quarter 2003
2) Control and Certification Form


August 22, 2003

TO: State Departmental Human Resource Directors, State Biweekly Human Resources Representatives
State Monthly Benefits Administrators

FROM: Florence J. Sheppard, Assistant Director for Health Benefits

SUBJECT: Chapter 119, P.L. 2003 State Health Benefits Program Provisions

Chapter 119, P.L.2003, enacted on July 1, 2003, modifies the benefits of State employees under the New Jersey State Health Benefits Program (SHBP). The law provides that a State employee hired on or after July 1, 2003 and enrolled in SHBP may not be eligible for coverage in the Traditional Plan pursuant to a binding collective negotiations agreement or pursuant to the application by the State Health Benefits Commission of the terms of any collective negotiations agreement to non-aligned State employees.

The determination as to whether or not an employee hired on or after July 1 is eligible for the Traditional Plan is based on the following:

  • If a new employee hired on or after July 1 is aligned, that is, in a position represented by a bargaining unit, the collective negotiations agreement between the State or the State university (Rutgers, UMDNJ, or NJIT) and the union that covers the newly hired employee's position determines eligibility for the Traditional Plan. As of this writing, the following bargaining units have agreed to the provisions of Chapter 119 in their contracts with the State: the Communication Workers of America (CWA), American Federation of State, County, and Municipal Employees Council (ASFME), and International Federation of Professional and Technical Engineers (IFPTE). The tentative agreement between the State and the American Federation of Teachers (AFT) includes this provision, but the contract has not yet been ratified as of the date of this letter. Once ratified, this provision will also apply to AFT represented employees.

  • On August 13, 2003, pursuant to the legislation, the State Health Benefit Commission (SHBC) extended the same provision to new employees hired on or after July 1 who are not aligned with a bargaining unit; those employees are not eligible for coverage under the Traditional Plan. This includes all non-aligned employees with the State, State colleges and universities, as well as non-aligned employees of the Judicial and Legislative branches of government.

Employees who are not eligible for the Traditional Plan enrollment can choose from among the six other plans offered by the SHBP - NJ PLUS, a point of service plan, or one of five HMOs: Aetna, AmeriHealth, CIGNA HealthCare, Health Net, and Oxford. If we identify any employees who have submitted applications for Traditional Plan coverage who are not eligible for that plan, we will notify you so you may have them select one of the other plans.

State employees hired on or after July 1, 2003 who are barred from participation in the Traditional Plan will not be eligible to select the Traditional Plan upon retirement. These employees will not be offered a plan for which they were ineligible as active employees.

If other bargaining units agree to this provision of Chapter 119, P.L. 2003 as their contracts are renewed, we will notify you.

If you have any questions regarding this matter, please call the Division's Office of Client Services at (609) 292-7524.


August 15, 2003

TO: State University and College Benefits Administrators, State Monthly Benefits Administrators

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Open Enrollment For The New Jersey State Employees Tax Savings Program (Tax$ave 2004)

The annual open enrollment for the calendar year 2004 New Jersey State Employees Tax Savings Program (Tax$ave 2004) will be conducted from October 1 through October 31, 2003. Employees of the State, State authorities, State universities, and State colleges who are eligible for participation in the New Jersey State Health Benefits Program (SHBP) may participate in Tax$ave.

About Tax$ave

Tax$ave consists of three components:

1.The Premium Option Plan (POP);

2.The Unreimbursed Medical Spending Account (UMSA); and

3.The Dependent Care Spending Account (DCSA).

Tax$ave offers eligible employees the opportunity to increase their available income by reducing their federal tax liability. Each year eligible employees should review their personal financial circumstances and decide if they wish to participate or not. Open Enrollment offers employees the opportunity to conduct this review and then act on their decision.

Premium Option Plan

Enrollment in the Premium Option Plan is automatic. This saves your employees tax money by paying health and dental premiums from pre-tax dollars and reducing their tax liability. If an employee does not wish to take advantage of the Premium Option Plan in 2004 (and therefore pay more in federal, Social Security, and Medicare taxes) he or she should file a Declination of Premium Option Plan (POP) form.

Flexible Spending Accounts

The Unreimbursed Medical Spending Account (UMSA); and the Dependent Care Spending Account (DCSA) are also referred to as Flexible Spending Accounts (FSA's).

  • New for 2004 - Tax$ave Unreimbursed Medical Spending Accounts will introduce the BennyTM Card, a new feature that makes the UMSA easier to use. The Benny Card is a special MasterCard®that draws on the value of the employee's annual UMSA election amount. Each time an employee uses Benny to pay for a qualified health care expense at a health care provider or business that accepts MasterCard, the amount of the qualified purchase is transferred from the UMSA automatically - eliminating the need to lay out cash at the time of purchase or file for a reimbursement.

Unlike the POP or the plans of the SHBP, prior participation in a Tax$ave FSA in 2003 does not carry over automatically into 2004. Employees must enroll again to participate in an FSA for calendar year 2004.

Employees have three ways of enrolling in the Tax$ave FSA accounts this year: mail, telephone, and Internet. The Tax$ave publications will provide the following instructions to employees:

  • Mail: FSA Election Applications must be mailed directly to Horizon Healthcare by the employee. All election forms must be postmarked no later than October 31, 2003, to be accepted. Those postmarked after October 31, 2003 will be returned without action. Benefits offices should not be involved in processing or mailing FSA Election Applications.

  • Telephone: Employees may either enroll (or reenroll) in the UMSA or DCSA plans for 2004 over the phone by calling Horizon Healthcare's automated voice response unit at 1-800-224-4426. This is a great opportunity to quickly and easily go through the process of a new or repeat enrollment. Horizon will inform current participating employees of this opportunity through a direct mailing in September. The deadline for enrollment by telephone is midnight, October 31, 2003.

  • ·Internet: Again this year employees have the ability to enroll (or reenroll) over the Internet. Go to the Horizon Healthcare Web page through a link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm and follow the simple directions. The deadline for enrollment over the Internet is midnight, October 31, 2003.
Employee Seminars

Upon request, Horizon Healthcare will provide Tax$ave educational seminars, at your workplace, for interested employees. The seminars are about 60 minutes in duration (including questions and answers). These have proven to be very successful educational tools and we strongly encourage you to make one available to your employees. Please see the enclosed request form to schedule a Horizon Healthcare representative.

Tax$ave Support Materials

The remainder of this letter provides information on the Tax$ave Open Enrollment publications and support available to assist you in explaining this important benefit program to your employees. Please do your best to make a concerted effort to inform your employees of the open enrollment and to educate them on the valuable benefits that Tax$ave offers them. We believe that more employees will participate in Tax$ave if they are made aware and understand the value of the tax savings offered by the program.

Enclosed is the Tax$ave Open Enrollment Milestones chart that lists the critical dates of the Tax$ave 2004 Annual Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the open enrollment.

The Division will also provide State Monthly employers, State Universities, and State Colleges with sufficient copies of the Tax$ave 2004 Open Enrollment News and the Premium Option Plan 2004 pamphlet for all eligible employees. Horizon Healthcare will provide sufficient copies of the FSA pamphlet for distribution to all of your eligible employees.

  • The Tax$ave 2004 Open Enrollment News announces the open enrollment, outlines the components of the program with emphasis on its tax saving advantages, and identifies the October 31, 2003 deadline for submission of all election materials.

  • The Premium Option Plan 2004 pamphlet explains the advantages and disadvantages of participation.

  • The FSA pamphlet describes the Unreimbursed Medical Spending Account (UMSA) and the Dependent Care Spending Account (DCSA).

These publications will be shipped to employers early in September and you should distribute them to your employees before the Open Enrollment start date on October 1, 2003. Preview copies of these publications are enclosed with this letter.

We also encourage you to provide your employees with reminders of the Tax$ave Open Enrollment to ensure they don't allow this opportunity to slip by without action.

The other open enrollment materials you will need are the FSA Election Kits and the Declination of Premium Option Plan (POP) for Plan Year 2004 form.

  • FSA Election Kits for 2004 will be sent directly to benefits administrators by Horizon Healthcare, along with a request form for additional kits. Please provide the FSA Election Kits to those employees who request them.

  • This letter includes a minimal supply of the declination forms. These can be copied for use by those few employees who do not wish to participate in the POP and, therefore, pay more in tax. (Note: do not distribute POP Declination forms to employees unless they ask for one.) If an employee chooses not to save tax dollars under the Tax$ave Premium Option Plan and wants to pay more federal income, Social Security, and Medicare taxes on the salary used to pay their medical and dental premiums in 2004, they must complete a POP form declining the federal tax break they could receive. Employees should request these forms from you. We will be instructing employees to return the Declination of Premium Option Plan (POP) forms to benefits administrators by October 31, 2003. Benefits administrators must then forward declination forms to payroll.

We appreciate your cooperation. Your involvement in the Tax$ave Open Enrollment is key to your employees receiving the valuable benefits offered by this program. If you have any questions about Tax$ave 2004 or the open enrollment, call the Horizon Healthcare Insurance Agency, Inc. at 1-800-224-4426, or visit the Division of Pensions and Benefits' Tax$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm

Enclosures:

Request for Tax$ave 2004 Employee Seminars
Tax$ave 2004 Open Enrollment Milestones
Tax$ave 2004 Open Enrollment News (sample)
The Premium Option Plan 2004 Pamphlet (sample)
Tax$ave Pamphlet - Savings You Can Bank On (sample)
Declination of Premium Option Plan (POP) for Plan Year 2004 (three copies enclosed)


August 15, 2003

TO: State Department Human Resource Directors, State Biweekly Payroll Locations Benefits Administrators

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Open Enrollment For The New Jersey State Employees Tax Savings Program (Tax$ave 2004)

The annual open enrollment for the calendar year 2004 New Jersey State Employees Tax Savings Program (Tax$ave 2004) will be conducted from October 1 through October 31, 2003. Employees of the State who are eligible for participation in the New Jersey State Health Benefits Program (SHBP) may participate in Tax$ave.

About Tax$ave

Tax$ave consists of three components:

1.The Premium Option Plan (POP);

2.The Unreimbursed Medical Spending Account (UMSA); and

3.The Dependent Care Spending Account (DCSA).

Tax$ave offers eligible employees the opportunity to increase their available income by reducing their federal tax liability. Each year eligible employees should review their personal financial circumstances and decide if they wish to participate or not. Open Enrollment offers employees the opportunity to conduct this review and then act on their decision.

Premium Option Plan

Enrollment in the Premium Option Plan is automatic. This saves your employees tax money by paying health and dental premiums from pre-tax dollars and reducing their tax liability. If an employee does not wish to take advantage of the Premium Option Plan in 2004 (and therefore pay more in federal, Social Security, and Medicare taxes) he or she should file a Declination of Premium Option Plan (POP) form.

Flexible Spending Accounts

The Unreimbursed Medical Spending Account (UMSA); and the Dependent Care Spending Account (DCSA) are also referred to as Flexible Spending Accounts (FSA's).

  • New for 2004 - Tax$ave Unreimbursed Medical Spending Accounts will introduce the BennyTM Card, a new feature that makes the UMSA easier to use. The Benny Card is a special MasterCard® that draws on the value of the employee's annual UMSA election amount. Each time an employee uses Benny to pay for a qualified health care expense at a health care provider or business that accepts MasterCard, the amount of the qualified purchase is transferred from the UMSA automatically - eliminating the need to lay out cash at the time of purchase or file for a reimbursement.

Unlike the POP or the plans of the SHBP, prior participation in a Tax$ave FSA in 2003 does not carry over automatically into 2004. Employees must enroll again to participate in an FSA for calendar year 2004.

Employees have three ways of enrolling in the Tax$ave FSA accounts this year: mail, telephone, and Internet. The Tax$ave publications will provide the following instructions to employees:

  • Mail: FSA Election Applications must be mailed directly to Horizon Healthcare by the employee. All election forms must be postmarked no later than October 31, 2003, to be accepted. Those postmarked after October 31, 2003 will be returned without action. Benefits offices should not be involved in processing or mailing FSA Election Applications.

  • Telephone: Employees may either enroll (or reenroll) in the UMSA or DCSA plans for 2004 over the phone by calling Horizon Healthcare's automated voice response unit at 1-800-224-4426. This is a great opportunity to quickly and easily go through the process of a new or repeat enrollment. Horizon will inform current participating employees of this opportunity through a direct mailing in September. The deadline for enrollment by telephone is midnight, October 31, 2003.

  • Internet: Again this year employees have the ability to enroll (or reenroll) over the Internet. Go to the Horizon Healthcare Web page through a link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm and follow the simple directions. The deadline for enrollment over the Internet is midnight, October 31, 2003.

Employee Seminars

Upon request, Horizon Healthcare will provide Tax$ave educational seminars, at your workplace, for interested employees. The seminars are about 60 minutes in duration (including questions and answers). These have proven to be very successful educational tools and we strongly encourage you to make one available to your employees. Please see the enclosed request form to schedule a Horizon Healthcare representative.

Tax$ave Support Materials

The remainder of this letter provides information on the Tax$ave Open Enrollment publications and support available to assist you in explaining this important benefit program to your employees. Please do your best to make a concerted effort to inform your employees of the open enrollment and to educate them on the valuable benefits that Tax$ave offers them. We believe that more employees will participate in Tax$ave if they are made aware and understand the value of the tax savings offered by the program.

Enclosed is the Tax$ave Open Enrollment Milestones chart that lists the critical dates of the Tax$ave 2004 Annual Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the open enrollment.

The initial announcement of the open enrollment to employees paid through Centralized Payroll will be made in a September 12 paycheck message and will be accompanied by three payroll inserts. These inserts are:

  • The Tax$ave 2004 Open Enrollment News that announces the open enrollment, outlines the components of the program with emphasis on its tax saving advantages, and identifies the October 31, 2003 deadline for submission of all election materials;

  • An FSA pamphlet that describes the Unreimbursed Medical Spending Account (UMSA) and the Dependent Care Spending Account (DCSA); and

  • The Premium Option Plan 2004 pamphlet that explains the advantages and disadvantages of participation.

The September 26 paychecks will carry another Tax$ave 2004 Open Enrollment announcement message and "reminder messages" will be provided to employees through paycheck messages on October 10 and October 24. The text of these check message announcements and preview copies of the Tax$ave publications are enclosed with this letter.

The other open enrollment materials you will need are the FSA Election Kits and the Declination of Premium Option Plan (POP) for Plan Year 2004 form.

  • FSA Election Kits for 2004 will be sent directly to benefits administrators by Horizon Healthcare, along with a request form for additional kits. Please provide the FSA Election Kits to those employees who request them.

  • This letter includes a minimal supply of the declination forms. These can be copied for use by those few employees who do not wish to participate in the POP and, therefore, pay more in tax. (Note: do not distribute POP Declination forms to employees unless they ask for one.) If an employee chooses not to save tax dollars under the Tax$ave Premium Option Plan and wants to pay more federal income, Social Security, and Medicare taxes on the salary used to pay their medical and dental premiums in 2004, they must complete a POP form declining the federal tax break they could receive. Employees should request these forms from you. We will be instructing employees to return the Declination of Premium Option Plan (POP) forms to benefits administrators by October 31, 2003. Benefits administrators must then forward declination forms to Centralized Payroll by November 14, 2003.

We appreciate your cooperation. Your involvement in the Tax$ave Open Enrollment is key to your employees receiving the valuable benefits offered by this program. If you have any questions about Tax$ave 2004 or the open enrollment, call the Horizon Healthcare Insurance Agency, Inc. at 1-800-224-4426, or visit the Division of Pensions and Benefits' Tax$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm

Enclosures:

Request for Tax$ave 2004 Employee Seminars
Tax$ave 2004 Open Enrollment Milestones
Open Enrollment Check Messages
Tax$ave 2004 Open Enrollment News (sample)
The Premium Option Plan 2004 Pamphlet (sample)
Tax$ave Pamphlet - Savings You Can Bank On (sample)
Declination of Premium Option Plan (POP) for Plan Year 2004 (three copies enclosed)


August 1, 2003

TO: Certifying Officers of Local Authorities and Agencies

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program Cost Information

This letter provides cost information that will assist you in determining whether or not your location should offer the Early Retirement Incentive Program authorized in Chapter 127, P.L. 2003 to eligible employees enrolled in the Public Employees' Retirement System (PERS). This Local Authority ERI Program was described to you in a letter dated July 23, 2003. A copy of that letter can be viewed on the Division's ERI Web site (click the ERI link from our home page at: www.state.nj.us/treasury/pensions). An attached chart summarizes the Local Authority ERI Program eligibility requirements and incentives.

The attached work sheet provides an estimate of pension costs calculated by the PERS actuary for the "eligible" employees who were reported as active at your location as of June 30, 2002. The Actuary used existing data to allow us to provide you cost information very quickly. If you have hired any ERI-eligible employees since June 30, 2002, they will not be reflected on this report. We can make special arrangements to refine the data at a later date, if it is necessary for your governing body's decision-making process. If we were to wait to use the June 30, 2003 data that has not yet been submitted by all employers, it would be several months before we could provide you with cost information.

The report is based on several assumptions. It assumes that the members will:

  • Remain active at your location until retirement;

  • Work continuously from June 30, 2002 until retirement;

  • Have received salary increases since 2002 in line with the actuarial assumptions of the PERS (5.95%);

  • All retire on July 1, 2004. The ERI laws permit a large number of possible effective dates; we selected the end of the fiscal year for this estimate;

  • Not be extended beyond their ERI retirement dates; and

  • Not have made a purchase of service credit between June 30, 2002 and their retirement.

Additions or deletions may be required based on your current records to reflect terminations, returns from leave of absence, and transfers.

The total estimated additional pension costs are shown in the last column that has printed data. This total cost consists of up to three components, depending upon the individual circumstances. The first component is the incentive itself. For category 1 employees, that is the lifetime cost of the extra years of service provided under the incentive and the acceleration of retirement costs. The acceleration costs are primarily those pension payments made because the individual retires earlier than he otherwise would have had there not been an ERI. If the member will be under age 55 at retirement, there is also a cost because of the elimination of the reduction of the age penalty. Any category 2 pension costs shown will only be acceleration costs since the incentive offered is employer-paid health benefits and not a pension enhancement. The additional cost of health benefit coverage is considered to be a separate, pay-as-you go cost that is not reflected in the pension liability (see the next paragraph). However, if your location does not normally provide its retirees with post-retirement medical coverage, then the incentive for category 2 will be the same as that offered for category 3. The category 3 costs are the $500 per month for two years (present value of $10,972) and the acceleration costs, if any.

There are other costs that will be incurred by an employer offering the Local Authority ERI Program under Chapter 127. The cost of lifetime health benefits for category 2 eligible employees and their dependent family members is specifically identified in the law. If the employer normally reimburses its retirees for Medicare Part B premiums, this should also be included in the health benefits costs. The annual cost for a retiree for health benefits depends upon the retiree's Medicare status, family situation, and plan selection, all of which could change year-by-year. For employers that participate in the State Health Benefits Program, the 2003 annual cost (not including any Medicare reimbursement) for a retiree in the Traditional Plan, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years. Current SHBP rates for retirees are available on the Division's Web site through the SHBP links.

Other possible costs to an employer for the ERI are dependent upon the employer's policies or contractual agreements with its employees. The most significant of these might be the payment for unused sick and or vacation time to an employee who retires. Although this is a cost that would probably be paid eventually without the ERI, it is accelerated by the ERI.

How to use the worksheet

The worksheet consists of a separate listing of the eligible PERS employees by ERI Category. The worksheet allows you to capture the first year costs and savings generated by the program. Ideally, you should do a year-by-year cost and savings analysis for as long as you would be paying for the program. This will allow you to see the annual budgetary impact, as well as the total costs and savings of a decision to adopt the ERI. The Worksheet will give you a rough estimate of costs and savings on which to make a decision.

Complete the worksheet as follows:

I. Eliminate those individuals not eligible for the ERI because they are part-time or have already terminated employment. You may also eliminate those you believe will not retire even if offered the incentive.

II. Identify those employees who will elect to retire by marking a "Y" in the ERI column. For each employee so marked, complete the rest of the worksheet as follows:

Cost
  1. Use the "Estimated Additional Liability (Total)" figure to calculate your annual additional pension costs and insert that into Column A. This calculation will be based on the funding vehicle chosen to pay for these pension costs. If your location does not bond these costs, the payment method is 15 years at 8.75% interest with payments increasing by 5.95% per year. To determine the first year's cost under this payment schedule, divide the total pension liability by 12.2523451 and multiply the result by 1.0595. If you are doing a multi-year analysis, you can get a subsequent year's payment by multiplying the previous year's payment by 1.0595.
  1. In column B, insert other costs that you will have to incur such as payment for unused sick leave, vacation pay, health benefits, etc.

  2. Total columns A and B to reflect one year's total estimated cost.
Savings
  1. In column C, insert the current salary to be eliminated. If the individual is to be replaced, only insert the incremental amount to be eliminated. For example, if you will replace an individual earning $50,000 by someone earning $40,000, the net savings to be inserted in column C would be $10,000.
  1. In column D, enter FICA savings. (Multiply column C by .0620 up to the Social Security maximum and add Part A Medicare savings {Multiply the full amount of column C by the .0145 contribution percentage}).

  2. In column E, insert the other employer costs that would be eliminated as a result of the position being vacated (or incremental costs if the employee is replaced). Such costs include health benefits as an employee, unemployment insurance, disability insurance, etc.

  3. Total columns C, D, and E, to reflect one year's total estimated savings.

III. Compare the one-year total estimated cost to the one-year total estimated savings. If you have employees who qualify for the ERI because of a purchase made since June 30, 2002, be aware that savings and costs for them will not be included or, if they moved from a lower to higher ERI category, the costs may be understated.

Important Considerations:

  • The annual cost of health benefits under Category 2 is a lifetime cost. However, if the employer already pays for the health benefits of its retirees with over 25 years of service, the annual cost of health benefits under Category 2 can be considered an additional cost for between one to five years, depending upon the employee's years of service. If these category 2 individuals hadn't taken the ERI, they would have presumably have worked until they attained 25 years and then retired with employer-paid health benefits.

  • If you do a year-by-year cost/savings comparison, savings for a vacated position that you do not refill should only be assumed until the individual would have normally retired, i.e., approximately three to five years.

Obtaining ERI Information

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about the Local Authority ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

Local Authority ERI Requirements and Incentives

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee, age 50 or older with 25 or more years of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Service or Early1 Retirement: - 3 additional years of service.
1 No reduction for age if under 55
Veteran Retirement2:
- 3/55 of Final Salary added to the retirement allowance.
Category 2 - fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Employers who Provide Paid Health Benefits to Retirees:
Employer paid post-retirement medical coverage
for the employee and eligible dependents3
3 Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.

Employers who do not Provide Paid Health Benefits to Retirees:

$500 per month
for 24 months following the date of retirement.
Category 3 - fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
2Must meet special veteran requirements of the PERS.Age 60 with 20 years of service (Category 2 only). Age 55 with 25 years of service.Age 55 with 35 years of service.

August 1, 2003

TO: Certifying Officers of County Colleges

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program Cost Information

This letter provides cost information that will assist you in determining whether or not your location should offer the Early Retirement Incentive Program authorized in Chapter 128, P.L. 2003 to eligible employees enrolled in the Public Employees' Retirement System (PERS), Teachers' Pension and Annuity Fund (TPAF), or the Alternate Benefit Program (ABP). This Local Government ERI Program was described to you in a letter dated July 21, 2003. A copy of that letter can be viewed on the Division's ERI Web site (click the ERI link from our home page at www.state.nj.us/treasury/pensions). An attached chart summarizes the Local Government ERI Program eligibility requirements and incentives.

The attached work sheet provides an estimate of pension costs calculated by the PERS and TPAF actuaries for the "eligible" employees who were reported as active at your location as of June 30, 2002. The Actuaries used existing data to allow us to provide you cost information very quickly. If you have hired any ERI-eligible employees since June 30, 2002, they will not be reflected on this report. We can make special arrangements to refine the data at a later date, if it is necessary for your governing body's decision-making process. If we were to wait to use the June 30, 2003 data that has not yet been submitted by all employers, it would be several months before we could provide you with cost information.

The report is based on several assumptions. It assumes that the members will:

  • Remain active at your location until retirement;

  • Work continuously from June 30, 2002 until retirement;

  • Have received salary increases since 2002 in line with the actuarial assumptions of the PERS and TPAF (5.95%);

  • All retire on July 1, 2004. The ERI laws permit a large number of possible effective dates; we selected the end of the fiscal year for this estimate;

  • Not be extended beyond their ERI retirement dates; and

  • Not have made a purchase of service credit between June 30, 2002 and their retirement.

Additions or deletions may be required based on your current records to reflect terminations, returns from leave of absence, and transfers. The report also does not include any information on your ABP members who may be eligible for this ERI Program. You will have to add you eligible ABP members to the list and the additional costs you will incur if they take advantage of this ERI Program.

The total estimated additional PERS and TPAF pension costs are shown in the last column that has printed data. This total cost consists of up to three components, depending upon the individual circumstances. The first component is the incentive itself. For category 1 employees, that is the lifetime cost of the extra years of service provided under the incentive and the acceleration of retirement costs. The acceleration costs are primarily those pension payments made because the individual retires earlier than he otherwise would have had there not been an ERI. If the member will be under age 55 at retirement, there is also a cost because of the elimination of the reduction of the age penalty. Any category 2 pension costs shown will only be acceleration costs since the incentive offered is employer-paid health benefits and not a pension enhancement. The additional cost of health benefit coverage is considered to be a separate, pay-as-you go cost that is not reflected in the pension liability (see the next paragraph). The category 3 costs are the $500 per month for two years (present value of $10,972) and the acceleration costs, if any.

There are other costs that will be incurred by an employer offering the Local Government ERI Program under Chapter 128. The cost of health benefits through the State Health Benefits Program (SHBP) for category 1 eligible employees and their dependent family members for three years after retirement is specifically identified in the law. This includes the cost of any Medicare Part B reimbursement due the member and spouse. The cost of lifetime health benefits through the State Health Benefits Program (SHBP) for category 2 eligible employees and their dependent family members is also specifically identified in the law. If the employer normally reimburses its retirees for Medicare Part B premiums, this should also be included in the health benefits costs. The annual cost for a retiree for health benefits depends upon the retiree's Medicare status, family situation, and plan selection, all of which could change year-by-year. The 2003 annual cost (not including any Medicare reimbursement) for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years. Current SHBP rates for retirees are available on the Division's Web site through the SHBP links.

Other possible costs to an employer for the ERI are dependent upon the employer's policies or contractual agreements with its employees. The most significant of these might be the payment for unused sick and or vacation time to an employee who retires. Although this is a cost that would probably be paid eventually without the ERI, it is accelerated by the ERI.

How to use the worksheet.

The worksheet consists of a separate listing of the eligible PERS and TPAF employees by ERI Category. The worksheet allows you to capture the first year costs and savings generated by the program. Ideally, you should do a year-by-year cost and savings analysis for as long as you would be paying for the program. This will allow you to see the annual budgetary impact, as well as the total costs and savings of a decision to adopt the ERI. The Worksheet will give you a rough estimate of costs and savings on which to make a decision.

Complete the worksheet as follows:

I. Eliminate those individuals not eligible for the ERI because they are part-time or have already terminated employment. You may also eliminate those you believe will not retire even if offered the incentive.

II. Add your eligible ABP members to the worksheet or handle them on a separate worksheet.

III. Identify those employees who will elect to retire by marking a "Y" in the ERI column. For each employee so marked, complete the rest of the worksheet as follows:

Cost
  1. For your employees in the PERS and TPAF, use the "Estimated Additional Liability (Total)" figure to calculate your annual additional pension costs and insert that into Column A. This calculation will be based on the funding vehicle chosen to pay for these pension costs. If your location does not bond these costs, the payment method is 15 years at 8.75% interest with payments increasing by 5.95% per year. To determine the first year's cost under this payment schedule, divide the total pension liability by 12.2523451 and multiply the result by 1.0595. If you are doing a multi-year analysis, you can get a subsequent year's payment by multiplying the previous year's payment by 1.0595.
  1. For your employees in the ABP, insert the incentive you will pay for category 1 and 3 retirees in Column A.
  1. In column B, insert other costs that you will have to incur such as payment for unused sick leave, vacation pay, health benefits, etc.

  2. Total columns A and B to reflect one year's total estimated cost.
Savings
  1. In column C, insert the current salary to be eliminated. If the individual is to be replaced, only insert the incremental amount to be eliminated. For example, if you will replace an individual earning $50,000 by someone earning $40,000, the net savings to be inserted in column C would be $10,000.
  1. In column D, enter FICA savings. (Multiply column C by .0620 up to the Social Security maximum and add Part A Medicare savings {Multiply the full amount of column C by the .0145 contribution percentage}).

  2. In column E, insert the other employer costs that would be eliminated as a result of the position being vacated (or incremental costs if the employee is replaced). Such costs include health benefits as an employee, unemployment insurance, disability insurance, etc.

  3. Total columns C, D, and E, to reflect one year's total estimated savings.

IV. Compare the one-year total estimated cost to the one-year total estimated savings. If you have employees who qualify for the ERI because of a purchase made since June 30, 2002, be aware that savings and costs for them will not be included or, if they moved from a lower to higher ERI category, the costs may be understated.

Important Consideration: If you do a year-by-year cost/savings comparison, savings for a vacated position that you do not refill should only be assumed until the individual would have normally retired, i.e., approximately three to five years.

Obtaining ERI Information

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about the Local Governmental ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

Local Government ERI Requirements and Incentives
(County Community Colleges)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee, age 50 or older with 25 or more years of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer.

PERS and TPAF
Service or Early4 Retirement
- 3 additional years of service.
4No reduction for age if under 55
Veteran Retirement5 - 3/55 of Final Salary added to the retirement allowance.

ABP6
100% of base annual salary paid in two equal installments one month and thirteen months after retirement.

Category 2 - fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents.
Category 3 - fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
5Must meet special veteran requirements of the PERS or TPAF.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.·
  • Age 55 with 35 years of service.
6Category 1 and 3 Payments to ABP MembersThe category 1 and 3 payments will be made to the ABP Member's retirement annuity, as an employer contribution, up to the maximum contribution allowable under Section 415 of the Internal Revenue Code ($40,000 in 2003). Any payment amount in excess of that limit will be contributed by the employer to a 403(b) contract on the member's behalf up to the maximum allowed for before tax contributions under the Internal Revenue Code (an additional $40,000 in 2003). If any payment amounts exist in excess of these maximum limits, that amount will be paid to the member and will be deemed by the IRS to be wages subject to normal taxation. In the calendar year after retirement, employer contributions cannot be made to an individual's retirement account, so the employer will make payments directly into the 403(b) account on the member's behalf.


August 1, 2003

TO: Certifying Officers of Municipalities and Counties

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program Cost Information

This letter provides cost information that will assist you in determining whether or not your location should offer the Early Retirement Incentive Program authorized in Chapter 128, P.L. 2003 to eligible employees enrolled in the Public Employees' Retirement System (PERS). This Local Government ERI Program was described to you in a letter dated July 21, 2003. A copy of that letter can be viewed on the Division's ERI Web site (click the ERI link from our home page at www.state.nj.us/treasury/pensions). An attached chart summarizes the Local Government ERI Program eligibility requirements and incentives.

The attached work sheet provides an estimate of pension costs calculated by the PERS actuary for the "eligible" employees who were reported as active at your location as of June 30, 2002. The Actuary used existing data to allow us to provide you cost information very quickly. If you have hired any ERI-eligible employees since June 30, 2002, they will not be reflected on this report. We can make special arrangements to refine the data at a later date, if it is necessary for your governing body's decision-making process. If we were to wait to use the June 30, 2003 data that has not yet been submitted by all employers, it would be several months before we could provide you with cost information.

The report is based on several assumptions. It assumes that the members will:

  • Remain active at your location until retirement;

  • Work continuously from June 30, 2002 until retirement;

  • Have received salary increases since 2002 in line with the actuarial assumptions of the PERS (5.95%);

  • All retire on July 1, 2004. The ERI laws permit a large number of possible effective dates; we selected the end of the fiscal year for this estimate;

  • Not be extended beyond their ERI retirement dates; and

  • Not have made a purchase of service credit between June 30, 2002 and their retirement.

Additions or deletions may be required based on your current records to reflect terminations, returns from leave of absence, and transfers.

The total estimated additional pension costs are shown in the last column that has printed data. This total cost consists of up to three components, depending upon the individual circumstances. The first component is the incentive itself. For category 1 employees, that is the lifetime cost of the extra years of service provided under the incentive and the acceleration of retirement costs. The acceleration costs are primarily those pension payments made because the individual retires earlier than he otherwise would have had there not been an ERI. If the member will be under age 55 at retirement, there is also a cost because of the elimination of the reduction of the age penalty. Any category 2 pension costs shown will only be acceleration costs since the incentive offered is employer-paid health benefits and not a pension enhancement. The additional cost of health benefit coverage is considered to be a separate, pay-as-you go cost that is not reflected in the pension liability (see the next paragraph). The category 3 costs are the $500 per month for two years (present value of $10,972) and the acceleration costs, if any.

There are other costs that will be incurred by an employer offering the Local Government ERI Program under Chapter 128. The cost of lifetime health benefits through the State Health Benefits Program (SHBP) for category 2 eligible employees and their dependent family members is specifically identified in the law. If the employer normally reimburses its retirees for Medicare Part B premiums, this should also be included in the health benefits costs. The annual cost for a retiree for health benefits depends upon the retiree's Medicare status, family situation, and plan selection, all of which could change year-by-year. The 2003 annual cost (not including any Medicare reimbursement) for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years. Current SHBP rates for retirees are available on the Division's Web site through the SHBP links.

Other possible costs to an employer for the ERI are dependent upon the employer's policies or contractual agreements with its employees. The most significant of these might be the payment for unused sick and or vacation time to an employee who retires. Although this is a cost that would probably be paid eventually without the ERI, it is accelerated by the ERI.

How to use the worksheet.

The worksheet consists of a separate listing of the eligible PERS employees by ERI Category. The worksheet allows you to capture the first year costs and savings generated by the program. Ideally, you should do a year-by-year cost and savings analysis for as long as you would be paying for the program. This will allow you to see the annual budgetary impact, as well as the total costs and savings of a decision to adopt the ERI. The Worksheet will give you a rough estimate of costs and savings on which to make a decision.

Complete the worksheet as follows:

I. Eliminate those individuals not eligible for the ERI because they are part-time or have already terminated employment. You may also eliminate those you believe will not retire even if offered the incentive.

II. Identify those employees who will elect to retire by marking a "Y" in the ERI column. For each employee so marked, complete the rest of the worksheet as follows:

Cost
  1. Use the "Estimated Additional Liability (Total)" figure to calculate your annual additional pension costs and insert that into Column A. This calculation will be based on the funding vehicle chosen to pay for these pension costs. If your location does not bond these costs, the payment method is 15 years at 8.75% interest with payments increasing by 5.95% per year. To determine the first year's cost under this payment schedule, divide the total pension liability by 12.2523451 and multiply the result by 1.0595. If you are doing a multi-year analysis, you can get a subsequent year's payment by multiplying the previous year's payment by 1.0595.

  2. In column B, insert other costs that you will have to incur such as payment for unused sick leave, vacation pay, health benefits, etc.

  3. Total columns A and B to reflect one year's total estimated cost.
Savings
  1. In column C, insert the current salary to be eliminated. If the individual is to be replaced, only insert the incremental amount to be eliminated. For example, if you will replace an individual earning $50,000 by someone earning $40,000, the net savings to be inserted in column C would be $10,000.
  1. In column D, enter FICA savings. (Multiply column C by .0620 up to the Social Security maximum and add Part A Medicare savings {Multiply the full amount of column C by the .0145 contribution percentage}).


  2. In column E, insert the other employer costs that would be eliminated as a result of the position being vacated (or incremental costs if the employee is replaced). Such costs include health benefits as an employee, unemployment insurance, disability insurance, etc.

  3. Total columns C, D, and E, to reflect one year's total estimated savings.

III. Compare the one-year total estimated cost to the one-year total estimated savings. If you have employees who qualify for the ERI because of a purchase made since June 30, 2002, be aware that savings and costs for them will not be included or, if they moved from a lower to higher ERI category, the costs may be understated.

Important Considerations:

  • The annual cost of health benefits under Category 2 is a lifetime cost. However, if the employer already pays for the health benefits of its retirees with over 25 years of service, the annual cost of health benefits under Category 2 can be considered an additional cost for between one to five years, depending upon the employee's years of service. If these category 2 individuals hadn't taken the ERI, they would have presumably have worked until they attained 25 years and then retired with employer-paid health benefits.

  • If you do a year-by-year cost/savings comparison, savings for a vacated position that you do not refill should only be assumed until the individual would have normally retired, i.e., approximately three to five years.

Obtaining ERI Information

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about the Local Government ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

Local Government ERI Requirements and Incentives
(Counties and Municipalities)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - a fulltime employee, age 50 or older with 25 or more years of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Service or Early1 Retirement - 3 additional years of service.
1 No reduction for age if under 55
Veteran Retirement2
- 3/55 of Final Salary added to the retirement allowance.
Category 2 - a fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents3
3Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - a fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
2Must meet special veteran requirements of the PERS or TPAF.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.
  • Age 55 with 35 years of service.

Special Note: Members of the Prosecutors Part of the PERS are not eligible for this ERI.


August 1, 2003

TO: Certifying Officers of Local School Boards, Education Services Commissions, and Jointure Commissions

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program Cost Information

This letter provides cost information that will assist you in determining whether or not your location should offer the Early Retirement Incentive Program authorized in Chapter 129, P.L. 2003 to eligible employees enrolled in the Public Employees' Retirement System (PERS) and the Teachers' Pension and Annuity Fund (TPAF). This School Boards ERI Program was described to you in a letter dated July 21, 2003. A copy of that letter can be viewed on the Division's ERI Web site (click the ERI link from our home page at www.state.nj.us/treasury/pensions). An attached chart summarizes the School Boards ERI Program eligibility requirements and incentives.

The attached work sheet provides an estimate of pension costs calculated by the PERS and TPAF actuaries for the "eligible" employees who were reported as active at your location as of June 30, 2002. The Actuaries used existing data to allow us to provide you cost information very quickly. If you have hired any ERI-eligible employees since June 30, 2002, they will not be reflected on this report. We can make special arrangements to refine the data at a later date, if it is necessary for your governing body's decision-making process. If we were to wait to use the June 30, 2003 data that has not yet been submitted by all employers, it would be several months before we could provide you with cost information.

The report is based on several assumptions. It assumes that the members will:

  • Remain active at your location until retirement;

  • Work continuously from June 30, 2002 until retirement;

  • Have received salary increases since 2002 in line with the actuarial assumptions of the PERS and TPAF (5.95%);

  • All retire on July 1, 2004. The ERI laws permit a large number of possible effective dates; we selected the end of the fiscal year for this estimate;

  • Not be extended beyond their ERI retirement dates; and

  • Not have made a purchase of service credit between June 30, 2002 and their retirement.

Additions or deletions may be required based on your current records to reflect terminations, returns from leave of absence, and transfers.

The total estimated additional pension costs are shown in the last column that has printed data. This total cost consists of up to three components, depending upon the individual circumstances. The first component is the incentive itself. For category 1 employees, that is the lifetime cost of the extra years of service provided under the incentive and the acceleration of retirement costs. The acceleration costs are primarily those pension payments made because the individual retires earlier than he otherwise would have had there not been an ERI. If the member will be under age 55 at retirement, there is also a cost because of the elimination of the reduction of the age penalty. Any category 2 pension costs shown will only be acceleration costs since the incentive offered is employer-paid health benefits and not a pension enhancement. The additional cost of health benefit coverage is considered to be a separate, pay-as-you go cost that is not reflected in the pension liability (see the next paragraph). The category 3 costs are the $500 per month for two years (present value of $10,972) and the acceleration costs, if any.

There are other costs that will be incurred by an employer offering the School Boards ERI Program under Chapter 129. The cost of health benefits through the State Health Benefits Program (SHBP) for category 1 eligible employees and their dependent family members for three years after retirement is specifically identified in the law. This includes the cost of reimbursing any Medicare Part B premiums to the retiree and spouse. The cost of lifetime health benefits through the State Health Benefits Program (SHBP) for category 2 eligible employees and their dependent family members is also identified in the law. If the employer normally reimburses its retirees for Medicare Part B premiums, this should also be included in the health benefits costs. The annual cost for a retiree for health benefits depends upon the retiree's Medicare status, family situation, and plan selection, all of which could change year-by-year. The 2003 annual cost (not including any Medicare reimbursement) for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years. Current SHBP rates for retirees are available on the Division's Web site through the SHBP links.

Other possible costs to an employer for the ERI are dependent upon the employer's policies or contractual agreements with its employees. The most significant of these might be the payment for unused sick and or vacation time to an employee who retires. Although this is a cost that would probably be paid eventually without the ERI, it is accelerated by the ERI.

How to use the worksheet.

The worksheet consists of a separate listing of the eligible PERS and TPAF employees by ERI Category. The worksheet allows you to capture the first year costs and savings generated by the program. Ideally, you should do a year-by-year cost and savings analysis for as long as you would be paying for the program. This will allow you to see the annual budgetary impact, as well as the total costs and savings of a decision to adopt the ERI. The Worksheet will give you a rough estimate of costs and savings on which to make a decision.

Complete the worksheet as follows:

I. Eliminate those individuals not eligible for the ERI because they have already terminated employment. You may also eliminate those you believe will not retire even if offered the incentive.

II. Identify those employees who will elect to retire by marking a "Y" in the ERI column. For each employee so marked, complete the rest of the worksheet as follows:

Cost
  1. Use the "Estimated Additional Liability (Total)" figure to calculate your annual additional pension costs and insert that into Column A. This calculation will be based on the funding vehicle chosen to pay for these pension costs. If your location does not bond these costs, the payment method is 15 years at 8.75% interest with level payments. To determine the annual cost under this payment schedule, divide the total pension liability by 8.18104299.
  1. In column B, insert other costs that you will have to incur such as payment for unused sick leave, vacation pay, health benefits, etc.


  2. Total columns A and B to reflect one year's total estimated cost.
Savings
  1. In column C, insert the current salary to be eliminated. If the individual is to be replaced, only insert the incremental amount to be eliminated. For example, if you will replace an individual earning $50,000 by someone earning $40,000, the net savings to be inserted in column C would be $10,000.
  1. In column D, enter FICA savings. (Multiply column C by .0620 up to the Social Security maximum and add Part A Medicare savings {Multiply the full amount of column C by the .0145 contribution percentage}). Do not include the employer contributions for which you would have been reimbursed by the State.

  2. In column E, insert the other employer costs that would be eliminated as a result of the position being vacated (or incremental costs if the employee is replaced). Such costs include health benefits as an employee, unemployment insurance, disability insurance, etc.

  3. Total columns C, D, and E, to reflect one year's total estimated savings.

III. Compare the one-year total estimated cost to the one-year total estimated savings. If you have employees who qualify for the ERI because of a purchase made since June 30, 2002, be aware that savings and costs for them will not be included or, if they moved from a lower to higher ERI category, the costs may be understated.

Important Considerations: If you do a year-by-year cost/savings comparison, savings for a vacated position that you do not refill should only be assumed until the individual would have normally retired, i.e., approximately three to five years.

Obtaining ERI Information

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about the School Board ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

School Board ERI Requirements and Incentives

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - an employee, age 50 or older with 25 or more years of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. Service or Early1 Retirement - 3 additional years of service.
1 No reduction for age if under 55
Veteran Retirement2
- 3/55 of Final Salary added to the retirement allowance.
Category 2 - an employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents3
3Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - an employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. $500 per month for 24 months following the date of retirement.
2Must meet special veteran requirements of the PERS or TPAF.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.
  • Age 55 with 35 years of service.

Special Cost Note: PERS and TPAF members who retire from Local School Boards, Education Services Commissions, and Jointure Commissions with 25 or more years of service normally receive State-paid health benefits in retirement. A provision of the ERI law makes the employer responsible for these post-retirement medical costs for the first three years after retirement, including any Medicare Part B reimbursement.


August 1, 2003

TO: Certifying Officers of PFRS-Participating Local Employers

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program Cost Information

This letter provides cost information that will assist you in determining whether or not your location should offer the Early Retirement Incentive Program authorized in Chapter 130, P.L. 2003 to eligible employees enrolled in the Police and Firemen's Retirement System (PFRS). This Local PFRS ERI Program was described to you in a letter dated July 21, 2003. A copy of that letter can be viewed on the Division's ERI Web site (click the ERI link from our home page at www.state.nj.us/treasury/pensions). An attached chart summarizes the Local PFRS ERI Program eligibility requirements and incentives.

The attached work sheet provides an estimate of pension costs calculated by the PFRS actuary for the "eligible" employees who were reported as active at your location as of June 30, 2002. The Actuary used existing data to allow us to provide you cost information very quickly. If you have hired any ERI-eligible employees since June 30, 2002, they will not be reflected on this report. We can make special arrangements to refine the data at a later date, if it is necessary for your governing body's decision-making process. If we were to wait to use the June 30, 2003 data that has not yet been submitted by all employers, it would be several months before we could provide you with cost information.

The report is based on several assumptions. It assumes that the members will:

  • Remain active at your location until retirement;

  • Work continuously from June 30, 2002 until retirement;

  • Have received salary increases since 2002 in line with the actuarial assumptions of the PFRS (5.95%);

  • All retire on July 1, 2004. The ERI laws permit a large number of possible effective dates; we selected the end of the fiscal year for this estimate;

  • Not be extended beyond their ERI retirement dates; and

  • Not have made a purchase of service credit between June 30, 2002 and their retirement.

Additions or deletions may be required based on your current records to reflect terminations, returns from leave of absence, and transfers.

The total estimated additional pension costs are shown in the last column that has printed data. This total cost consists of one or two components, depending upon the individual circumstances. The first component is the incentive itself. For category 1 employees, that is the lifetime cost of the extra years of service provided under the incentive and the acceleration of retirement costs. The acceleration costs are primarily those pension payments made because the individual retires earlier than he otherwise would have had there not been an ERI. Any category 2 pension costs shown will only be acceleration costs since the incentive offered is employer-paid health benefits and not a pension enhancement. The additional cost of health benefit coverage is considered to be a separate, pay-as-you go cost that is not reflected in the pension liability (see the next paragraph). The category 3 costs are the $500 per month for two years (present value of $10,972) and the acceleration costs, if any.

There are other costs that will be incurred by an employer offering the Local PFRS ERI Program under Chapter 130. The cost of lifetime health benefits through the State Health Benefits Program (SHBP) for category 2 eligible employees and their dependent family members is specifically identified in the law. If the employer normally reimburses its retirees for Medicare Part B premiums, this should also be included in the health benefits costs. The annual cost for a retiree for health benefits depends upon the retiree's Medicare status, family situation, and plan selection, all of which could change year-by-year. The 2003 annual cost (not including any Medicare reimbursement) for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years. Current SHBP rates for retirees are available on the Division's Web site through the SHBP links.

Other possible costs to an employer for the ERI are dependent upon the employer's policies or contractual agreements with its employees. The most significant of these might be the payment for unused sick and or vacation time to an employee who retires. Although this is a cost that would probably be paid eventually without the ERI, it is accelerated by the ERI.

How to use the worksheet.

The worksheet consists of a separate listing of the eligible PFRS employees by ERI Category. The worksheet allows you to capture the first year costs and savings generated by the program. Ideally, you should do a year-by-year cost and savings analysis for as long as you would be paying for the program. This will allow you to see the annual budgetary impact, as well as the total costs and savings of a decision to adopt the ERI. The Worksheet will give you a rough estimate of costs and savings on which to make a decision.

Complete the worksheet as follows:

I. Eliminate those individuals not eligible for the ERI because they have already terminated employment. You may also eliminate those you believe will not retire even if offered the incentive.

II. Identify those employees who will elect to retire by marking a "Y" in the ERI column. For each employee so marked, complete the rest of the worksheet as follows:

Cost
  1. Use the "Estimated Additional Liability (Total)" figure to calculate your annual additional pension costs and insert that into Column A. This calculation will be based on the funding vehicle chosen to pay for these pension costs. If your location does not bond these costs, the payment method is 15 years at 8.75% interest with payments increasing by 5.95% per year. To determine the first year's cost under this payment schedule, divide the total pension liability by 12.2523451 and multiply the result by 1.0595. If you are doing a multi-year analysis, you can get a subsequent year's payment by multiplying the previous year's payment by 1.0595.
  1. In column B, insert other costs that you will have to incur such as payment for unused sick leave, vacation pay, health benefits, etc.

  2. Total columns A and B to reflect one year's total estimated cost.
Savings
  1. In column C, insert the current salary to be eliminated. If the individual is to be replaced, only insert the incremental amount to be eliminated. For example, if you will replace an individual earning $50,000 by someone earning $40,000, the net savings to be inserted in column C would be $10,000.
  1. In column D, enter FICA savings. (Multiply column C by .0620 up to the Social Security maximum and add Part A Medicare savings {Multiply the full amount of column C by the .0145 contribution percentage}).

  2. In column E, insert the other employer costs that would be eliminated as a result of the position being vacated (or incremental costs if the employee is replaced). Such costs include health benefits as an employee, unemployment insurance, disability insurance, etc.

  3. Total columns C, D, and E, to reflect one year's total estimated savings.

III. Compare the one-year total estimated cost to the one-year total estimated savings. If you have employees who qualify for the ERI because of a purchase made since June 30, 2002, be aware that savings and costs for them will not be included or, if they moved from a lower to higher ERI category, the costs may be understated.

Important Considerations:

  • The annual cost of health benefits under Category 2 is a lifetime cost. However, if the employer already pays for the health benefits of its retirees with over 25 years of service, the annual cost of health benefits under Category 2 can be considered an additional cost for between one to five years, depending upon the employee's years of service. If these category 2 individuals hadn't taken the ERI, they would have presumably have worked until they attained 25 years and then retired with employer-paid health benefits.

  • If you do a year-by-year cost/savings comparison, savings for a vacated position that you do not refill should only be assumed until the individual would have normally retired, i.e., approximately three to five years.

Obtaining ERI Information

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about the Local PFRS ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

Local PFRS ERI Requirements and Incentives
(Local Government Employers)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee with 25 or more years of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. Service or Special1 Retirement - 3 additional years of service.
1 Up to a maximum of 30 years of service.
Category 2 - fulltime employee, age 55 or older with 20 or more years, but less than 25 years, of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents2
2Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - fulltime employee, age 55 or older with 10 or more years, but less than 20 years, of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. $500 per month for 24 months following the date of retirement.


July 23, 2003

TO: Certifying Officers of Local Authorities and Agencies

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program

Governor James E. McGreevey signed Assembly bill A-2638 into law as Chapter 127, P.L. 2003. This law allows governing bodies of certain authorities, boards, commissions, corporations, and other agencies and instrumentalities participating in the Public Employees' Retirement System (PERS) to offer an Early Retirement Incentive (ERI) to certain eligible employees. The governing body that decides to offer the ERI will be responsible for paying the costs of the ERI, which are described below. This letter outlines the procedures being established by the Division of Pensions and Benefits to implement this law. Hereafter, we will refer to this law as the Local Authority ERI Program.

Details about the Local Authority Early Retirement Incentive Program

The new law allows the governing body of certain authorities, boards, commissions, corporations, and other agencies and instrumentalities to adopt the Local Authority ERI Program through resolution. The governing body must adopt its resolution before July 15, 2004 and provide a certified copy to the Division of Pensions and Benefits within three business days of its adoption. The resolution can be effective on the 1st of any month after its adoption, but no later than August 1, 2004. There is no prescribed format for the resolution other than that it should state that the entity is adopting the ERI under the provisions of Chapter 127, P.L. 2003 and it must identify the effective date of the resolution. The eligible retirement dates will be the three months following the effective date of the resolution, that is, during the employer's "ERI window". If your governing body adopts the ERI, fax a copy of the resolution to the Division Director immediately at (609) 393-4606 and mail the original.

The employer will be responsible for paying for the additional costs created by the ERI. These costs include pension and or health benefits costs in addition to any contractual costs you have with your employees regarding reimbursement for unused earned time and other benefits you may provide. The Division will provide information in early August about your eligible employees that will allow you to estimate an approximate cost of an ERI. The information assumes your eligible employees retire on July 1, 2004. (See enclosure 2 about estimating ERI costs.)

Eligible employees of an employer that adopts the Local Authority ERI Program have to submit an application for retirement after the adoption of the resolution and prior to their selected retirement date within the ERI window adopted by the employer. The retirement date on the application must be for the 1st of one of the three months following the effective date of the resolution. For example, an employer adopts the Local Authority ERI on November 15, 2003 with an effective date of May 1, 2004. Eligible employees of that employer must file for retirement between November 16, 2003 and July 31, 2004 for a retirement date of June, July, or August 1st, 2004. (Note: The Division must receive the application prior to the retirement date selected.)

An employer that adopts the Local Authority ERI Program may extend an eligible employee deemed critical to its operation for up to one year beyond the end of its ERI window. The employee must qualify for the regular ERI retirement window, file for retirement within the ERI window, and agree to the extension. The governing body must approve each extension unless it specifically delegated that authority to an administrative official in its adopting resolution. The Division will provide instructions for how an adopting employer will notify us of approved extensions after adoption of the ERI.

The law provides the authority for certain employers participating in the ERI Program to issue refunding bonds to pay off ERI pension costs. The Division will provide instructions on how to request cost information for bonding purposes after a resolution for participation is filed. If not bonded, the pension costs must be paid in increasing annual payments over fifteen years at 8.75% interest.

The ERI law also requires all employers eligible to offer the ERI to meet and consult with the bargaining representatives of their employees who would be eligible for the benefits of this program. This meeting must occur within one year of enactment of the law, i.e., by July 15, 2004, whether your location decides to adopt the ERI Program or not.

Who is eligible and what are the incentives?

  • The Local Authority ERI Program is available to employees of certain authorities, boards, commissions, corporations, and other agencies and instrumentalities that adopt the ERI who meet certain age and membership credit requirements by the last possible retirement date of the employer's ERI window. The three eligibility categories and their corresponding incentives are described in the enclosed chart. "Employee" means someone who works full-time and is eligible to participate in the employer's health benefits program.
  • The eligible employee must submit an application for retirement with a retirement date for the 1st of the month within three months after the effective date of the resolution. The retirement application must be submitted after the employer adopts the ERI Program, but no later than the desired retirement date within the employer's ERI window. Note: The Division must receive the retirement applications before the requested retirement dates.
  • The Local Authority ERI Program includes a provision for extensions of retirement dates, mentioned earlier in this letter. Employees being extended must meet the eligibility requirements for the ERI and must file for a retirement date within the ERI window as described above. Service credit accrued during the extension cannot be used to qualify for a higher ERI category or retirement benefit, e.g., shift from a category 2 to a category 1 benefit or from a service to a veteran retirement. Service credit purchased during the extension also cannot be used to qualify for a higher ERI benefit unless the Application to Purchase was received by the Division prior to the retirement date selected within the employer's ERI window.

Implementation Sequence

A general timeline or sequence of events for the ERI is as follows:

  • Initial instructions sent (this letter) - July 2003.
  • Rough eligibility and cost information sent - August 2003.
  • Employer evaluates program and information.
  • Employer meets/consults with bargaining representatives.
  • Employer adopts ERI - no later than July 15, 2004.
  • Division sends employee packets and estimates - within a month after adoption.
  • Employees file for retirement - after resolution adopted and before retirement date selected within the employer's ERI window.
  • Employer sends extension notice to the Division.
  • Employees retire - within employer's ERI window and up to one year later for approved extensions.
  • Employers sent exact cost information - the quarter following the fiscal years in which the ERI retirements occur (Fall of CY 2004, 2005, and or 2006).

Obtaining ERI Information

The Division has several hundred hours of programming to complete in order to attune its computer systems to the requirements of this law. When this programming is done, we will provide retirement estimates for all eligible employees of each location that adopts the ERI.

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. As we develop it, the Web site will include frequently asked questions with answers and include an interactive retirement estimate calculator, modified to reflect the provisions of this ERI law. Members will also be able to download an ERI Application for Retirement Allowance from this site.

We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about eligibility for the Local Authority ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

2 enclosures


ENCLOSURE 1

Local Authority ERI Requirements and Incentives

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee, age 50 or older with 25 or more years of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Service or Early1 Retirement - 3 additional years of service.
1No reduction for age if under 55 Veteran Retirement2 - 3/55 of Final Salary added to the retirement allowance.
Category 2 - fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Employers who Provide Paid Health Benefits to Retirees
Employer paid post-retirement medical coverage
for the employee and eligible dependents3
3Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.

Employers who do not Provide Paid Health Benefits to Retirees
$500 per month
for 24 months following the date of retirement.
Category 3 - fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
2 Must meet special veteran requirements of the PERS.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.
  • Age 55 with 35 years of service.


ENCLOSURE 2

Estimating ERI Costs

The decision to adopt is difficult because the costs and savings of the ERI program cannot be calculated with confidence due to the many variables and unknowns.

The Division will provide you with an estimate of the potential pension costs of the ERI for your eligible employees. These costs include the:

  • Cost of the actual incentive for the employee's lifetime (three years service credit for category 1 employees or $500 per month for 24 months for category 3 employees and category 2 employees if you do not provide health benefits to your retirees);

  • Cost of eliminating the permanent age reduction for category 1 employees under the age of 55; and

  • Acceleration costs of the early retirement incentive. This cost recognizes the retirement benefits paid before they would otherwise have been paid had there not been an ERI.

These pension costs will be based on FY2002 actuarial data with salary and service projected to the assumed ERI effective date. These figures could be understated because:

  • Members may purchase service credit to qualify for the ERI or for a higher category benefit;

  • Salaries may have increased since 2002 at a rate higher than these projected by the actuary;

  • You choose to extend some critical employees and thereby enhance their benefit due to an extra year's service at their highest salary;

  • The retirement system Board of Trustees may make changes to the experience factors that are used to set the value of the system (and which were used to generate the estimates).

Health benefits costs for your category 2 employees are dependent upon the retiree's medical status, family situation, and plan selection. Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years.

The other side of the cost-savings analysis will depend principally on whether the positions of employees who retire under the ERI are abolished or filled at a lower salary. The savings consist of salary and employer FICA payments avoided and benefits not provided if positions are left vacant. Generally, any savings generated end between 1-5 years, at which time the employee probably would have retired even without the ERI.


July 21, 2003

TO: Certifying Officers of PFRS-Participating Local Employers

FROM: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program

Governor James E. McGreevey signed Assembly bill A-3530 into law as Chapter 130, P.L. 2003. This law allows governing bodies of employers other than the State and state colleges and universities to offer an Early Retirement Incentive (ERI) to certain eligible employees. The governing body that decides to offer the ERI will be responsible for paying the costs of the ERI, which are described below. This letter outlines the procedures being established by the Division of Pensions and Benefits to implement this law. Hereafter, we will refer to this law as the Local PFRS ERI Program.

Details about the Local PFRS Early Retirement Incentive Program

The new law allows the governing body of an employer other than the State and state colleges and universities to adopt the Local PFRS ERI program through resolution. The governing body must adopt its resolution before July 15, 2004 and provide a certified copy to the Division of Pensions and Benefits within three business days of its adoption. The resolution can be effective on the 1st of any month after its adoption, but no later than August 1, 2004. There is no prescribed format for the resolution other than that it should state that the entity is adopting the ERI under the provisions of Chapter 130, P.L. 2003 and it must identify the effective date of the resolution. The eligible retirement dates will be the three months following the effective date of the resolution, i.e., during the employer's ERI window. If your governing body adopts the ERI, fax a copy of the resolution to the Division Director immediately at (609) 393-4606 and mail the original.

The employer will be responsible for paying for the additional costs created by the ERI. These costs include pension and or health benefits costs in addition to any contractual costs you have with your employees regarding reimbursement for unused earned time and other benefits you may provide. The Division will provide information in early August about your eligible employees that will allow you to estimate an approximate cost of an ERI. The information assumes your eligible employees retire on July 1, 2004. (See enclosure 2 about estimating ERI costs.)

Eligible employees of an employer that adopts the Local PFRS ERI Program have to submit an application for retirement after the adoption of the resolution and prior to their selected retirement date within the ERI window adopted by the employer. The retirement date on the application must be for the 1st of one of the three months following the effective date of the resolution. For example, an employer adopts the Local PFRS ERI on November 15, 2003 with an effective date of May 1, 2004. Eligible employees of that employer must file for retirement between November 16, 2003 and July 31, 2004 for a retirement date of June, July, or August 1st, 2004. (Note: The Division must receive the application prior to the retirement date selected.)

An employer that adopts the Local PFRS ERI Program may extend an eligible employee deemed critical to its operation for up to one year beyond the end of its ERI window. The employee must qualify for the regular ERI retirement window, file for retirement within the ERI window, and agree to the extension. The governing body must approve each extension unless it specifically delegated that authority to an administrative official in its adopting resolution. The Division will provide instructions for how an adopting employer will notify us of approved extensions after adoption of the ERI.

The law provides authority for a county or municipality participating in the ERI Program to issue refunding bonds to pay off its ERI pension costs. The Division will provide instructions on how to request cost information for bonding purposes after a resolution for participation is filed. If not bonded, the pension costs must be paid in increasing annual payments over fifteen years at 8.75% interest.

The ERI law also requires all employers to meet and consult with the bargaining representatives of their employees who would be eligible for the benefits of this program. This meeting must occur within one year of enactment of the law, i.e., by July 15, 2004, whether your location decides to adopt the ERI Program or not.

Who is eligible and what are the incentives?

  • The Local PFRS ERI Program is available to employees of employers, other than the State and state colleges and universities, that adopt the ERI who meet certain age and membership credit requirements by the last possible retirement date of the employer's ERI window. The three eligibility categories and their corresponding incentives are described in the enclosed chart.

  • The eligible employee must submit an application for retirement with a retirement date for the 1st of the month within three months after the effective date of the resolution. The retirement application must be submitted after the employer adopts the ERI Program, but no later than your retirement date within the employer's ERI window. Note: The Division must receive the retirement applications before the requested retirement dates.

  • The Local PFRS ERI Program includes a provision for extensions of retirement dates, mentioned earlier in this letter. Employees being extended must meet the eligibility requirements for the ERI and must file for a retirement date within the ERI window as described above. Service accrued during the extension cannot be used to qualify for a higher retirement benefit, e.g., shift from a category 2 to a category 1 benefit. Service purchased also cannot be used to qualify for a higher ERI benefit unless the Application to Purchase was received by the Division prior to retirement date selected within the employer's ERI window.

Implementation Sequence

A general timeline or sequence of events for the ERI is as follows:

  • Initial instructions sent (this letter) - July 2003.
  • Rough eligibility and cost information sent - August 2003.
  • Employer evaluates program and information.
  • Employer meets/consults with bargaining representatives.
  • Employer adopts ERI - no later than July 15, 2004.
  • Division sends employee packets and estimates - within a month after adoption.
  • Employees file for retirement - after resolution adopted and before retirement date selected within the employer's ERI window.
  • Employer sends extension notice to the Division.
  • Employees retire - within employer's ERI window and up to one year later for approved extensions.
  • Employers sent exact cost information - the quarter following the fiscal years in which the ERI retirements occur (Fall of CY 2004, 2005, and or 2006).

Obtaining ERI Information

The Division has several hundred hours of programming to complete in order to attune its computer systems to the requirements of this law. When this programming is done, we will provide retirement estimates for all eligible employees of each location that adopts the ERI.

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. As we develop it, the Web site will include frequently asked questions with answers and include an interactive retirement estimate calculator, modified to reflect the provisions of this ERI law. Members will also be able to download an ERI Application for Retirement Allowance from this site.

We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about eligibility for the Local PFRS ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

2 enclosures


ENCLOSURE 1

Local PFRS ERI Requirements and Incentives
(Local Government Employers)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee with 25 or more years of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. Service or Special1 Retirement - 3 additional years of service.
1 Up to a maximum of 30 years of service.
Category 2 - fulltime employee, age 55 or older with 20 or more years, but less than 25 years, of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents2
2Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - fulltime employee, age 55 or older with 10 or more years, but less than 20 years, of service in the PFRS as of the effective retirement dates referenced in the employer's resolution adopting the ERI. $500 per month for 24 months following the date of retirement.


ENCLOSURE 2

Estimating ERI Costs

The decision to adopt is difficult because the costs and savings of the ERI program cannot be calculated with confidence due to the many variables and unknowns.

The Division will provide you with an estimate of the potential pension costs of the ERI for your eligible employees. These costs include the:

  • Cost of the actual incentive for the employee's lifetime (up to three years service credit for category 1 employees or $500 per month for 24 months for category 3 employees); and

  • Acceleration costs of the early retirement incentive. This cost recognizes the retirement benefits paid before they would otherwise have been paid had there not been an ERI.

These pension costs will be based on FY2002 actuarial data with salary and service projected to the assumed ERI effective date. These figures could be understated because:

  • Members may purchase service credit to qualify for the ERI or for a higher category benefit;

  • Salaries may have increased since 2002 at a rate higher than these projected by the actuary;

  • You choose to extend some critical employees and thereby enhance their benefit due to an extra year's service at their highest salary;

  • The retirement system Board of Trustees may make changes to the experience factors that are used to set the value of the system (and which were used to generate the estimates).

Health benefits costs for your category 2 employees are dependent upon the retiree's medical status, family situation, and plan selection. The 2003 annual cost for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years.

The other side of the cost-savings analysis will depend principally on whether positions of employees who retired under the ERI are abolished or filled at a lower salary. The savings consist of salary and employer FICA payments avoided and benefits not provided if positions are left vacant. Generally, any savings generated end between1-5 years, at which time the employee probably would have retired even without the ERI.


July 21, 2003

To: Certifying Officers of Municipalities and Counties

From: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program

Governor James E. McGreevey signed Assembly bill A-2639 into law as Chapter 128, P.L. 2003. This law allows governing bodies of Municipalities, Counties, and County Colleges to offer an Early Retirement Incentive (ERI) to certain eligible employees. The governing body that decides to offer the ERI will be responsible for paying the costs of the ERI, which are described below. This letter outlines the procedures being established by the Division of Pensions and Benefits to implement this law. Hereafter, we will refer to this law as the Local Government ERI Program.

Details about the Local Government Early Retirement Incentive Program

The new law allows the governing body of a Municipality, County, or County College to adopt the Local Government ERI program through resolution. The governing body must adopt its resolution before July 15, 2004 and provide a certified copy to the Division of Pensions and Benefits within three business days of its adoption. The resolution can be effective on the 1st of any month after its adoption, but no later than August 1, 2004. There is no prescribed format for the resolution other than that it should state that the entity is adopting the ERI under the provisions of Chapter 128, P.L. 2003 and it must identify the effective date of the resolution. The eligible retirement dates will be the three months following the effective date of the resolution, i.e., during the employer's ERI window. If your governing body adopts the ERI, fax a copy of the resolution to the Division Director immediately at (609) 393-4606 and mail the original.

The employer will be responsible for paying for the additional costs created by the ERI. These costs include pension and or health benefits costs in addition to any contractual costs you have with your employees regarding reimbursement for unused earned time and other benefits you may provide. The Division will provide information in early August about your eligible employees that will allow you to estimate an approximate cost of an ERI. The information assumes your eligible employees retire on July 1, 2004. (See enclosure 2 about estimating ERI costs.)

Eligible employees of an employer that adopts the Local Government ERI Program have to submit an application for retirement after the adoption of the resolution and prior to their selected retirement date within the ERI window adopted by the employer. The retirement date on the application must be for the 1st of one of the three months following the effective date of the resolution. For example, an employer adopts the Local Government ERI on November 15, 2003 with an effective date of May 1, 2004. Eligible employees of that employer must file for retirement between November 16, 2003 and July 31, 2004 for a retirement date of June, July, or August 1st, 2004. (Note: The Division must receive the application prior to the retirement date selected.)

An employer that adopts the Local Government ERI Program may extend an eligible employee deemed critical to its operation for up to one year beyond the end of its ERI window. The employee must qualify for the regular ERI retirement window, file for retirement within the ERI window, and agree to the extension. The governing body must approve each extension unless it specifically delegated that authority to an administrative official in its adopting resolution. The Division will provide instructions for how an adopting employer will notify us of approved extensions after adoption of the ERI.

The law provides authority for an employer participating in the ERI Program to issue refunding bonds to pay off its ERI pension costs. The Division will provide instructions on how to request cost information for bonding purposes after a resolution for participation is filed. If not bonded, the pension costs must be paid in increasing annual payments over fifteen years at 8.75% interest.

The ERI law also requires all Municipalities, Counties, and County Colleges to meet and consult with the bargaining representatives of their employees who would be eligible for the benefits of this program. This meeting must occur within one year of enactment of the law, i.e., by July 15, 2004, whether your location decides to adopt the ERI Program or not.

Who is eligible and what are the incentives?

  • The ERI Program is available to employees of Municipalities, Counties, and County Colleges that adopt the ERI who meet certain age and membership credit requirements by the last possible retirement date of the employer's ERI window. The three eligibility categories and their corresponding incentives are described in the enclosed chart. "Employee" means someone who works full-time and is eligible to participate in the employer's health benefits program.
  • The eligible employee must submit an application for retirement with a retirement date for the 1st of the month within three months after the effective date of the resolution. The retirement application must be submitted after the employer adopts the ERI Program, but no later than your retirement date within the employer's ERI window. Note: The Division must receive the retirement applications before the requested retirement dates.
  • The Local Government ERI Program includes a provision for extensions of retirement dates, mentioned earlier in this letter. Employees being extended must meet the eligibility requirements for the ERI and must file for a retirement date within the ERI window as described above. Service accrued during the extension cannot be used to qualify for a higher retirement benefit, e.g., shift from a category 2 to a category 1 benefit or from a service to a veteran retirement. Service purchased also cannot be used to qualify for a higher ERI benefit unless the Application to Purchase was received by the Division prior to retirement date selected within the employer's ERI window.

Implementation Sequence

A general timeline or sequence of events for the ERI is as follows:

  • Initial instructions sent (this letter) - July 2003.
  • Rough eligibility and cost information sent - August 2003.
  • Employer evaluates program and information.
  • Employer meets/consults with bargaining representatives.
  • Employer adopts ERI - no later than July 15, 2004.
  • Division sends employee packets and estimates - within a month after adoption.
  • Employees file for retirement - after resolution adopted and before retirement date selected within the employer's ERI window.
  • Employer sends extension notice to the Division.
  • Employees retire - within employer's ERI window and up to one year later for approved extensions.
  • Employers sent exact cost information - the quarter following the fiscal years in which the ERI retirements occur (Fall of CY 2004, 2005, and or 2006).

Obtaining ERI Information

The Division has several hundred hours of programming to complete in order to attune its computer systems to the requirements of this law. When this programming is done, we will provide retirement estimates for all eligible employees of each location that adopts the ERI.

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. As we develop it, the Web site will include frequently asked questions with answers and include an interactive retirement estimate calculator, modified to reflect the provisions of this ERI law. Members will also be able to download an ERI Application for Retirement Allowance from this site.

We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about eligibility for the Local Government ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

2 enclosures


ENCLOSURE 1

Local Government ERI Requirements and Incentives
(Counties and Municipalities)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee, age 50 or older with 25 or more years of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Service or Early1 Retirement - 3 additional years of service.
1 No reduction for age if under 55
Veteran Retirement2 - 3/55 of Final Salary added to the retirement allowance.
Category 2 - fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents3
3 Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
2Must meet special veteran requirements of the PERS or TPAF.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.
  • Age 55 with 35 years of service.

Special Note: Members of the Prosecutors Part of the PERS are not eligible for this ERI.


ENCLOSURE 2

Estimating ERI Costs

The decision to adopt is difficult because the costs and savings of the ERI program cannot be calculated with confidence due to the many variables and unknowns.

The Division will provide you with an estimate of the potential pension costs of the ERI for your eligible employees. These costs include the:

  • Cost of the actual incentive for the employee's lifetime (three years service credit for category 1 employees or $500 per month for 24 months for category 3 employees);

  • Cost of eliminating the permanent age reduction for category 1 employees under the age of 55; and

  • Acceleration costs of the early retirement incentive. This cost recognizes the retirement benefits paid before they would otherwise have been paid had there not been an ERI.

These pension costs will be based on FY2002 actuarial data with salary and service projected to the assumed ERI effective date. These figures could be understated because:

  • Members may purchase service credit to qualify for the ERI or for a higher category benefit;

  • Salaries may have increased since 2002 at a rate higher than these projected by the actuary;

  • You choose to extend some critical employees and thereby enhance their benefit due to an extra year's service at their highest salary;

  • The retirement system Board of Trustees may make changes to the experience factors that are used to set the value of the system (and which were used to generate the estimates).

Health benefits costs for your category 2 employees are dependent upon the retiree's medical status, family situation, and plan selection. The 2003 annual cost for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years.

The other side of the cost-savings analysis will depend principally on whether positions of employees who retired under the ERI are abolished or filled at a lower salary. The savings consist of salary and employer FICA payments avoided and benefits not provided if positions are left vacant. Generally, any savings generated end between1-5 years, at which time the employee probably would have retired even without the ERI.


July 21, 2003

To: Certifying Officers of County Colleges

From: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program

Governor James E. McGreevey signed Assembly bill A-2639 into law as Chapter 128, P.L. 2003. This law allows governing bodies of Municipalities, Counties, and County Colleges to offer an Early Retirement Incentive (ERI) to certain eligible employees. The governing body that decides to offer the ERI will be responsible for paying the costs of the ERI, which are described below. This letter outlines the procedures being established by the Division of Pensions and Benefits to implement this law. Hereafter, we will refer to this law as the Local Government ERI Program.

Details about the Local Government Early Retirement Incentive Program

The new law allows the governing body of a Municipality, County, or County College to adopt the Local Government ERI program through resolution. The governing body must adopt its resolution before July 15, 2004 and provide a certified copy to the Division of Pensions and Benefits within three business days of its adoption. The resolution can be effective on the 1st of any month after its adoption, but no later than August 1, 2004. There is no prescribed format for the resolution other than that it should state that the entity is adopting the ERI under the provisions of Chapter 128, P.L. 2003 and it must identify the effective date of the resolution. The eligible retirement dates will be the three months following the effective date of the resolution, i.e., during the employer's ERI window. If your governing body adopts the ERI, fax a copy of the resolution to the Division Director immediately at (609) 393-4606 and mail the original.

The employer will be responsible for paying for the additional costs created by the ERI. These costs include pension and or health benefits costs in addition to any contractual costs you have with your employees regarding reimbursement for unused earned time and other benefits you may provide. The Division will provide information in early August about your eligible employees who are members of the PERS or TPAF that will allow you to estimate an approximate cost of an ERI. The information assumes your eligible employees retire on July 1, 2004. You will have to identify your eligible employees who are ABP members. (See enclosure 2 about estimating ERI costs.)

Eligible employees of an employer that adopts the Local Government ERI Program have to submit an application for retirement after the adoption of the resolution and prior to their selected retirement date within the ERI window adopted by the employer. The retirement date on the application must be for the 1st of one of the three months following the effective date of the resolution. For example, an employer adopts the Local Government ERI on November 15, 2003 with an effective date of May 1, 2004. Eligible employees of that employer must file for retirement between November 16, 2003 and July 31, 2004 for a retirement date of June, July, or August 1st, 2004. (Note: The Division must receive the application prior to the retirement date selected.)

An employer that adopts the Local Government ERI Program may extend an eligible employee deemed critical to its operation for up to one year beyond the end of its ERI window. The employee must qualify for the regular ERI retirement window, file for retirement within the ERI window, and agree to the extension. The governing body must approve each extension unless it specifically delegated that authority to an administrative official in its adopting resolution. The Division will provide instructions for how an adopting employer will notify us of approved extensions after adoption of the ERI.

The law provides authority for an employer participating in the ERI Program to issue refunding bonds to pay off its ERI pension costs. The Division will provide instructions on how to request cost information for bonding purposes after a resolution for participation is filed. If not bonded, the pension costs must be paid in increasing annual payments over fifteen years at 8.75% interest.

The ERI law also requires all Municipalities, Counties, and County Colleges to meet and consult with the bargaining representatives of their employees who would be eligible for the benefits of this program. This meeting must occur within one year of enactment of the law, i.e., by July 15, 2004, whether your location decides to adopt the ERI Program or not.

Who is eligible and what are the incentives?

  • The ERI Program is available to employees of Municipalities, Counties, and County Colleges that adopt the ERI who meet certain age and membership credit requirements by the last possible retirement date of the employer's ERI window. The three eligibility categories and their corresponding incentives are described in the enclosed chart. "Employee" means someone who works full-time and is eligible to participate in the employer's health benefits program.
  • The eligible employee must submit an application for retirement with a retirement date for the 1st of the month within three months after the effective date of the resolution. The retirement application must be submitted after the employer adopts the ERI Program, but no later than your retirement date within the employer's ERI window. Note: The Division must receive the retirement applications before the requested retirement dates.
  • The Local Government ERI Program includes a provision for extensions of retirement dates, mentioned earlier in this letter. Employees being extended must meet the eligibility requirements for the ERI and must file for a retirement date within the ERI window as described above. Service accrued during the extension cannot be used to qualify for a higher retirement benefit, e.g., shift from a category 2 to a category 1 benefit or from a service to a veteran retirement. Service purchased also cannot be used to qualify for a higher ERI benefit unless the Application to Purchase was received by the Division prior to retirement date selected within the employer's ERI window.

Alternate Benefit Program Member Eligibility Processing

If your county college decides to adopt the Local Government ERI, you will have to identify eligible ABP members to us. We will then audit their membership accounts to confirm their eligibility. Further instructions will be provided after adoption.

Implementation Sequence

A general timeline or sequence of events for the ERI is as follows:

  • Initial instructions sent (this letter) - July 2003.Rough eligibility and cost information sent - August 2003.Employer evaluates program and information.Employer meets/consults with bargaining representatives.Employer adopts ERI - no later than July 15, 2004.Division sends employee packets and estimates - within a month after adoption.Employees file for retirement - after resolution adopted and before retirement date selected within the employer's ERI window.Employer sends extension notice to the Division.Employees retire - within employer's ERI window and up to one year later for approved extensions.

  • Employers sent exact cost information - the quarter following the fiscal years in which the ERI retirements occur (Fall of CY 2004, 2005, and or 2006).

Obtaining ERI Information

The Division has several hundred hours of programming to complete in order to attune its computer systems to the requirements of this law. When this programming is done, we will provide retirement estimates for all eligible employees of each location that adopts the ERI.

Additional, more current information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. As we develop it, the Web site will include frequently asked questions with answers and include an interactive retirement estimate calculator, modified to reflect the provisions of this ERI law. Members will also be able to download an ERI Application for Retirement Allowance from this site.

We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about eligibility for the Local Government ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.

2 enclosures


Local Government ERI Requirements and Incentives
(County Community Colleges)

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - fulltime employee, age 50 or older with 25 or more years of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer. PERS and TPAF
Service or Early4 Retirement
- 3 additional years of service.
4 No reduction for age if under 55 Veteran Retirement 5 - 3/55 of Final Salary added to the retirement allowance.

ABP 6
100% of base annual salary paid in two equal installments one month and thirteen months after retirement.
Category 2 - fulltime employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents.
Category 3 - fulltime employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS, TPAF, or the ABP as of the effective retirement date within the ERI window adopted by the employer. $500 per month for 24 months following the date of retirement.
5 Must meet special veteran requirements of the PERS or TPAF.
  • Age 60 with 20 years of service (Category 2 only).
  • Age 55 with 25 years of service.·
  • Age 55 with 35 years of service.
6 Category 1 and 3 Payments to ABP Members The category 1 and 3 payments will be made to the ABP Member's retirement annuity, as an employer contribution, up to the maximum contribution allowable under Section 415 of the Internal Revenue Code ($40,000 in 2003). Any payment amount in excess of that limit will be contributed by the employer to a 403(b) contract on the member's behalf up to the maximum allowed for before tax contributions under the Internal Revenue Code (an additional $40,000 in 2003). If any payment amounts exist in excess of these maximum limits, that amount will be paid to the member and will be deemed by the IRS to be wages subject to normal taxation. In the calendar year after retirement, employer contributions cannot be made to an individual's retirement account, so the employer will make payments directly into the 403(b) account on the member's behalf.

ENCLOSURE 2

Estimating ERI Costs

The decision to adopt is difficult because the costs and savings of the ERI program cannot be calculated with confidence due to the many variables and unknowns.

The Division will provide you with an estimate of the potential pension costs of the ERI for your eligible employees. These costs include the:

  • Cost of the actual incentive for the employee's lifetime (three years service credit for PERS/TPAF category 1 employees, one year's salary for ABP category 1 employees, or $500 per month for 24 months for category 3 employees);

  • Cost of eliminating the permanent age reduction for category 1 employees under the age of 55; and

  • Acceleration costs of the early retirement incentive. This cost recognizes the retirement benefits paid before they would otherwise have been paid had there not been an ERI.

These pension costs will be based on FY2002 actuarial data with salary and service projected to the assumed ERI effective date. These figures could be understated because:

  • Members may purchase service credit to qualify for the ERI or for a higher category benefit;

  • Salaries may have increased since 2002 at a rate higher than these projected by the actuary;

  • You choose to extend some critical employees and thereby enhance their benefit due to an extra year's service at their highest salary;

  • The retirement system Board of Trustees may make changes to the experience factors that are used to set the value of the system (and which were used to generate the estimates).

Health benefits costs for your category 1 and 2 employees are dependent upon the retiree's medical status, family situation, and plan selection. The 2003 annual cost for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by a large number of retirees, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years.

The other side of the cost-savings analysis will depend principally on whether positions of employees who retired under the ERI are abolished or filled at a lower salary. The savings consist of salary and employer FICA payments avoided and benefits not provided if positions are left vacant. Generally, any savings generated end between1-5 years, at which time the employee probably would have retired even without the ERI.


July 16, 2003

To: Certifying Officers of Local School Boards, Education Services Commissions, and Jointure Commissions

From: Frederick J. Beaver, Director

SUBJECT: Early Retirement Incentive Program

Governor James E. McGreevey has signed Assembly bill A-2640 into law as Chapter 129, P.L. 2003. This law allows governing bodies of Local School Boards, Education Services Commissions, and Jointure Commissions to offer an Early Retirement Incentive (ERI) to certain eligible employees. The governing body that decides to offer the ERI will be responsible for paying the costs of the ERI, which are described below. This letter outlines the procedures being established by the Division of Pensions and Benefits to implement this law. Hereafter, we will refer to this law as the School Board ERI Program.

Details about the School Board Early Retirement Incentive Program

The new law allows the governing bodies of a Local School Board, Education Services Commission, or Jointure Commission to adopt the School Board ERI program through resolution. The governing body must adopt its resolution within twelve months of enactment of Chapter 129, P.L. 2003 and provide a certified copy to the Division of Pensions and Benefits within three days of its adoption. The resolution can be effective either July 1, 2003 or July 1, 2004, but not both. There is no prescribed format for the resolution other than that it should state that the entity is adopting the ERI under the provisions of Chapter 129, P.L. 2003 with an effective date of either July 1 of 2003 or 2004. (Important Note: To adopt the ERI for July 1, 2003, your governing board must approve its resolution almost immediately in order to give employees time to react and file for retirement.) If your governing body adopts the ERI, fax a copy to the Division Director immediately at (609) 393-4606 and mail the original.

The employer will be responsible for paying for the additional costs created by the ERI. These costs include pension and or health benefits costs in addition to any contractual costs you have with your employees regarding reimbursement for unused earned time and other benefits you may provide. The Division will provide information in early August about your eligible employees that will allow you to estimate an approximate cost of an ERI in 2004. If you are considering an effective date of July 1, 2003 for your ERI resolution, you will have to make that decision without cost input from the Division. (See enclosure 2 about estimating ERI costs.)

Eligible employees of an employer that adopts the School Board ERI Program have to submit an application for retirement during the month of July with a retirement date of August 1 or September 1 of that year if they wish to participate in the program. Employees of an employer that adopts a resolution effective July 1, 2003, who have already filed for retirement effective July 1st, will have to submit to the Division a Change Retirement form or letter changing their retirement date to August or September 1st in order to qualify for the incentive. An employer who adopts the School Board ERI Program may extend an eligible employee deemed critical to its operation for up to one year beyond the end of its ERI window, i.e., until September 1, 2004 if it opts for a 2003 ERI or until September 1, 2005 if it opts for a 2004 ERI window. The employee must qualify for the regular ERI retirement window and agree to the extension.

The law provides authority for an employer participating in the ERI Program to issue refunding bonds to pay off its ERI pension costs. The Division will provide instructions on how to request cost information for bonding purposes after a resolution for participation is filed. If not bonded, the pension costs must be paid in level annual payments over fifteen years at 8.75% interest.

The ERI law also requires all Local School Boards, Education Services Commissions, and Jointure Commissions to meet and consult with the bargaining representatives of their employees who would be eligible for the benefits of this program. This meeting must occur within one year of enactment of the law whether your location decides to adopt the ERI Program or not.

Who is eligible and what are the incentives?

The ERI Program is available to employees of Local School Boards, Education Services Commissions, and Jointure Commissions adopting the ERI who meet certain age and membership credit requirements by the last possible retirement date of the employer's ERI window, i.e., September 1 of 2003 or 2004. The three eligibility categories and their corresponding incentives are described in the enclosed chart.

  • The eligible employee must submit an application for retirement with a retirement date of August 1 or September 1 of 2003 or August 1 or September 1 of 2004, depending upon which ERI effective date the employer adopted. The retirement application must be submitted within a month of the employer's adoption of the ERI Program and must be received by the Division prior to the requested retirement date.

  • The School Board ERI Program includes a provision for extensions of retirement dates, mentioned earlier in this letter. Employees being extended must meet the eligibility requirements for the ERI and must file for a retirement date within the ERI window as described above. Service accrued or purchased during the extension cannot be used to qualify for a higher retirement benefit, e.g., shift from a category 2 to a category 1 benefit or from a service to a veteran retirement. Instructions for how an adopting employer will notify the Division of approved extensions will be provided after adoption of the ERI.

Obtaining ERI Information

The Division has several hundred hours of programming to complete in order to attune its computer systems to the requirements of this law. When this programming is done, we will provide retirement estimates for all eligible employees of each location that adopts the ERI.

More information about the ERI is posted to a special section of the Division Web site (www.state.nj.us/treasury/pensions). The site outlines the program, details eligibility information, and explains how the program will work. As we develop it, the Web site will include a large number of commonly asked questions with answers. It also includes an interactive retirement estimate calculator, modified to reflect the provisions of this ERI law, which will allow PERS and TPAF members to obtain complete retirement estimates.

We will post updates on the ERI program frequently, so this site should be very useful to you and your employees.

Questions about eligibility for the School Board ERI Program should be directed to the Division of Pensions and Benefits through the normal communications channels.


ENCLOSURE 1

School Board ERI Requirements and Incentives

ELIGIBILITY REQUIREMENTS INCENTIVES
Category 1 - an employee, age 50 or older with 25 or more years of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. Service or Early1 Retirement - 3 additional years of service.
1 No reduction for age if under 55

Veteran Retirement2
- 3/55 of Final Salary added to the retirement allowance.
Category 2 - an employee, age 60 or older with 20 or more years, but less than 25 years, of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. Employer paid post-retirement medical coverage in the State Health Benefits Program for the employee and eligible dependents3
3Does not include payment of survivor benefits for surviving dependents unless employer normally provides them.
Category 3 - an employee, age 60 or older with 10 or more years, but less than 20 years, of service in the PERS or TPAF as of the effective retirement date referenced in the employer's resolution adopting the ERI. $500 per month for 24 months following the date of retirement.
2Must meet special veteran requirements of the PERS or TPAF.

- Age 60 with 20 years of service (Category 2 only).
- Age 55 with 25 years of service.
- Age 55 with 35 years of service.

Special Cost Note: PERS and TPAF members who retire from Local School Boards, Education Services Commissions, and Jointure Commissions with 25 or more years of service normally receive State-paid health benefits in retirement. A provision of the ERI law makes the employer responsible for these post-retirement medical costs for the first three years after retirement, including any Medicare Part B reimbursement.


ENCLOSURE 2

Estimating ERI Costs

The decision to adopt or not is difficult because the costs and savings of the ERI program cannot be accurately calculated with any confidence because of all the variables and unknowns.

We will provide you our best estimate of the pension costs of the ERI for your eligible employees. These costs include the

  • Actual incentive for the employee's lifetime (three years service credit for category 1 employees or $500 per month for 24 months for category 3 employees);

  • Cost of the elimination of the permanent age reduction for category 1 employees under the age of 55; and

  • Acceleration costs of the early retirement incentive. This cost recognizes the retirement benefits paid before they would otherwise have been paid had there not been an ERI.

These pension costs will be based on FY2002 actuarial data with salary and service projected to the assumed ERI effective date. These figures could be understated because

  • Members purchase service credit to qualify for the ERI or for a higher category benefit;

  • Salaries increased since 2002 at a rate higher than these projected by the actuary;

  • You extend some critical employees and thereby enhance their benefit due to an extra year's service at their highest salary;

  • The retirement system Board of Trustees changes the experience factors that are used to value the system (and which were used to generate the estimates).

Health benefits costs, which you will pay for three years for your category 1 employees and for a lifetime for your category 2 employees, are dependent upon the retiree's medical status, family situation, and plan selection. The 2003 annual cost for a retiree in the Traditional Plan of the State Health Benefits Program, the plan selected by the majority of teachers, ranges from $3,650 (Medicare eligible with single coverage) to $17,519 (No Medicare with Family Coverage). Even if you were able to project costs based on the employee's current status, health benefits costs have been rising at a high and relatively unpredictable rate over the past several years.

The other side of the cost-savings analysis will depend principally on whether positions of employees who retired under the ERI are abolished or filled at a lower salary. The savings consist of salary and employer FICA payments avoided and benefits not provided if positions are left vacant. Generally, any savings generated end between1-5 years when the employee would probably have retired even without the ERI.


June 25, 2003

TO: Certifying Officers of the Teachers' Pension and Annuity Fund

FROM: William H. Kale, Assistant Director, Client Services

SUBJECT: Proposed Repeal of Rule Regarding Retired TPAF Members Returning to Interim TPAF Employment

This letter provides notice of a proposed rule change that, if adopted, could impact on school operations. No action is required of you at this time. However, if you would like to comment on the rule change prior to its adoption, you may do so by reviewing the rule and following the procedures outlined in the New Jersey Register where the rule is posted. The Division of Pensions and Benefits will inform all employers participating in the Teachers' Pension and Annuity Fund (TPAF) should the proposed rule change take effect.

In 1999, the TPAF Board of Trustees adopted the rule N.J.A.C. 17:3-2.6; Ineligible Positions; Interim Appointment to Boards of Education, which provided that any person retired from the Teachers' Pension and Annuity Fund who is temporarily appointed to any TPAF-eligible position listed in N.J.A.C. 17:3-2.1 or the functional equivalent would be ineligible for enrollment in the retirement system TPAF if the total time for all interim appointments with one board of education didn't exceed six months. After the interim period, the retiree was required to either end employment or reenroll in the TPAF.

On January 6, 2002, Chapter 355, P.L. 2001, c. 355 was enacted. This law provided a one-year exception for enrollment in the retirement system for certificated superintendents and administrators in positions of critical need and also provided for an additional year of employment if necessary. Since this law did not apply to all TPAF positions, but only to the positions of certificated superintendent or administrator at a board of education, Tthe TPAF Board of Trustees has amended 17:3-2.6 to exclude those positions covered under the statute. Upon further consideration, the Board has determined that Chapter 355 (N.J.S.A. 18A:66-53.2b) covers the only exception to the enrollment after retirement provisions and has proposed the repeal of 17:3-2.6so its rules will conform with the law. If the rule were repealed, any retired member of the TPAF would have to be reenrolled in the retirement system after accepting employment in a TPAF-covered position with the exception of the certificated superintendent and administrator titles mentioned in the law. The retirement allowance would be suspended and any benefits associated with that retirement would not be in effect until such time as the member retired again.

The proposed repeal was published for comment in the New Jersey Register on June 16, 2003. We have also posted it on our Web site (www.state.nj.us/treasury/pensions). After a 60-day comment period, the TPAF Board could act to repeal the rule.

In a completely separate matter, I would also like to draw your attention to the proposed readoption of the rules of the State Health Benefits Program (SHBP) which were also in the June 16th New Jersey Register. These rules are also posted to our Web site. If you are a participating employer in the SHBP, you may wish to review and comment on these rules.

If you have any questions regarding this letter, please contact the Client Services Bureau at (609) 292-7524.


May 2003

TO: Benefits Managers, New Jersey State and County Colleges and Universities, Department of Education, Office of Student Assistance

FROM: John Megariotis, Assistant Director, Finance

SUBJECT: New Legislation for Alternate Benefit Program

Effective May 8, 2003, Chapter 75, P.L. 2003 eliminates the reduction of group life insurance from 3½ to ½ of the annual base salary for participants of the Alternate Benefit Program (ABP) who are age 70 or older and die while in active employment. The group life insurance amount now remains at 3½ times the annual base salary regardless of the age of the ABP participant.

For those ABP members who submitted a waiver for Noncontributory Group Life Insurance over $50,000 for calendar year 2003, the waiver will remain in effect until January 1, 2004. Additionally, because of this enactment, ABP members who are age 70 and older who wish file a waiver form for calendar year 2003 may do so prior to July 1, 2003. The effective date of the waiver is retroactive to May 8 (the enactment of the bill) through the remainder of 2003. Those individuals who do not file a waiver form before the July 1 closing date may be responsible for the taxable benefit of this coverage over $50,000 for calendar year 2003. Waivers submitted after July 1 will not take effect until calendar year 2004.

The employing agency is responsible for copying and distributing the enclosed notice, or a similar one of your design, which explains this change to all ABP members.

If you have any questions, call the Alternate Benefit Program at (609) 777-0887.

Enclosure


June 6, 2003

TO: Certifying Officers, Police and Firemen's Retirement System

FROM: William H. Kale, Assistant Director, Client Services

SUBJECT: Police and Firemen's Retirement System (PFRS) members employed in titles not approved by the PFRS Board of Trustees

In recent audits, we have discovered several cases where a PFRS-contributing employee was in a title that had not been approved for inclusion in the PFRS. In most cases, the employee had been promoted out of a PFRS-covered position into one not covered by the PFRS and not involving supervision of other PFRS members within a police or fire organization.Such employees cannot contribute to the PFRS and cannot receive PFRS salary or service credit for these positions. Also, they are not eligible to receive PFRS retirement benefits if they retire from these positions.

The Division's External Audit Unit has been reviewing employer records for compliance with the appropriate retirement system statutes and regulations. If they find that an employee is contributing to the PFRS from a title that is not covered, that employee's service credit will be audited and the Enrollment Bureau will be notified to transfer the employee into the PERS. If a member was not in a covered PFRS title and retired as a contributing PFRS member, the retirement may be changed to a PERS retirement.

Employees and retirees who find themselves in the position of losing valuable retirement benefits due to enrollment errors may attempt to seek legal redress from their employer. Errors such as these should be avoided, or corrected as soon as they are found.

Please review the job titles and responsibilities of your employees who contribute to the PFRS. You may use the attached Approved PFRS Title list, which is current as of April 2003, or use the list found on the Division Web site (click on PFRS Eligible Job Titles at www.state.nj.us/treasury/pensions/pfrs1.htm) which is updated whenever the Board of Trustees approves a new position for the PFRS).

If any employee is not in a PFRS covered title, and you think he or she fits one of the exceptions described below, ask the Director for a review of that title to determine whether it is eligible for inclusion in the PFRS (unless, of course, you already have written approval for the position from the Division).

If, after a title review is done, the Board determines that the title is not includable in the PFRS, the employee must either be transferred into the PERS or moved back into a PFRS-covered title. There are two exceptions that would allow a PFRS member to remain in the system while in a title not approved for inclusion in the PFRS.

The first exception allows the Director of the Division and the PFRS Board of Trustees to determine, on a case-by-case basis, whether an employee of a law enforcement or firefighting unit is an administrative or supervisory employee within the meaning of police officer or firefighter pursuant to N.J.A.C. 17:4-2.1.

The second exception is found at N.J.S.A. 43:16A-3.1. This law allows service with a law-enforcement or firefighting unit, in an appointive capacity with administrative or supervisory duties over policemen and or firemen, to be considered PFRS service for any person who served in a PFRS covered title within the previous six months.

In summary:

  1. Review the current job titles of all your contributing PFRS members to ensure they are in PFRS-covered positions. Please use the current Approved PFRS Title list.

  2. If a PFRS member is not in an approved PFRS-covered position, but does supervise other PFRS members in a police or fire organization, contact the Division to determine if the employee is entitled to remain in the PFRS;

  3. If a PFRS member is promoted, transferred, or hired into a non-PFRS-covered position in the future, be sure to consider whether the employee should remain in the PFRS. If you believe that the title should be a PFRS-approved title, please write and request that the Director analyze the title using the statutory process based on Public Law 1989, Chapter 204 to determine whether that title is eligible for membership in the PFRS.

If you have questions about this matter, please write to the Office of Client Services at the address on the letterhead, e-mail to pensions.nj@treas.state.nj.us or call at (609) 292-7524.The Division and the Board extends thanks to those of you who participated in the two recent PFRS surveys. We received responses from over 70% of our participating locations for the survey regarding the definition of full-time and from 55% of our participating locations for the survey regarding appointive positions with administrative or supervisory duties over police officers or firefighters. We will advise PFRS employers of any Board actions based on the results of the surveys.

Attachment


June 2003

TO: Certifying Officer, Public Employees' Retirement System (Boards of Education), Teachers' Pension and Annuity Fund

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Salary Change Instructions

The enclosed Report of Salary Change lists those members projected on your second quarter 2003 Report of Contributions. The list shows the membership number, member's name, payment plan (10/12), and provides space to insert the base salary to be projected on the quarterly Report of Contributions for the third calendar quarter of 2003.

You should insert only the member's quarterly base salary, rounded to the nearest dollar, which will correctly reflect the member's base wage for the third quarter Report of Contributions. Do not add members (new enrollments, transfers, employees returning from leave of absence) to this report, nor should you reflect a name change.

For example, a 12-month employee whose annual salary is $24,000 effective July 1st will be shown at a quarterly salary of $6,000. This is the salary that will be paid for the months of July, August, and September. Teachers who are on a "Summer Payment Plan" are not to be reported as 12-month employees.

A 10-month employee at the same annual base salary of $24,000 will be reported at $2,400, because the member will be paid for only one month in the third quarter - the month of September. If the member's payment plan will change in the third quarter from a 10-month basis to a 12-month basis or a 12-month basis to a 10-month basis, please make this correction on the Report of Salary Change.

For 12 month members project only three full months of contractual base salary even if an employee will be on leave of absence or terminating employment. It has been our experience that employers reporting one or two months of salary on the Report of Salary Change have the correct base salary and contributions on the next quarterly Report of Contributions, but the months of service column is not changed to reflect the correct service credit.

There is sometimes a delay in a board of education adopting its new salary budget, and although salary changes are effective July 1st for 12-month members and September 1st for 10-month members, the retroactive increase is not paid until the fourth quarter. Under these circumstances, it is suggested that you forward the Report of Salary Change to this Division before November 10th with the new quarterly base salary for the fourth quarter plus the retroactive increase covering the third quarter. This should be one combined figure. In this case, you must denote on the first page of the projection sheet that this is a fourth quarter salary projection. In addition, you should request a Report of Salary Change for the first quarter 2004 to insert the quarterly base salaries to be projected on the first quarter 2004 Report of Contributions. If you follow this procedure, it will avoid numerous changes on your Report of Contributions, because the Division will project the proper salary and deductions for each quarter.

The Division will furnish a Report of Salary Change for any quarter upon request. To avoid delays in submitting your Report of Contributions, it is recommended that you use the Report of Salary Change, rather than column 1 of the Report, whenever you have numerous salary projections. To process a Report of Salary Change, it must be returned to the Division of Pensions and Benefits by the 15th of the second month of a calendar quarter for the salaries to be projected for that quarter.

To project the salaries on your third quarter 2003 Report of Contributions, the changes must be received no later than August 15th.

In Summary

  • Project only 3 months of base salary for 12 month members (plus retro, if applicable)
  • Do not add members
  • Do not make name changes
  • Return the report of salary change by August 15th

June 2003

TO: Certifying Officer, Autonomous State College/University

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Contributions, 2nd Quarter 2003

Your 2nd quarter 2003 tape Report of Contributions applicable to the Teachers' Pension and Annuity Fund, Public Employees' Retirement System, and Police and Firemen's Retirement System is due July 10, 2003. Your June 2003 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through the Transmittal Electronic Payments System (TEPS). The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. Your TEPS remittance is also due by July 10, 2003.

With the tape Report of Contributions, you must complete and return the Transmittal Summary form for the 2nd quarter 2003. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report. The Control and Certification form must also accompany your quarterly tape Report. This is essential as it attests to the accuracy and validity of the submitted documentation.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. A tape Report of Contributions will be considered received when it is submitted in an acceptable format, passes all EDP edits, and can be used to update members' accounts. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

CHANGE TO MEMBER PENSION RATES - TEACHERS' PENSION AND ANNUITY FUND

Chapter 133, P.L. 2001 reduced the member's pension rate from 4.5% to 3% for members of the Teachers' Pension and Annuity. The pension rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after December 15, 2001 should be deducted at 3% including any portion of the retroactive salary that covered a period prior to December 15, 2001.

This TPAF employee contribution rate will remain in effect through 2003 and will continue thereafter as long as the excess assets of the TPAF permit. This is not a permanent change to the normal contribution rate of 5% of salary. The minimum repayment for pension loans and the minimum deduction for the purchase of service credit, which is based on the full 5% contribution rate, will not change.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%. The rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change. The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS, CHAPTER 247, P.L. 1999

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law. Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES

(Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees adopted a rule change for N.J.A.C. 17:2-4.7, that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, and not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month. Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal shortage statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every Notice of Change is prenoted to ensure that the Division has the correct banking information. This normally takes 12 to 15 days.

STATEMENTS OF OVERAGES/SHORTAGES

Overage and shortage statements, which affect a member's Annuity Savings Fund, identify whether or not the pension contributions are subject to the 414(h) provision. These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h). Please note that all member shortages are to be paid by separate check. Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone Sal Cirigliano at (609) 292-2366.

Enclosures

  1. Transmittal Summary for 2nd Quarter 2003
  2. Control and Certification Form

June 2003

TO:Certifying Officer: Teachers' Pension and Annuity Fund, Public Employees' Retirement System &, Police and Firemen's Retirement System

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Contributions, Second Quarter 2003 (April 1st to June 30th)

This memorandum has pertinent information concerning the completion of your Report of Contributions. Please read this memorandum before you make any changes to the Report.

DEADLINE FOR FILING

Teachers' Pension and Annuity Fund July 10, 2003
Public Employees' Retirement System July 10, 2003
Police and Firemen's Retirement System July 10, 2003

REPORTING PROCEDURES

Through the Transmittal Electronic Payments System (TEPS), employers must submit monthly transmittal remittances of approximately 1/3 of the total quarterly amounts due for pension contributions, contributory life insurance premiums and regular SACT. Token payments are not acceptable. Your June 2003 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through TEPS. The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. The TEPS remittance is also due by July 10, 2003.

With the Report of Contributions, you must complete and return the Transmittal Summary form for the 2nd quarter 2003. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.

>If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

When you receive your quarterly Report, you should review it immediately. If you think you will have a problem in meeting the filing deadline, or if there is anything you do not understand, contact the Audit/Billing Section at (609) 292-3630. Normally reporting inquiries can be resolved with a telephone call. Please make all necessary corrections to the Report before you return it to the Division of Pensions and Benefits. Verify that all changes are explained, the Report is added correctly, and the totals agree with the sum of the transmittal remittances.

Please show on the quarterly Report the telephone number of the individual to be contacted if our auditors have questions concerning any items.

SIGNATURE

Your quarterly Report of Contributions must be signed. Any Report not bearing a signature will be considered delinquent until an affidavit is submitted by the Certifying Authority attesting to its contents. Initials will not be accepted.

CHANGE TO MEMBER PENSION RATES - TEACHERS' PENSION AND ANNUITY FUND

Chapter 133, P.L. 2001 reduced the member's pension rate from 4.5% to 3% for members of the Teachers' Pension and Annuity Fund. The pension rate for calendar year 2003 will remain at 3%. This is not a permanent change to the normal contribution rate of 5% of salary. The minimum repayment for pension loans and the minimum deduction for the purchase of service credit, which is based on the full 5% contribution rate, will not change.

Retroactive increases paid on or after January 1, 2002 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2002.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%. The pension rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change. The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS, CHAPTER 247, P.L. 1999

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date. Employees of local boards of education may participate in the SACT 403(b) program or a 403(b) plan administered by their employer. This law impacts both arrangements.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law. Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES

(Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees at its November 17, 1999 meeting adopted a rule change for N.J.A.C. 17:2-4.7 that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month. Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal shortage statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every Notice of Change is prenoted to ensure that the Division has the correct banking information. This normally takes 12 to 15 days.

CHANGE TO BASE SALARY

It is important to review the salary shown in column 6 and verify that it correctly reflects the member's base salary for the quarter. If the salary shown is not correct, draw a line through it and write the correct salary above it. Pension Contributions, Contributory Insurance, SACT, and Tax-Sheltered Annuity deductions must be changed to reflect amounts due on the new salary.

If your employees received a salary increase that is retroactive to a prior quarter, change column 6 to reflect the COMBINED TOTAL of:

(a) the new base salary for the quarter, plus,

(b) the additional base salary for the retroactive period.

The new quarterly base salary should be written in column 1 of the Report. This salary will be projected in column 6 of your next quarterly Report. This will eliminate the need to make numerous changes on your 3rd quarter Report of Contributions. Also, in the "Remarks Column" of the current Report you should indicate that the members had a salary increase and the effective date.

REPORTING RETROACTIVE SALARY AFTER RETIREMENT

If a member receives a retroactive salary adjustment after retirement, do not write the member's name on the Report of Contributions. Complete a new Certification of Service and Final Salary and indicate that it is a retroactive adjustment after retirement by writing on the top of the Certification "Revised Due to Retro." Deduct the pension contributions and contributory life insurance, if applicable, from the retroactive check and remit that amount on behalf of the member to the Audit/Billing Section of this Division.

STATEMENTS OF OVERAGES/SHORTAGES

Overages and shortages that affect a member's Annuity Savings Fund identify whether or not the pension contributions are subject to the 414(h) provision. These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h). All overage and shortage statements that cover a period prior to January 1, 1987 are not subject to the 414(h) provision. Please note that all member shortages are to be paid by separate check. Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone us at (609) 292-3630.

Enclosures:

  1. Quarterly Report of Contributions
  2. Transmittal Summary for 2nd Quarter 2003
  3. Envelope for Report
  4. Report of Salary Change for 3rd Quarter 2003 (TPAF and PERS boards of education)
  5. Report of Salary Change Instruction Memo

May 30, 2003

TO: Municipality Personnel Officers

FROM: William H. Kale, Assistant Director, Client Services

SUBJECT: Volunteer Emergency-Worker's Survivors Pension (VESP)

Chapter 134, P.L. 2002, signed into law by Governor McGreevey on January 9, 2003, establishes a survivors pension, paid by the State, for certain volunteer emergency workers who are killed in the performance of their volunteer duties. This letter describes the Volunteer Emergency-Worker's Survivors Pension (VESP), outlines municipality responsibilities, and requests information about potential recipients.

The State Treasurer recently assigned responsibility for implementation of Chapter 134 to the Division of Pensions and Benefits. The Division has drafted Administrative Code regulations, which will appear in the New Jersey Register for comment in the very near future. Check the Register or the Division's Web site (www.state.nj.us/treasury/pensions) to review these regulations.

Who is Eligible for the VESP?

Survivors (dependents) of a volunteer firefighter, first aid worker, rescue squad worker, or emergency medical technician who was killed while performing volunteer duties during an emergency (including during travel to and from the emergency site) on or after January 1, 2000 may be eligible for a VESP. The volunteer must have been a member of a duly incorporated voluntary fire company, first aid and emergency or ambulance or rescue squad. Eligible survivors include:

  • The widow or widower;

  • Unmarried children (if there is no widow or widower) (a) under the age of 18; (b) age 18 years of age or older while enrolled in a secondary school; (c) under the age of 24 and enrolled in a degree program at an institution of higher education for at least 12 credit hours each semester; or (d) disabled child at any age who is incapable of self-support due to the disability;

  • Dependent parents (if there is no widow, widower, or eligible dependent children) who received at least half of their support from the emergency worker during the twelve months preceding the death.

NOTE: If a survivor is also eligible for a monthly pension benefit due to the voluntary emergency worker's membership in the PERS, PFRS, or SPRS on the basis of other employment, that survivor is not also eligible for the VESP.

How does an eligible survivor get the VESP benefit?

The municipality being served by the volunteer emergency worker at the time of death is authorized by Chapter 134 to extend a VESP to eligible survivors of that worker, which the State Treasurer (the Division of Pensions and Benefits) will administer and pay. If the governing body decides to offer the VESP, it must adopt a resolution certifying the eligibility of the survivor(s) and submit it to the Division of Pensions and Benefits within ten days of adoption. The municipality will be required to forward a certified application for VESP benefits to the Division along with the supporting documentation needed to ensure the eligibility of the survivor(s) for the VESP. This would include the accident or police report and the death certificate, and other documents such as the marriage certificate, birth certificates of children, school enrollment records, etc., as appropriate. A sample resolution and the VESP Application will be available in the near future on the Division's Web site (www.state.nj.us/treasury/pensions).

What is the VESP benefit and when will it start?

For survivors of an emergency worker who died in 2000, 2001, 2002, or 2003, the VESP becomes payable in January 2004. After this year, the VESP for an eligible survivor will begin in the January of the calendar year following the volunteer emergency worker's death. The annual amount of the benefit, which is exempt from federal income tax and will be paid monthly by the Division of Pensions and Benefits, is as follows:

  • Eligible Survivor Annual VESP Benefit

  • Widow or Widower (with or without dependent children). $15,000

  • Dependent children (with no surviving widow or widower or after the death of a surviving widow or widower). $15,000 split equally between the eligible children.

  • Dependent children (after surviving widow or widower remarries). $10,000 split equally between the eligible children.

  • Dependent parent or parents (with no surviving widow, widower, or dependent children). $5,000


When will the VESP benefit end?

The VESP benefit for a widow or widower will end when that survivor remarries or dies. If that widow or widower has a dependent child or children who also qualified as surviving dependents, then that child or children will be eligible to receive a VESP benefit.

The VESP benefit for a dependent child will end when the child dies, marries, reaches the age limit, no longer meets the education criteria for eligibility, or is no longer deemed disabled and incapable of self-support. The VESP benefit for a dependent parent will end when that survivor remarries or dies.

What must you do now?

If your municipality has had a volunteer emergency-worker die while performing volunteer duties since January 1, 2000, and that volunteer has one or more survivors meeting the criteria of Chapter 134, you should

  • Immediately notify the Division of Pensions and Benefits so we may appropriate the necessary funding for next year and send you the forms needed for us to process the VESP. The contact information is below.

  • Confirm the eligibility of the survivor(s) for a VESP and have the municipal governing body adopt a resolution certifying to that eligibility.

  • Forward the resolution to the Division within ten days of its adoption.

  • Submit a VESP Application to the Division. Once the VESP Application has been made available to municipalities, it should be submitted with the governing body resolution if at all possible. However, do not delay the submission of the resolution if the VESP Application has not been completed when the resolution is due at the Division.

You also may wish to notify your volunteer organizations of the Chapter 134 benefits now available in case of the death of one of their volunteers while performing their volunteer duties.

To provide the information requested above or for questions about Chapter 134, contact the Office of Client Services by letter at the address on the letterhead, e-mail at pensions.nj@treas.state.nj.us or call (609) 292-7524. Use VESP as the subject line for written correspondence.


April 7, 2003

TO: Employers Participating in the State Health Benefits Program

FROM: Florence J. Sheppard, Assistant Director, State Health Benefits Program

SUBJECT: SHBP Notice of Privacy Practices

The federal regulations implementing the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require group health plans to establish extensive privacy policies and procedures to safeguard medical information related to covered members. These HIPAA policies and procedures take effect April 14, 2003 for the State Health Benefits Program (SHBP).

One immediate task required by the new HIPAA regulations is the distribution of the SHBP's Notice of Privacy Practices (hereafter called the Privacy Notice) to all enrolled members. A sufficient quantity of the Privacy Notice has been provided to you for your employees. Please see that a Privacy Notice is delivered to each of your employees as quickly as practical. The SHBP will distribute the Privacy Notice to retirees and COBRA participants directly.

The HIPAA privacy regulations do not apply directly to employers or to employment records. Therefore, your interaction with the Health Benefits Bureau of the Division of Pensions and Benefits with respect to enrollments and billing will not change. The significant impact on SHBP operations falls on the Division, as the administrator of the program, and on our Business Associates — the health plans and our actuaries. However, there will be an indirect HIPAA privacy impact on employers when they attempt to access or discuss the medical information of their employees. This access can only be given with the specific authorization of the employee. In most cases this authorization will have to be written and will have to include specific information required by the HIPAA regulations.

As we fully develop our HIPAA policies and procedures, including the necessary authorization forms, we will keep you updated. Please consult the Division of Pensions and Benefits’ Web site at: www.state.nj.us/treasury/pensions for the most current news about HIPAA.

Enclosure


March 2003

TO: Certifying Officer, Public Employees' Retirement System

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Prosecutors Part of PERS on the Quarterly Report of Contributions

This is your initial Report of Contributions with a bureau break 9 that lists all eligible members of the Prosecutors Part of the Public Employees' Retirement System (PERS). You should carefully review all members listed on bureau 9 to make certain that it correctly reflects all county employees eligible for participation in the Prosecutors Part of PERS. If there are any discrepancies, please contact Claressa Lapham of the Audit/Billing Section at (609) 292-3637.

Enclosed with this memorandum is a Change of Position form. This form should be completed whenever a member is deleted from a bureau of the county's Report of Contributions and added to bureau 9. Conversely, a form is required when the member is deleted from bureau 9 and added to any other bureau of the county's Report of Contributions. Due to data processing restrictions, the employee must be reported on the bureau the member is being transferred to for the entire quarter. The Change of Position form will provide the necessary information for the account to be adjusted internally. For example, a member resigned the position of assistant prosecutor January 31st taking a position with the county that does not qualify the employee for the Prosecutors Part of PERS benefits; you should delete the member from bureau 9 and add the member to the appropriate bureau of the county's Report. The deduction for January would be computed at 7.5%, while the amounts due on the new regular PERS non-Prosecutor Part position for February and March would be computed at 3%.

The rules for transferring between bureaus are the same for members transferring between public employers within the same retirement system. When a member transfers between the 1st and the 16th, you should deduct the contributions due on the full monthly contractual base salary the member is receiving on the new position. If the transfer occurs on or after the 17th of the month, deduct the contributions due for the entire month on the full contractual base salary for previous position. Start deductions on the contractual base salary for the new position as of the first of the following month. This is very important for the Prosecutors Part of PERS because pension contributions and service credit are maintained separately for benefit processing.

If you have any questions concerning this matter, please contact Claressa Lapham at (609) 292-3637.


March 2003

TO: Certifying Officer: Teachers' Pension and Annuity Fund, Public Employees' Retirement System & Police and Firemen's Retirement System

FROM: John D. Megariotis, Assistant Director, Finance

SUBJECT: Report of Contributions, First Quarter 2003 (January 1st to March 31st)

This memorandum has pertinent information concerning the completion of your Report of Contributions. Please read this memorandum before you make any changes to the Report.

DEADLINE FOR FILING

Teachers' Pension and Annuity Fund April 10, 2003
Public Employees' Retirement System April 10, 2003
Police and Firemen's Retirement System April 10, 2003

REPORTING PROCEDURES

Through the Transmittal Electronic Payments System (TEPS), employers must submit monthly transmittal remittances of approximately 1/3 of the total quarterly amounts due for pension contributions, contributory life insurance premiums and regular SACT. Token payments are not acceptable. Your March 2003 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through TEPS. The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. The TEPS remittance is also due by April 10, 2003.

With the Report of Contributions, you must complete and return the Transmittal Summary form for the 1st quarter 2003. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

When you receive your quarterly Report, you should review it immediately. If you think you will have a problem in meeting the filing deadline, or if there is anything you do not understand, contact the Audit/Billing Section at (609) 292-3630. Normally reporting inquiries can be resolved with a telephone call. Please make all necessary corrections to the Report before you return it to the Division of Pensions and Benefits. Verify that all changes are explained, the Report is added correctly, and the totals agree with the sum of the transmittal remittances.

Please show on the quarterly Report the telephone number of the individual to be contacted if our auditors have questions concerning any items.

SIGNATURE

Your quarterly Report of Contributions must be signed. Any Report not bearing a signature will be considered delinquent until an affidavit is submitted by the Certifying Authority attesting to its contents. Initials will not be accepted.

CHANGE TO MEMBER PENSION RATES - TEACHERS' PENSION AND ANNUITY FUND

Chapter 133, P.L. 2001 reduced the member's pension rate from 4.5% to 3% for members of the Teachers' Pension and Annuity Fund. The pension rate for calendar year 2003 will remain at 3%. This is not a permanent change to the normal contribution rate of 5% of salary. The minimum repayment for pension loans and the minimum deduction for the purchase of service credit, which is based on the full 5% contribution rate, will not change.

Retroactive increases paid on or after January 1, 2002 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2002.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%. The pension rate for calendar year 2003 will remain at 3%.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change. The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS, CHAPTER 247, P.L. 1999

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date. Employees of local boards of education may participate in the SACT 403(b) program or a 403(b) plan administered by their employer. This law impacts both arrangements.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law. Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES

(Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees at its November 17, 1999 meeting adopted a rule change for N.J.A.C. 17:2-4.7 that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month. Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal shortage statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every Notice of Change is prenoted to ensure that the Division has the correct banking information. This normally takes 12 to 15 days.

CHANGE TO BASE SALARY

It is important to review the salary shown in column 6 and verify that it correctly reflects the member's base salary for the quarter. If the salary shown is not correct, draw a line through it and write the correct salary above it. Pension Contributions, Contributory Insurance, SACT, and Tax-Sheltered Annuity deductions must be changed to reflect amounts due on the new salary.

If your employees received a salary increase that is retroactive to a prior quarter, change column 6 to reflect the COMBINED TOTAL of:

  • the new base salary for the quarter, plus,
  • the additional base salary for the retroactive period.

The new quarterly base salary should be written in column 1 of the Report. This salary will be projected in column 6 of your next quarterly Report. This will eliminate the need to make numerous changes on your 2nd quarter Report of Contributions. Also, in the "Remarks Column" of the current Report you should indicate that the members had a salary increase and the effective date.

REPORTING RETROACTIVE SALARY AFTER RETIREMENT

If a member receives a retroactive salary adjustment after retirement, do not write the member's name on the Report of Contributions. Complete a new Certification of Service and Final Salary and indicate that it is a retroactive adjustment after retirement by writing on the top of the Certification "Revised Due to Retro." Deduct the pension contributions and contributory life insurance, if applicable, from the retroactive check and remit that amount on behalf of the member to the Audit/Billing Section of this Division.

STATEMENTS OF OVERAGES/SHORTAGES

Overages and shortages that affect a member's Annuity Savings Fund identify whether or not the pension contributions are subject to the 414(h) provision. These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h). All overage and shortage statements that cover a period prior to January 1, 1987 are not subject to the 414(h) provision. Please note that all member shortages are to be paid by separate check. Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone us at (609) 292-3630.


February 7, 2003

TO: Certifying Officers of Municipalities, Municipal Authorities and County Colleges Participating in the State Health Benefits Program

FROM: Florence Sheppard, Assistant Director, State Health Benefits Program

SUBJECT: Chapter 3. P.L. 2003 - Amended Health Care Waivers

Governor McGreevey has signed into law, Chapter 3, P.L. 2003, which amends the health care waiver provisions of Chapter 259, P.L. 1995 and Chapter 189, P.L. 2001. Effective January 27, 2003, the new law amends these statutes in two ways:

  1. The ability to waive coverage is no longer limited to employees who have other coverage as a dependent of a spouse. It extends the waiver of coverage provisions to apply to any situation in which an employee is eligible for other health care coverage, and
  1. The waiver provisions are extended to county colleges in the State Health Benefits Program or another group health benefits plan.

The other provisions of Chapters 259 and 189 remain unchanged, including the provision that the amount of the incentive to be paid cannot be subject to the collective bargaining process.

Enclosed you will find a revision to the SHBP Coverage Waiver/Reinstatement form Adobe PDF (9K) and it's accompanying cover letter. Please begin using this updated form immediately.

If you have any question regarding this law, please call the Division's Office of Client Services at (609) 292-7524. When you call, select the option to "Speak with a Counselor" and, when prompted, press 1 for "Employer Questions" and 1 again for "Health Benefits Questions."

Enclosure


February 2003

TO: Certifying Officers of Municipalities, Municipal Authorities, and County Colleges Participating in the State Health Benefits Program

FROM The New Jersey State Health Benefits Program

SUBJECT: Health Care Waivers

Chapter 259, P.L. 1995, Chapter 189, P.L. 2001, and Chapter 3, P.L. 2003 allow a municipality, municipal authority, or county college that participates in the State Health Benefits Program (SHBP) or another group health benefit plan to:

  • permit employees, who are eligible for other health care benefits, to waive coverage and receive an incentive. The incentive cannot exceed 50% of the amount saved by the municipality because of the waiver of benefits.

  • permit an employee, who has waived coverage under the provisions of this law, to immediately resume health coverage if they lose their other health coverage.

The decision of the municipality, municipal authority, or county college to allow its employees to waive coverage and the amount of the incentive to be paid cannot be subject to the collective bargaining process.

The law requires employees participating in the SHBP to file the attached State Health Benefits Program Coverage Waiver/Reinstatement form Adobe PDF (9K) to waive health coverage to receive the cash incentive. The form is also to be used by an employee to reinstate waived health coverage due to the loss of the employee's other health coverage. The employee must attach the form to a completed SHBP Health Benefits Application when filing for a waiver or reinstatement. The effective date of the waiver or reinstatement will be in accordance with normal processing guidelines as described on the SHBP Waiver/Reinstatement form Adobe PDF (9K).

Any municipality, municipal authority, or county college contemplating exercising its right to offer a cash incentive to waive health benefits is urged to seek the advice of legal counsel that is knowledgeable with federal and state tax matters, especially with regard to employee benefits plans. If a cash incentive provided by an employer is not part of an Internal Revenue Code Section 125 plan, the health benefits provided to its other employees may be subject to federal taxes.

If you have any question regarding this law, please call the Division's Office of Client Services at (609) 292-7524. When you call, select the option to "Speak with a Counselor" and, when prompted, press 1 for "Employer Questions" and 1 again for "Health Benefits Questions."



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