CERTIFYING OFFICER LETTERS 2013

Also available: Archived E-Messages to Certifying Officers and EPIC Users

CERTIFYING OFFICER LETTERS FROM OTHER YEARS

Also available Archived E-Messages to Certifying Officers and EPIC Users.

May 16, 2013

The Division of Pensions and Benefits, with assistance from the Office of the Attorney General, recently completed a formal process to amend the New Jersey Administrative Code (N.J.A.C.) as it relates to the Alternate Benefit Program (ABP) (N.J.A.C. 17:7-1 through 21).  The final rules were published in the New Jersey Register on March 18, 2013. 

CLOSURE OF PRE-1995 CONTRACTS

As part of this process it became apparent that several long-time members of the ABP continued to make voluntary contributions to the 403(b) annuity contracts available under the ABP prior to 1995.  Those contracts have been deemed to be “closed” and identified as the “ABP Pre-1995 Annuity Contracts Plan (Closed Plan)” (N.J.A.C. 17:7-1.2).  It was determined that these non-qualified contracts should be closed not just to new members but to all future contributions from all program members.  Under the newly adopted rules the only accounts approved to receive 403(b) contributions are those administered under the Additional Contributions Tax-Sheltered Program (ACTS) (N.J.A.C. 17:7-1.2). Therefore, we ask all employers to begin the process of transitioning their employees who continue to make contributions to a “Closed Plan” account to the qualified 403(b) annuities available under ACTS.  We also ask that you complete this process as soon as is administratively possible but in all cases contributions should cease to these “Closed Plan” accounts no later than June 28, 2013.

Our plan service providers are aware of the need to transition these employees’ accounts and will work with you and your affected employees to expedite this process.  If you are in need of assistance please reach out to your campus service provider representative.  If you require additional assistance, please contact us at the Division.

IRS DETERMINATION

The N.J.A.C. amendment process also resulted in a favorable determination letter being issued by the U.S. Department of the Treasury’s Internal Revenue Service (IRS) for the ABP and ACTS.  The favorable determination by the IRS means that the plan complies with federal standards as to the plan’s design.  A plan operating in compliance with these federal standards will continue to receive favorable tax treatment under the U.S. Internal Revenue Code. 

PLAN DOCUMENTATION AND ADMINISTRATION

The IRS determination revealed that several areas of plan administration were not sufficiently defined in existing literature to allow for consistent interpretation of administration policy between educational institutions and the various service providers.  The newly adopted rules resolve that program deficiency and provide what amounts to a complete “Plan Document” that may be referred to as the reference source for determination of all facets of program benefits. The Division is also working with the ABP’s service providers to assure that the plan is administered consistently with its adopted rules. 

The Plan Document (N.J.A.C. 17:7) has been placed on the Division’s Web site at: www.state.nj.us/treasury/pensions/abp1.shtml  

I encourage each of you with oversight responsibility for administration of this program to make use of this source for decision-making under the program.

CO Letter in Printable Format Adobe PDF (59K)

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May 10, 2013

This letter is being distributed to employers as a reminder of the existing policy for the effective dates of SHBP/SEHBP coverage as it applies to 10-month employees.

As outlined in N.J.S.A. 52:14-17.32c, employees hired as of September 1st under a 10-month contract are entitled to have their health benefits effective September 1st providing they start work at the beginning of the contract year and a completed Health Benefits Enrollment Application is received in our office by October 5th (or the next business day if October 5th falls on a weekend).  Coverage for these employees and their dependents will continue during the two months of the year in which they are not paid, provided that proper payment is made for coverage as may be required by the State or participating employer.

Applications for 10-month employees received after October 5th will be effective November 1st.  All other 10-month employees who do not start work at the beginning of the contract year (September 1st) will have benefits begin 60 days from the date of hire.

The termination of health coverage for a 10-month employee who terminates employment at the end of a contract year will be September 1st provided the employee’s benefits were in effect September 1st of the previous year.  Terminations submitted via the Employer Pensions and Benefits Information Connection (EPIC) must be processed by the 5th of the month prior to the health benefit termination date.  Please refer to the “Timetable for Terminations in the NJ SHBP/SEHBP for State and Monthly Employers” found in EPIC by clicking on 10-month termination explanation when processing terminations.

If you have any questions about the information in this letter, please contact the Division’s Office of Client Services at (609) 292-7524 to speak with an Employer Group representative or send an e-mail to:pensions.nj@treas.state.nj.us

CO Letter in Printable Format Adobe PDF (53K)

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March 26, 2013

Due to the expansion of health plan offerings effective January 1, 2013, part-time employees may enroll in any SHBP/SEHBP health plan that is offered by the employer (except for NJ Direct HD1500 or Aetna Value HD1500) and a SHBP/SEHBP prescription drug plan (if offered by the employer).

Programming to align prescription drug plans with the appropriate health plan was not completed prior to January 1, 2013, and some part-time employees were enrolled in a prescription drug plan that did not align with the correct health plan. The Division of Pensions and Benefits recently completed system alignment of part-time coverage offerings with the employers who offer prescription drugs through a SHBP/SEHBP health plan. In many cases, there will be corrections to employer billed amounts in the April 2013 billing retroactive to January 1, 2013. Impacted member claims will be reprocessed and may result in an adjustment to the amount the member is required to pay. 

Also, part-time employees of employers who offer prescription drug based upon the health plan in which the subscriber is enrolled will no longer be able to waive prescription drug coverage. If a part-time member had previously waived their stand-alone prescription coverage, their enrollment in prescription coverage through the health plan will be effective April 1, 2013.  

Please inform your participating part-time employees of this update.

Enclosure

Fact Sheet #66, Health Benefits Coverage for Part-Time Employees Adobe PDF (32K)

CO Letter in Printable Format Adobe PDF (49K)

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March 14 , 2013

Chapter 52, P.L. 2011, (N.J.S.A. 43:3C-15) requires that both the Certifying Officer¹ and the immediate Supervisor of the Certifying Officer receive training² in enrollments and annually certify for each member of the retirement system, that the enrolled person is eligible for membership in the retirement system in accordance with the statutes and regulations of the retirement system.

ONLINE MEMBERSHIP CERTIFICATION NOW AVAILABLE IN EPIC

The Division of Pensions and Benefits has completed work on the Chapter 52 Annual Membership Certification which is available as an online application in the Employer Pensions and Benefits Information Connection (EPIC).

With the completion of programming, the Annual Membership Certification is now due from employers.  The designated and trained Certifying Officer and Supervisor of the Certifying Officer are both required to complete the Chapter 52 Annual Membership Certification. 

The Certifying Officer and Supervisor of the Certifying Officer should immediately:

• Log on to EPIC — go to: www.state.nj.us/treasury/pensions/  and click the link “Log on to MBOS or EPIC.”  Then log on to myNewJersey and EPIC.

• On your EPIC Home Page you will see a button for the “Chapter 52 Annual Certification.”  Click the button and the first page of the application will show the Chapter 52 training and certification status of the Certifying Officer and the Supervisor of the Certifying Officer.  To complete the Annual Membership Certification, click the “Complete Certification” button to open the certification page.

  Note: If Chapter 52 training has not been completed by both individuals, it must be done immediately². The “Complete Certification” button will not be available until Chapter 52 training is completed.

• If you are able to certify that each member of the retirement system is properly enrolled, click “Yes.”  You will receive an online confirmation and the process is completed.

• If you are unable to certify that each member of the retirement system is properly enrolled, click “No” and you will be shown a page with detailed instructions on how to report any improperly enrolled individuals to the Division of Pensions and Benefits — employers should also remove these individuals from the quarterly Report of Contributions.  Once any instance of an improperly enrolled worker has been reported with the Division, you will receive a follow-up e-mail from the Division with instructions that you may return to EPIC and complete the Annual Membership Certification.

Immediate action is required. The Certifying Officer and Supervisor of the Certifying Officer must each complete the Annual Membership Certification within 30 days of receipt of this letter.  Failure to do so will prevent the Division from accepting any new enrollment applications from the employing location until the certifications are completed.

CERTIFICATION IS REQUIRED ANNUALLY

Please note that the current certification marks the initial rollout of the Chapter 52 Annual Membership Certification.  Under the provisions of Chapter 52, Membership Certifications are due annually and will be required each September.

Therefore, the Division will send employers an e-mail notification for September 2013 as a reminder that memberships are again due for certification.  After memberships are recertified in September, the process will be complete for the year³ until a new reminder is sent for September 2014 and each year thereafter. 

IMPORTANCE OF PROPER ENROLLMENT

Improper enrollment of ineligible individuals in the retirement systems results in pension abuse and a loss of public confidence in local and state administrators.  Failure to complete the required training and/or Annual Membership Certification may also result in financial hardship for your employees and financial harm or other penalties for you, the employer.

Until Chapter 52 training and the Annual Certification is completed:

• Your employing location cannot process enrollment applications or transfers until both the Certifying Officer and the Supervisor complete training.

• Employees with delayed enrollments will have significantly larger back deduction amounts resulting in longer repayment schedules and in some cases, assessment of interest charges.

• Your employing location may also be subject to a delayed enrollment liability if an employee is not properly enrolled in the pension system in a timely manner.

• An employer who enrolls, or permits the continued enrollment of, an individual who is ineligible for membership in the retirement system will be subject to prosecution under N.J.S.A. 43:3C-15 — “any person who knowingly makes a false statement, or falsifies or permits to be falsified any record, application, form, or report of a pension fund or retirement system, in an attempt to defraud the fund or system will be guilty of a crime of the fourth degree.”

It is essential that public employers remain up to date with the enrollment eligibility training and certification requirements.  The Division of Pensions and Benefits expects that all Certifying Officers and their Supervisors will make every effort to ensure that their location is in full compliance with this law.

ENROLLMENT AND TRANSFER FORM UPDATES

In addition to the new online Annual Membership Certification, the Division has also updated its online and paper Enrollment Applications and Report of Transfer forms to reflect the Chapter 52 training and certification requirements.  PDF versions of the revised forms can be found in the Forms Index of the online Employers’ Pensions and Benefits Administration Manual (EPBAM) at: www.state.nj.us/treasury/pensions/epbam/

¹“Certifying Officer” is defined in the law as an officer or employee of the State or of an employer other than the State who is responsible for submitting information to and performing the duties relating to matters concerning the retirement system with respect to each of the employees of the employing location, as required by law, the board of trustees or commission, and the Division of Pensions and Benefits. “Supervisor of the Certifying Officer” is designated by the employing location and is required to be the immediate supervisor of the Certifying Officer as defined above.

²For more information on Chapter 52 Mandatory Training Requirements see the Certifying Officer Letters of May 26, 2011, Enrollment Certification and Training Requirements Under Chapter 52, P.L. 2011, and June 17, 2011, Required Training under Chapter 52, P.L. 2011.  Links to these letters are at: www.state.nj.us/treasury/pensions/coltr11.shtml

³In the event of a change in either the Certifying Officer or the Supervisor of the Certifying Officer, the new individual must complete both Chapter 52 training in enrollments and complete a new membership certification.

CO Letter in Printable Format Adobe PDF (69K)

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February 26, 2013

We appreciate your efforts in preparing to launch ING’s Common Remitter services for participants in the New Jersey Alternate Benefit Program and Additional Contributions Tax-Sheltered Program administered through the Division of Pensions and Benefits.
In order to implement the Common Remitter service, we want to remind you of the plans that are within the scope for this service:

• Alternate Benefit Program (ABP) — A mandatory 401(a) retirement plan, the ABP covers primarily employees who provide instruction and/or are required to have a professional degree or designation as part of their job functions. Typically, such employees will be full-time officers, full-time professional staff, faculty, and teaching staff

• Additional Contributions Tax-Sheltered Program (ACTS) — A voluntary 403(b) plan, ACTS is available for all employees of the State’s public universities and colleges provided that the employee normally works at least 20 hours per week

We recognize that schools and/or investment providers may have developed different naming conventions for the ABP and ACTS programs.  As a reminder, employees eligible to participate in ACTS may fall into one of two categories:

1. Employees who are ABP members, and
   
   
2. School employees who are not eligible to become ABP members.

As a reminder, data related to any other plan, including the pre-1995 403(b) Alternate Benefit Plan and any other school-sponsored plan not offered under the auspices of the Alternate Benefit Program (such as a school-sponsored voluntary 403(b) plan or a school-sponsored excess plan), is not currently part of these common remitter services and should not be transmitted through ING.
We know that you may have questions about these new common remitter services.  We intend to hold webcasts to address your concerns and assist you in transitioning to the Common Remitter services.  We will notify you of the dates for these webcasts as soon as they are available.

In the meantime, if you have specific questions about your plan data files, please do not hesitate to contact Mala Emera at (732) 326-5613 or the ING Common Remitter team at 1-866-408-0658 or by e-mail at common.remitter@us.ing.com

CO Letter in Printable Format Adobe PDF (58K)

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January 24, 2013

On May 9, 2012, we advised all Alternate Benefit Program (ABP) employers and their staff that if there was no remedial correction to statutes to permit programs that had been referred to as “Transition to Retirement” by June 30, 2012, the Division’s position as stated in its July 1, 2011, communication on this subject would be implemented; all “Transition to Retirement” programs would have to be discontinued; and corrective measures would have  to be taken with regard to your employees who had elected to participate in the program.

As background, on July 1, 2011, the Division released guidance relating to a practice whereby some, if not all, of the State’s public colleges and universities (including county colleges) offered programs referred to as “Transition to Retirement.” Under those programs employees, typically faculty members, retired from their full-time positions with the institution, began collecting retirement benefits from the ABP, and continued employment with the institution in a reduced, part-time capacity.  In some situations this practice may have been memorialized in a collective negotiations agreement.  The ABP statutes do not authorize “Transition to Retirement” programs and, as such, the programs should not be utilized to qualify an employee for retirement benefits from the ABP.  The Division did not take corrective action at that time since amendments to New Jersey’s Statutes to permit these programs had been proposed and were pending before the Legislature.

On October 11, 2012 we advised this same group of employers and their staff that, since no remedial correction to statutes had occurred, the Division would have to take steps to discontinue these programs and correct past actions taken by employers and employees under these programs. The Treasurer’s Office then received a request from a group representing the State’s Colleges and Universities to reconsider the “arbitrary deadline of June 30, 2012” and allow more time for corrective legislation, in the form of S-1819 and A-3024, to progress through the legislative process.

Unfortunately, as of now, that legislation has not been enacted. To maintain the qualified status of the Alternate Benefit Program with the Internal Revenue Service, the Division must take the following corrective measures:

First, employers are advised that ABP members participating in “Transition to Retirement” programs will not be approved to receive any retirement benefits from the retirement system, including retiree health benefit coverage (if applicable), and those employees must continue participation under the ABP if their continued employment so permits.

Second, the Division requests a copy of all “Transition to Retirement” programs that have been in force through the employment agreements from January 2009 through December 2012. 

Third, we are asking all employers to provide a list, in the format provided in attachment A of this notice, of all employees who have participated in a “Transition to Retirement” program since January 1, 2009.  As you will see in the provided format, the Division is interested in the original date of retirement and the position from which the employee retired under the “Transition to Retirement” program, the date and position under which the employee continued employment under the “Transition to Retirement” program, and if the subsequent employment has terminated.

Fourth, any ABP member who elected to retire under a “Transition to Retirement” program during calendar year 2012 only who wishes to rescind that retirement and continue participation under the ABP will be permitted to do so if:

1. The member submits a written request to their employer to rescind their retirement;
2. The employer confirms in writing that the retirement is rescinded and employment will continue;
3. The member, working through their ABP service provider, cancels any request for a benefit payment or, in the case of an account that has been withdrawn or is otherwise in payment status, returns the funds that were distributed to their investment provider to re-establish the ABP retirement account, and;
4. The Division receives copies of the member’s and employer’s written confirmation of the rescinding of retirement and the ABP service provider’s confirmation of cancelation or return of benefits.

Additional guidance will be provided concerning corrective actions that will be required for those employees who have participated in a “Transition to Retirement” program between 2009 and 2011 or in 2012 and are unable to re-establish their retirement account as outlined under the fourth step above.  That guidance will be provided after the Division is able to analyze data requested under the second and third steps above and has conferred with the Office of Employee Relations and the Office of the Attorney General.  Therefore, your prompt attention is requested to allow for corrective action to take place as soon as is possible.

All information requested by the Division related to this matter should be forwarded to:

Attn: ABP Transition Project
Bureau of DB & DC Plans Reporting
New Jersey Division of Pensions and Benefits
50 West State St
PO Box 295
Trenton, NJ 08625-0295

The requested information must be provided to the Division of Pensions and Benefits no later than February 15, 2013.  If an institution did not offer to its employees a program commonly referred to as a “Transition to Retirement” program or if no employees participated in such a program during the period from 2009 through 2012, a statement to that effect must be filed with the Division of Pensions and Benefits and sworn to by the certifying officer for that institution no later than February 15, 2013.  Failure to file the requested information related to participants in a “Transition to Retirement” or a statement from the certifying officer may impact the timely processing of reimbursement requests for employer pension obligations for current members of the ABP.

Any questions may be directed to this address or to the ABP Transition to Retirement Project call center at (609) 292-3440.

Enclosure
Attachment A - Transition to Retirement Participation List Adobe PDF (136K)

CO Letter in Printable Format Adobe PDF (55K)

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January 18 , 2013

On July 17, 2012, the Office of the State Comptroller (OSC) released its report, Improper Participation by Professional Service Providers in the State Pension System.  In the report the OSC cited continued instances of improper pension enrollment by local employers of individuals working under Professional Services Contracts.

Individuals who meet the definition of an “independent contractor” as set forth in regulation or policy of the federal Internal Revenue Service (IRS) for the purposes of the Internal Revenue Code are not considered to be “employees” and have never been eligible for membership in the Public Employees’ Retirement System (PERS) or the Defined Contribution Retirement Program (DCRP) as a result of the contracted services.

In 2007, the New Jersey Legislature passed Chapter 92, P.L. 2007, enacting significant reforms recommended in the Final Report of the Joint Legislative Committee on Pension and Health Benefit Reform.  These reforms, specifically those codified at N.J.S.A. 43:15A-7.2 and 43:15C-2b(4) expressly provide that, effective January 1, 2008 and after, persons performing professional services 1) under a contract awarded pursuant to N.J.S.A. 40A:11-5, 18A:18A-5, or 18A:64A-25.5 (no bid contracts) and/or 2) under an independent contract as determined in accord with the rules and policy of the IRS, are ineligible for membership in the PERS based on that service, and correspondingly are ineligible for participation in the DCRP (pursuant to Section 20 of Chapter 92).  

Professional services are defined in N.J.S.A. 40A:11-2(6) to be services performed by a person authorized by law to practice a recognized profession, whose practice is regulated by law, the performance of which requires knowledge of an advanced type in a field of learning acquired by a prolonged formal course of specialized instruction and also the performance of services that are original and create in character in a recognized field of artistic endeavor.  Accordingly, attorneys, physicians, engineers, architects, accountants, auditors and other individuals providing "professional services" who perform services as a result of a Professional Services Contract with a public employer are ineligible for participation in the PERS or DCRP as a result of those services. 

EMPLOYER REVIEW REQUIREMENTS

In its report the OSC indicates that many employing locations have apparently failed to implement Chapter 92 and remove ineligible individuals from the PERS or DCRP who are performing services under no bid Professional Services Contracts or who are performing professional services as independent contractors.  Employing locations will now be required to review the employment status with regards to these professionals and take corrective actions regarding improper pension enrollment.

In reviewing the eligibility for membership of individuals performing professional services under no bid contracts, or as independent contractors, the employer must first review the pre-Chapter 92 service, i.e. the status of the individual prior to January 1, 2008, to determine whether the individual was an employee or an independent contractor in accord with IRS guidelines.  If the enrollment was based solely upon work as an independent contractor in accordance with the Internal Revenue Code, these individuals were not employees and therefore were not eligible for membership in the PERS (or DCRP). In these cases, the pension service is subject to review of the facts by the Division of Pensions and Benefits to determine if the individual was in fact an employee or an independent contractor. 

There are also no “grandfathering” provisions under N.J.S.A.43:15A-7.2 to permit individuals who were already enrolled in the PERS, to remain PERS (or DCRP) members after January 1, 2008, if the enrollment was based solely upon work as a professional services provider.  All individuals with Professional Services Contracts, or who met the definition of a professional services provider, were required to be removed from PERS or DCRP membership after January 1, 2008 (June 30, 2008 for fiscal year contracts).

In both of the situations described above, individuals found to have been improperly enrolled will be issued a return of pension contributions and any pension service based upon an ineligible position will be canceled by Division of Pensions and Benefits.

ENROLLMENT CERTIFICATIONS

The review and correction of these professionals’ status is of added importance under the requirements of Chapter 52, P.L. 2011 (N.J.S.A. 43:3C-15), insofar that law requires:

“the certifying officer and the officer's immediate supervisor to certify…  …annually for each member of the retirement system, that the person enrolled is eligible for enrollment in the pension fund or retirement system in accordance with the relevant law and the rules or regulations promulgated thereto”

and that:

“any person who knowingly makes a false statement, or falsifies or permits to be falsified any record, application, form, or report of a pension fund or retirement system, in an attempt to defraud the fund or system as a result of such act shall be guilty of a crime of the fourth degree.”

Beginning in early 2013, the Chapter 52 Annual Certification of Enrollments will be required of all employing locations. (Additional information about the Chapter 52 Annual Certification of Enrollments will be distributed when the certification application becomes available for use.)  However, in advance of the Annual Certification, and in order to avoid potential penalties under Chapter 52 for the improper enrollment of professional services providers or independent contractors into the retirement system, Certifying Officers should review the employee/independent contractor status of their staff and take immediate corrective action for any individuals who may be improperly enrolled.

On the recommendation of the OSC, the Division of Pensions and Benefits has developed the accompanying Employee/Independent Contractor Checklist form to certify the PERS eligibility of employees and exclude from enrollment ineligible professional service contractors and independent contractors.  Certifying Officers should complete this checklist for each individual who has provided professional services and was reported as a member of the PERS or DCRP since January 1, 2008, regardless of whether the individual is still working at your location.  Submit the completed forms to the Division of Pensions and Benefits no later than February 15, 2013.

In addition, upon completion of this form employing locations must take all appropriate action to remove ineligible individuals from PERS or DCRP membership, prior to completing the Chapter 52 Annual Certification of Enrollments.

To remove an ineligible individual from PERS enrollment:

• Stop reporting pension contributions for the individual on the quarterly Report of Contributions; and

• Immediately notify the Division of Pensions and Benefits, External Audit Unit in writing or by sending e-mail to pensions.nj@treas.state.nj.us  with “External Audit” in the e-mail subject line. When writing, please identify your employing location, a contact name and phone number, the name of the independent contractor or professional service provider, the position held, and the original date of hire or appointment.

ADDITIONAL INFORMATION

For specific questions regarding the classification of employees or Independent Contractors, please refer to the information provided by the Internal Revenue Service at: www.irs.gov  or seek the advice of an attorney.

A Certifying Officer Letter of August 2007 regarding Chapter 92, P.L. 2007, — including the ineligibility of Professional Services Contracts — can be found on the Division’s Web site at: www.state.nj.us/treasury/pensions/coltr07.shtml

Additional information on the ineligibility of Professional Services Contracts was provided for Local Employers by the Department of Community Affairs in the December 2007 Local Finance Notice 2007-28 at: www.state.nj.us/dca/divisions/dlgs/lfns/07/2007-28.doc  and the April 2008 Local Finance Notice 2008-10 at: www.state.nj.us/dca/divisions/dlgs/lfns/08/2008-10.doc

Employers with general questions about this letter, PERS enrollment, or the provisions of Chapter 92, P.L. 2007 or Chapter 52, P.L. 2011, can contact the Division of Pensions and Benefits, Employer Education unit at (609) 292-7524, or send e-mail to:pensions.nj@treas.state.nj.us

Enclosures

Fact Sheet #84, Professional Services Contracts, Independent Contractors, and Pension Enrollment Adobe PDF (53K)

Employee/Independent Contractor Checklist Adobe PDF (38K)

CO Letter in Printable Format Adobe PDF (110K)

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