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The Division of Pensions and Benefits posts proposed rules — new rules, amended rules and readoptions of existing rules — on this Web site to inform members, retirants, employers and other interested parties. Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code. If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. NJAC refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations. Proposed changes are either in bold print or are underlined. Deletions are bracketed [so]. Public Notices Notice of Administrative Change: N.J.A.C. 17:2-2.3 Public Employees' Retirement System - Ineligible Persons. Cite as 32 N.J.R. 2925(a) [PERS] Proposed Rules Proposed Amendment: N.J.A.C. 17:2-2.3 Ineligible Persons. Cite as 32 N.J.R. 4239. [PERS] Proposed Amendment N.J.A.C. 17:9-3.1 and Proposed New Rule: N.J.A.C. 17:9-3.8 Dependents and Children Defined and Children with Disabilities Age 23 or Older; Determination of Eligibility for Continuation of Coverage. Cite as 32 N.J. Reg. 3383(a) Proposed Amendment:: N.J.A.C. 17:2-3.14 Acceptable Designations of Beneficiaries. Cite as 32 N.J. Reg. 3213(a) [PERS] Adoptions Readoption with Amendments N.J.A.C 17:4 Cite as 32 N.J.R 4060(a). [PFRS] Adopted Amendment N.J.A.C. 17:4-3.4 Survivor Benefits. Cite as 32 N.J.R. 3554(b). [PFRS] Adopted Amendment: N.J.A.C. 17:9-6.9 Eligibility of State Payment of Retiree Coverage Under P.L. 1997, C.330 Cite as 32 N.J.R.. 4451(a) [SHBP] Adopted Amendment N.J.A.C. 17:9-6.1 Retired Employee Defined. Cite as 32 N.J.R. 4450(b). [SHBP] Adopted Repeal N.J.A.C. 17:9-5.6 Health Maintenance Organization Charges. Cite as 32 N.J.R. 4450(a) [SHBP] Adopted New Rule: N.J.A.C 17:5-2.4 Acceptable Designation of Beneficiaries. Cite as 32 N.J.R. 3996(d) [SPRS] Adopted Amendment: N.J.A.C. 17:3-3:13 Acceptable Designations of Beneficiaries. Cite as 32 N.J.R. 3996(c) [TPAF] Adopted Amendment: N.J.A.C.17:3-1.2 Fiscal Year. Cite as 32 N.J.R. 3996(b) [TPAF] Adopted New Rule: N.J.A.C. 17:2-1.2 Division of Pensions and Benefits Public Employees' Retirement System Fiscal Year. Cite as 32 N.J.R. 3966(a) [PERS] Adopted New Rule: N.J.A.C. 17:6-1.4 Consolidated Police and Firemen's Pension Fund Election of Members--Commission. Cite as 32 N.J.R. 3863(a) [PFRS] Adopted New Rule N.J.A.C. 17:4-3.6 Acceptable Designation of Beneficiaries. Cite as 32 N.J.R. 3581(a) [PFRS] Adopted Amendment: N.J.A.C. 17:3-1.4 Election of Member-Trustee. Cite as 32 N.J.R. 2926(a). [TPAF] Adopted Amendment: N.J.A.C. 17:4-1.4 Election of Active Member-Trustee. Cite as 32 N.J.R. 2598(a). [PFRS] Adopted Amendment: N.J.A.C. 17:4-5.1 and Proposed Repeal and New Rule: N.J.A.C. 17:4-5.1 and 5.3 Eligibility for Purchase and Optional Purchases of Eligible Service. Cite as 32 N.J. Reg. 2600(a). [PFRS] Adopted Amendment: N.J.A.C. 17:9-5.12 and 6.8 Premium Sharing for Active State health Benefit Coverage; Premium Sharing for Retired State Health Benefit coverage. Cite as 32 N.J.R. 2601(b). [SHBP] Adopted New Rules: N.J.A.C. 17:1-4.10 and 5.12 Eligibility for a Loan; Outstanding Loans. Cite as 32 N.J.R. 2602(a) [JRS] Adopted Amendment: N.J.A.C. 17:4-6.4 Outstanding loans. Cite as 32 N.J. Reg. 2601(a) [PFRS]Adopted Amendment: N.J.A.C. 17:4-2.5 Age Requirements. Cite as 32 N.J.R. 2599(a). [PFRS] Adopted Amendment N.J.A.C. 17:3-6.13 Disability Retirant; Annual Medical Examinations. Cite as 32 N.J.R. 2110(a) [TPAF], 32 N.J.R. 2257(a) [PERS] Adopted New Rule: N.J.A.C. 17:2-2.8 Enrollment Eligibility Of Provisional, Temporary Employees Occupying Full Time Police And Fire Titles. Cite as 32 N.J.R. 1415(a). [PERS] Amendment:
N.J.A.C. 17:1-4.36 Peacetime Military Service. Cite as 32 N.J.Reg.
1045(a) [General] Repeal
and New Rule: N.J.A.C. 17.2-1.4 Election of Member Trustee. Adopted
March 6, 2000. Cite as 31 N.J.R. 3926(a)[PERS]
PUBLIC EMPLOYEES' RETIREMENT SYSTEM Proposed Amendment; N.J.A.C. 17:2-2.3 Cite as 32 NJR 4239 The agency proposal follows: Summary The proposed amendment is necessary to clarify that those employed by the Federal Workforce Investment Act of 1998 are ineligible for enrollment in the Public Employees' Retirement System (PERS). The Federal Workforce Investment Act is the successor to the Job Training Partnership Act (JTPA). N.J.S.A. 43:15A-7h specifically excludes employees of the JTPA from PERS enrollment. The Division of Pensions and Benefits recently requested advice from the Attorney General's Office asking whether Title I of P.L. 105-220 (112 Stat. 936 to 1059) effects any change on N.J.S.A. 43:15A-7h which provides that employees hired under the predecessor Federal law, the Job Training Partnership Act, are ineligible for membership in the PERS. The more recent federal law, approved August 7, 1998, repealed the JTPA as of July 1, 2000. The membership eligibility of local government employees hired pursuant to the Workforce Investment Act of 1998 has become an issue. The Attorney General's Office response stated that section 199A(c) of the Workforce Investment Act of 1998 (112 Stat. 1059) provides that "all references in any other provision of law to a provision of the .JTPA.shall be deemed to refer to the corresponding provision of this title." Accordingly, employees hired under the Workforce Investment Act can be deemed to be JTPA employees and therefore ineligible for PERS membership pursuant to N.J.S.A. 43:15A-7h. Full text of the proposal follows: N.J.A.C. 17:2-2.3 Ineligible persons (a) The following classes of persons are ineligible for membership in the system 1 through 8 (No change) 9. Any person hired under the Workforce Investment Act of 1998. Employees hired under the Workforce Investment Act shall be deemed to be Job Training Partnership Act (JTPA) employees and therefore ineligible for PERS membership pursuant to N.J.S.A. 43:15A-7h. POLICE AND FIREMEN'S RETIREMENT SYSTEM Proposed Readoption
with Amendments: N.J.A.C. 17:4 Cite as 32 N.J. Reg. 4060(a) The agency proposal follows: Summary The Board of Trustees of the Police and Firemen's Retirement System (Board) is responsible for reviewing the administrative rules within N.J.A.C. 17:4. When they become aware of a change in the laws or a court decision that possibly could affect the Police and Firemen's Retirement System (PFRS), the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division of Pensions and Benefits, and the Board's staff to ascertain if the current rules are necessary and/or cost efficient. In 1999, the Public Employees' Retirement System (PERS) Board of Trustees completed an extensive review of their rules found at N.J.A.C. 17:2. Many of the proposed amendments which follow are being made to better correspond with the rules of the PERS. Accordingly, the Board of Trustees of the Police and Firemen's Retirement System proposes to readopt the current rules within N.J.A.C. 17:4, which expire on April 1, 2001, with the following amendments, repeals and new rule, and to extend the expiration date for such rules under Executive Order No. 66(1978). The current rules deal with the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects associated with the Police and Firemen's Retirement System. Members, participating employers, retirees and survivors of retirees rely on the efficient operation of the retirement system to administer retirement benefits and to provide the information they need regarding individual accounts. They rely upon the presence and predictability of the rules that guide the administration of benefits and the stability of the Retirement System. The protections and guarantees that these rules afford its members mandate their continued existence. The rules proposed for readoption and the proposed amendments, repeals and new rule reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the Police and Firemen's Retirement System. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66(1978), the chapter was readopted as new rules in 1990. Chapter 4 expired on June 8, 1995 pursuant to Executive Order No. 66(1978), and a new Chapter 4, Police and Firemen's Retirement System was adopted, effective April 1, 1996. Following is a discussion of the proposed amendments, repeals and new rule. Subchapter 1. Administration The Board proposes that N.J.A.C. 17:4-1.1(a) be amended to correspond to the language in the PERS rules found at N.J.A.C. 17:2-1.1. The amended rule provides that the Board shall meet on the third Monday of each month, adding "or at such other time as may be deemed necessary by the Board." Subsection (b) is added, providing that the chairperson may call for special meetings as necessary. Proposed amendments at N.J.A.C. 17:4-1.3 would change "chairman" to "chairperson." This change is to be made throughout the chapter. "Each fiscal year" would be changed to "July" to better clarify when the election takes place. N.J.S.A. 43:16A-13(6) requires six members in attendance and not five as previously stated because this statute also increased the size of the Board to 11 members instead of nine (N.J.S.A. 43:16A-13(2)). N.J.S.A. 43:16A- 13(8) requires that the Director of the Division of Pensions and Benefits appoint a Secretary to the Board. Therefore, N.J.A.C. 17:4-1.3(c) and (d) would be replaced with a new subsection (c) stating this requirement. N.J.A.C. 17:4-1.3(e) would become (d). Proposed amendments to N.J.A.C. 17:4-1.5 would change certifying "agent" to certifying "officer" throughout this chapter because the participating employers are not agents of the Division. N.J.A.C. 17:4-1.5(d) would be added, stating upon the request of the Board, "the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the retirement system." This language will impress upon the certifying officers the importance of accuracy in the information they provide the Division. Proposed amendments to N.J.A.C. 17:4-1.6 would add subsection (c) dealing with beneficiary information. The confidentiality of beneficiary information appears at N.J.A.C. 17:1-4.1 under General Administration, but the Board believes it also belongs in the PFRS rules. Advice from the Attorney General's Office has been interpreted to permit the Division to release beneficiary information once a member's death has been reported to the System; therefore, proposed new N.J.A.C. 17:4-1.6(c) provides as follows: "The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released after the member's death." Existing subsection (c) would be recodified as (d). Proposed amendments at subsection (d) as recodified would establish the conditions under which the Division will release medical records. Proposed amendments to N.J.A.C. 17:4-1.7 would change the words "his or her" to "claimant." The required notice is proposed to be expanded through the efforts of the Board Secretary and the Attorney General's Office to include more information regarding the appeals process. These new paragraphs are to replace the existing notice. Proposed amendments to N.J.A.C. 17:4-1.8 would change the beginning of the first sentence from "[m]onthly retirement allowances will be suspended" to "[t]he disbursement of pension checks shall be suspended" to correspond with the language in the PERS rules. Paragraph (a)2 is amended to reflect certificates of eligibility being mailed periodically rather than annually. In paragraph (a)3, the word "event" would also be changed to "instance" for the above reason. Proposed amendments at N.J.A.C. 17:4-1.9 would recodify it as N.J.A.C. 17:4-1.12 to correspond with the PERS rules. The proposed amendments would eliminate the word "State" from the section heading. In subsection (a), "State employees paid by centralized payroll" is replaced with "employees whose employers who report salary and contributions on a biweekly basis" because the computer reporting systems of employers are expected to be advanced enough at this time so as to permit the Division to request on-line reporting of information instead of paper-based reporting. The Board proposes that N.J.A.C. 17:4-1.10 be recodified as N.J.A.C. 17:4-3.7 because it deals with survivor benefits. References to widowers would be eliminated and the last sentence of subsection (b) would be deleted because a widower no longer must prove dependency to receive a surviving spouse benefit. The Board proposes to repeal N.J.A.C. 17:4-1.11 concerning travel as it is also found at N.J.A.C. 17:4-6.17(c)1. Proposed amendments to N.J.A.C. 17:4-1.12 would recodify it as N.J.A.C. 17:4-1.11 to correspond with the PERS rules. "May be required" would be replaced with "shall," because a member's age is required information. The next sentence would be deleted as the Division no longer requires birth date evidence within the first six years of membership. A new sentence detailing acceptable proofs of age would appear next to establish examples of acceptable proofs. Subchapter 2. Enrollment Proposed amendments at N.J.A.C. 17:4-2.1 would add provisions to clarify what information must be provided to the Division and the Board before a position may be classified as that of a firefighter. Employees from civil service locations must satisfy the requirements of the positions as set forth by the Department of Personnel, but non-civil service locations do not have any uniform requirements for these positions. A determination is made by the Board regarding eligibility for the PFRS on a case-by-case basis and the Board proposes to set forth the following information requirements in order to allow for employers and the Board to determine whether the position satisfies the definition of firefighter. The Board also proposes to change the words "policeman" and "fireman" to "police officer" and "firefighter" throughout this rule and to replace any gender specific pronouns. The "b" in Board and the "s" in "System" would also be capitalized throughout the proposed amendment. Finally, the proposed amendment at N.J.A.C. 17:4-2.1(b)9 would add quotation marks before and after "direct supervision" and would also add "as defined by (b)5 above" to clarify that specific usage of the term. Proposed amendments at N.J.A.C. 17:4-2.2 would eliminate the references to N.J.S.A. 43:10 (county pension funds--closed for new enrollments), Chapter 92, P.L. 1973 and Chapter 156, P.L. 1973 because the positions covered by these laws have been enrolled in the PFRS for more than 25 years and no new enrollments are possible under these provisions. The proposed amendment would also change policeman and fireman to police officer and firefighter. Proposed amendment at N.J.A.C 17:4-2.3 would add the requirement that the examining physician's signature be less than a year old. The System requires proof of present physical condition, not the condition of an applicant more than a year ago. Proposed amendment would also delete the reference to the civil service commission, which no longer submits medical evidence to the Division. Proposed amendments at N.J.A.C. 17:4-2.6, Enrollment date, would make this rule better correspond to the similar rule found in the PERS rules at N.J.A.C. 17:2-2.4. A new paragraph (a)1 would be established using the existing language regarding the enrollment date of monthly employees, while a new paragraph (a)2 would be added to define what the compulsory enrollment date will be for biweekly employees. A proposed amendment to subsection (b) would eliminate the gender specific pronouns. Existing subsection (c) would be deleted, and a new subsection (c) dealing with the same subject, enrollment dates for those not covered by Civil Service, would be added to better address monthly and biweekly enrollment dates for those not covered by Civil Service. Subsection (d) would be amended to include the requirement that temporary employees be enrolled in the PERS under the provisions of N.J.A.C. 17:2-2.8. Subchapter 3. Insurance and Death Benefits The Board proposes to amend N.J.A.C. 17:4-3.1(a) by changing "he" to "the member" and deleting the reference to contributions for insurance coverage. The life insurance coverage in the PFRS is noncontributory. If an employer reports pensionable income after a member's death, then the Board will bill the employer or the beneficiary. The deduction does not have to be made by the employer; therefore, the Board also proposes to delete "provided such deduction was made by the employer." The Board also proposes to amend N.J.A.C. 17:4- 3.1(b) by adding "and noncontributory insurance benefits" after "death benefits" to apply this subsection to both types of benefits as their base salary calculation is the same. The Board proposes to amend N.J.A.C. 17:4- 3.1(c) by changing the masculine pronouns to "the member." N.J.A.C. 17:4- 3.1(d) and (e) would be deleted because the members described therein are now paid in the same manner as outlined in N.J.A.C. 17:4-3.1(c). The proposed amendments to N.J.A.C. 17:4-3.1(f) would recodify it as subsection (d). The Board proposes to replace "indicate" with "indicates" to be grammatically correct and to delete the language regarding billing the employer for overpayment. This has not been the Division's practice for many years. The language regarding underpayment to the beneficiary would remain. N.J.A.C. 17:4-3.1(g) would be recodified as subsection (e), and the Board proposes to add "If a deceased member does not have an eligible surviving spouse, child or parent" before current first word "refunds" to reflect that a deceased member's contributions will be used to fund an active death benefit under the provisions of P.L. 1999, c.428, and only if there is no eligible survivor will a refund be made. Refunds are only made to beneficiaries or a member's estate and are not refunded to the employer, therefore, the Board proposes to delete the last sentence of this section. The Board proposes to delete N.J.A.C. 17:4-3.1(h) because only members who are over 60 need to prove insurability now. The maximum enrollment age is 35 in PFRS; therefore, no members would have to prove insurability. The Board proposes to recodify N.J.A.C. 17:4-3.1(i) as (g). The Board proposes to delete N.J.A.C. 17:4-3.1(j) and (k) because there are no 10-month employees in the PFRS and these paragraphs only apply to the calculation of benefits for 10-month employees. The Board proposes to repeal N.J.A.C. 17:4-3.3 because it deals with proof of insurability. At one time, member's had to prove insurability if they were late enrollees into the system. Now, the only time a member must prove insurability is when the member is age 60 at enrollment. Because the enrollment age is 35 in the PFRS, this situation cannot exist, and so the rule as written is no longer necessary. The proposed amendment at N.J.A.C. 17:4-3.5 would change "his" to "the member's." Subchapter 4. Membership Proposed amendments at N.J.A.C. 17:4-4.3 would change "he" to "the member." Proposed amendments at N.J.A.C. 17:4-4.5 would place a period after "full normal deduction" and add that if wages are sufficient, arrears and loan deductions should be taken. The Division will accept just pension contributions and will not reject the contribution if loan and arrears payments are not also made. The proposed amendment reflects this practice. Proposed amendments at N.J.A.C. 17:4-4.6 would change the minimum adjustment amount to $2.00 per quarter to reflect the PERS rules at N.J.A.C. 17:2-4.6 and the general rules at N.J.A.C. 17:1-1.10. Proposed amendments at N.J.A.C. 17:4-4.7(b) would delete "retirement" before "deductions" because no pension deductions of any type (loan, arrears, normal contributions) should be taken during a suspension without pay. The Division now refers to retirement credit as service credit, and so, the Board proposes this amendment as well. The Board also proposes, in subsection (c), to capitalize the "B" in Board and to move the word "entire" to modify suspension and not elimination. The Board proposes to repeal N.J.A.C. 17:4-4.8, Military leave, because it has not been in effect since August 1, 1974, when the Vietnam War ended. The Board proposes to clarify N.J.A.C. 17:4-4.9 to match the language in the PERS rules at 17:2-4.9. The Board proposes to amend N.J.A.C. 17:4-4.10 to match the language in the PERS rules at 17:2-4.11, replacing "he" with "the member." The Board proposes to amend N.J.A.C. 17:4-4.11 by adding the words "the day" before "they return to service" to better clarify this section. Subchapter 5. Purchases and Eligible Service Proposed amendments at N.J.A.C. 17:4-5.5 would add the statutory cites for the referenced Chapter Laws. The Board proposes to delete paragraph (a)1 because there now exists a uniform contribution rate. Paragraph (a)2 would be recodified as (a)1, and would change the word "reinstate" to "purchase" to reflect current usage. The Board proposes to delete the references to rate of contribution and would add a cross-reference to the purchase rules to determine costs. The Board proposes to delete paragraphs (a)3 and 4 because delayed enrollees no longer need to prove insurability and the proration of purchases is covered in statute (N.J.S.A. 43:16A-11.4). The Board proposes to amend N.J.A.C. 17:5-5.6 by deleting the gender specific pronouns. The Board also proposes to eliminate the reference to the current rate of contribution because the PFRS has had a uniform contribution rate since 1989. The Board proposes to repeal N.J.A.C. 17:5-5.7 because it is no longer necessary. Purchases, whether in lump-sum or through payroll deduction, are credited at the time the purchase is agreed to. Subchapter 6. Retirement The Board proposes to amend N.J.A.C. 17:4-6.1 by changing the wording to match that in the PERS rules found at N.J.A.C. 17:2-6.1. Specifically, the Board proposes to change the word "prescribed" to "required" and capitalize the "s" in System. The Board also proposes to amend the rule by changing the requirement that the form be filed with the system, to the Division of Pensions and Benefits, to reflect actual practice. The Board proposes to add "on or" in front of "before" to clarify that the Division will accept a form received on the date of retirement. A sentence is added providing that the retirement application becomes effective on the first of the month following receipt of the application, unless a future date is requested. The Board proposes to remove all gender specific pronouns and change them to "the member." The Board also proposes to delete the words "acceptance for" in front of "processing." The Board proposes at paragraph (c) to add the requirements that a member submit proof of age before retirement. The Board does not want employers to make medical opinions; therefore, it proposes at subsection (d) to amend the requirement that the employer state that a member is incapable for further duty and replace it with a second source from either a doctor or hospital. Finally, the Board proposes to add subsection (e) which would deal with the situation when a member returns to employment, cancels the retirement allowance and then retires again. This amendment is necessary due to a recent Administrative Law Decision (Jan Astin for Harry Astin v. PERS, OAL Docket No. TYP 2603-99) which found that there was a lack of any specificity as to how a re-retiree was to go about reinstatement of the initial retirement allowance in the Administrative Code. The Board proposes to recodify N.J.A.C. 17:4-6.2 as 6.3 to match the PERS rules, and also because it makes more sense to define the effective date and then changes to that date, instead of the reverse. The proposed amendment to existing N.J.A.C 17:4-6.2 would be to delete the gender specific pronouns and to change from 30 days from the effective date to "one month" from the effective date to make it clear that benefits start on the first of a month and not on the 30th or 31st. The Board proposes to delete subsection (c) because P.L. 1999, c.428 now provides for active survivor benefits and not just retired survivor benefits. The Board proposes at new subsection (c) to add that a member retire on the first of a month that the member turns 55 if the member's birthday is the first. The Board proposes to recodify N.J.A.C. 17:4-6.3 as 6.2 as stated above. The Board also proposes to amend the rule to state "one month" instead of "30 days." The Board proposes to delete subsection (b) because insurance coverage is covered in subchapter 3. Proposed amendments at N.J.A.C. 17:4-6.6 would eliminate the gender specific pronouns. Proposed amendments at N.J.A.C. 17:4-6.7 would eliminate the gender specific pronouns and delete paragraph (a)1 concerning "normal" retirement age because age restrictions for disability benefits were found to be discriminatory. The requirement that an applicant be considered a member at the time of filing would be added as new paragraph (a)1. The Board proposes to amend N.J.A.C. 17:4-6.9 because P.L. 1999, c.428 eliminated the use of average final compensation in the calculation of PFRS benefits. Retirements are now all calculated on the last 12 months of service. Therefore, the Board proposes to add that final compensation includes pay in the 12 months before retirement and also proposes to delete references to 10 month employees because there are no 10 month employees in the PFRS. Proposed amendments to N.J.A.C. 17:4-6.10 would amend the language to better match the PERS rules at N.J.A.C. 17:2-6.10. The proposed amendment includes adding the words "employer initiated" and deleting "employee notice" from the section heading to better reflect the subject matter of the rule. The proposed amendment would make this rule gender neutral and remove the requirement that the employer make a medical opinion as to the totality and permanency of an employee's disability. The proposed amendment would also remove the language at N.J.A.C. 17:4-6.10(a)6 regarding the selection of the type of allowance desired. Members of the PFRS do not select an option at retirement. This was changed in December, 1967 when the widows' pension was enacted (N.J.S.A. 43:16A-12.1). Proposed amendments at N.J.A.C. 17:4-6.11 would delete the gender specific pronouns and add that a member may retire on the first of the month that the member turns 55 if the member's birthday is on the first, or when the member has a minimum of 20 years of service credit, if the member was enrolled in PFRS as of January 18, 2000. Proposed amendments to N.J.A.C. 17:4-6.12 would delete any gender specific pronouns. At N.J.A.C. 17:4-6.13, the Board proposes to repeal the existing rule and replace it with the rule language developed for the PERS at N.J.A.C. 17:2- 6.26. Changes include the deletion of references to specific membership directories from which physicians are to be designated by the Board to conduct medical examinations and would require those physicians to be independent except in the case of abbreviated life expectancies. Proposed amendments to N.J.A.C. 17:4-6.14 would replace gender specific pronouns with "the member" and would replace "system" with "Division" to accurately reflect who will be sending notice. Proposed amendments at N.J.A.C. 17:4-6.14(b) would delete "if not voluntarily established before that date" because if a member has already retired, he or she would not be subject to mandatory retirement. N.J.A.C. 17:4-6.14(j) is proposed for deletion because P.L. 1999, c.428 eliminated the 30 day requirement for a member's survivor to receive a survivor's benefit. Proposed amendments at N.J.A.C. 17:4-6.15 would change any gender specific pronouns, capitalize the "b" in Board and change "system" to "Division." The last sentence is proposed for deletion to conform to Division practice. The sentence provided that a copy of the notice of rejection of an application for accidental disability retirement, based on incapacity not the direct result of a traumatic event occurring during and as a result of performance of duties, would be returned and considered in future claims. Any medical information must be updated in order to file again. Proposed amendments at N.J.A.C. 17:4-6.16 would eliminate "average" before "final compensation" because the provisions of P.L. 1999, c.428 eliminated the use of the average of the final three years of service and replaced it with the last 12 months or 26 pay periods of compensation. Proposed amendments would also delete references to "State" and "centralized payroll" and add "on a biweekly basis" because more employers are expected to report on a biweekly basis, and this would apply to them. The proposed deletions of N.J.A.C. 17:4-6.16(c) and (d) are necessary because there are no longer any 10-month employees in the PFRS. Proposed amendments at N.J.A.C. 17:4-6.17 would change any gender specific pronouns and replace them with "the member." Proposed new rule N.J.A.C. 17:4-6.18 would mimic that found at N.J.A.C. 17:2-6.22 and is necessary to address the situation where a member waived all or a portion of the member's retirement allowance. Subchapter 7. Transfers Proposed amendments at N.J.A.C. 17:4-7.1 would include a new subsection (a), stating that "[t]he receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the transfer of all or a portion of prior service of any member of the System for misconduct occurring during the member's prior public service which renders that prior service, or part thereof, dishonorable." This is necessary to establish that only honorable service can be transferred. Paragraphs (b)1 and 2 (former (a)1 and 2) are amended to clarify that service credits and contributions transfer, and the form names have been changed. The Division now does wire transfers and not checks. Back deductions are scheduled in the new account. Paragraph (b)3 (former (a)3) allows the statement to be prepared and forwarded, but does not require it to accompany a check because we don't issue one. Paragraph (b)4 (former (a)4) would delete mention of the same rate of contribution because the Board now has standardized and not age based rates. Paragraph (b)5 (former (a)5) is amended to detail when a member is not eligible to transfer service credit. Paragraph (a)6 providing for transfer application copy forwarding would be deleted because it is no longer Division practice. A new paragraph (b)6 is proposed to reflect a change in Division practice, which is to use a data sheet indicating an interfund transfer. Subsection (c) (former (b)) is proposed to be amended to clarify the procedure for handling and valuation of accrued reserves. Subsection (c) would become subsection (d) and old subsection (d) would also be deleted because of the standardized rates now in effect. Proposed new subsection (e) would clarify that someone who transfers into the PFRS is subject to the age and physical requirements of enrollment. Proposed new rule N.J.A.C. 17:4-7.2 would clarify when a member is eligible to do an intrafund transfer, and impose penalties on employers for late enrollment. N.J.A.C. 17:4-7.3 is proposed for repeal as its substance is now addressed in N.J.A.C. 17:4-7.2. Full text of the proposed amendments follows: SUBCHAPTER 1. ADMINISTRATION 17:4-1.1 Board Meetings (a) The Board of Trustees shall meet on the third Monday of each month [, unless a change is declared in order by the chairman at an appropriate time] or at such other time as may be deemed necessary by the Board. (b) The chairperson may call for special meetings when necessary. 17:4-1.3 Officers and committees (a) The [chairman] chairperson and vice [chairman] chairperson of the Board will be elected by a majority vote of the members in attendance at the first meeting of [each fiscal year] July, not less than [five] six members to be present at such meeting. (b) The [chairman] chairperson of the Board shall preside at all of its meetings [that he or she attends and in his or her], or in the absence of the [vice chairman or, if] chairperson, the vice chairperson shall assume the chairperson's responsibilities if both are absent, another member selected by the majority of the members in attendance will preside for that single meeting. [(c) The secretary of the Board will be the Chief of the Bureau of Police and Fire Funds, Division of Pensions.] [(d) Upon recommendation of the Chief, the Board will also select from the staff of such Bureau, an assistant secretary who will serve in the absence of the secretary.] (c) The Director of the Division of Pensions and Benefits shall appoint a qualified employee of the Division to be Secretary of the Board. [(e) (d) The [chairman] chairperson will appoint such committees from the Board members as [he deems] deemed necessary to facilitate the Board's operations. Such committee appointments will be for a one year period, commencing each July 1. 17:4-1.5 Certifying [agent ] officer (employer) (a) The chief fiscal officer or other officer duly designated by a resolution of each county, [or] municipality or public agency, and the personnel officer of the Division, Bureau or Institution of the State locations, shall serve as certifying [agent] officer for that unit. (b) The certifying [agent] officer shall be responsible for the duties described by N.J.S.A. 43:16A-32. (c) The certifying [agent] officer shall be responsible for all other duties relating to matters concerning the [system] System. (d) Upon the request of the Board, the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the retirement system. 17:4-1.6 Records (a)-(b) (No change.) (c) The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released after the member's death. [(c)](d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board of Trustees. The Division shall release a copy of the examining physician's medical report to the member, the member's attorney or any person authorized by the member in writing to receive a copy of such report. In no event shall the report be released to any individual not authorized in writing to receive the report. 17:4-1.7 Appeal from Board decisions The following statement shall be incorporated in every written notice setting forth the Boards determination in a matter where such determination is contrary to the claim made by the claimant or [his or her] the claimant's legal representative: ["If you disagree with the determination of the Board of Trustees in this matter, you may appeal by sending a written statement to the Board within 45 days from the date of this letter informing the Board of your disagreements and all of the reasons therefore. If no such written statement is received within the 45-day period, this determination shall be considered final."] "(a) If you disagree with the determination of the Board, you may appeal by submitting a written statement to the Board within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for your disagreement with the Board's determination and shall include any relevant documentation supporting your claim. If no such written statement is received within the 45-day period, the determination by the Board shall be final. (b) The Board shall determine whether to grant an administrative hearing based upon the standards for a contested case hearing set forth the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1-1 et seq. (c) Administrative hearings will be conducted by the Office of Administrative Law pursuant to the provisions of N.J.S.A. 52:14B-1 et seq. and N.J.A.C. 1:1-1. (d) If the granted appeal involves a question of facts, the Board shall submit the matter to the Office of Administrative Law. (e) If the granted appeal involves solely a question of law, the Board may retain the matter and issue a final administrative determination which shall include detailed findings of fact and conclusions of law based upon the documents, submissions and legal arguments of the parties. The Board's final determination may be appealed to the Superior Court, Appellate Division." 17:4-1.8 Suspension of pension checks (a) [Monthly retirement allowances will] The disbursement of pension checks shall be suspended under the following circumstances and [the suspension will] such suspensions shall continue during the period [of] in default: 1. (No change.) 2. If a widow, widower, parent or guardian of a minor child(ren) fails to file a certificate of eligibility which is normally mailed to such beneficiaries on [an annual] a periodic basis; 3. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this [event],instance shall be suspended until a proper legal representative has been appointed. (Agency Note: N.J.A.C. 17:4-1.9 is proposed for recodification with amendments as N.J.A.C. 17:4-1.12.) (Agency Note: N.J.A.C. 17:4-1.10 is proposed for recodification with amendment as N.J.A.C. 17:4-3.7) [17:4-1.11 Travel] [Travel to and from work when it is to and from the regular place of employment is not considered duty rendered in the course of employment for the purpose of determining eligibility for accidental disability or accidental death benefits.] 17:4[1.12]1.11 Proof of age (a) All members [may be required to] shall establish proof of their age with the System. [A person enrolling in the System may be requested to submit proof of his or her age at the time of such enrollment and will be required to submit such proof of age before a period of six years has elapsed from the date of enrollment.] Acceptable proofs of age include birth or baptismal certificates, passports, naturalization papers, Biblical records, affidavits of older members of the immediate family or primary school records. (b) In the event a member dies before satisfactory evidence of [his or her] the [member's] date of birth has been filed with the System, appropriate evidence may be required before any death claim is processed for settlement. (c) (No change.) 17:4-[1.9]1.12 [State employees] Employees; biweekly salaries (a) Retirement and death benefits as well as service credit will be determined on the basis of biweekly pay periods for [State employees paid by centralized payroll] employees whose employers report salary and contributions on a biweekly basis. This biweekly schedule should conform to the biweekly reporting schedule issued by the State's Centralized Payroll Office. (b) In the event a member is reported on a combination of monthly and biweekly pay periods, [his] the member's last year's salary or final compensation as well as [his] the member's service credit will be computed on a proportional basis. SUBCHAPTER 2. ENROLLMENT 17:4-2.1 Eligible positions (a) All public employees actively employed in positions meeting the definition ["policeman"] "police officer" or ["fireman"]"firefighter" shall be members of the Police and Firemen's Retirement System of New Jersey. (b) The following words and terms, as used in this section and in N.J.S.A. 43:16A-1 et seq., shall have the following meanings: 1.-2. (No change.) 3. "Board of Trustees" or ["board"]"Board" means the Board of Trustees of the Police and Firemen's Retirement System established pursuant to N.J.S.A. 43:16A-13. 4.-5. (No change.) 6. "Employer" means the State of New Jersey or the county, municipality or political subdivision thereof which pays the particular [policeman] police officer or [fireman] firefighter. 7. (No change.) 8. ["Fireman"]"Firefighter" shall have the meaning ascribed to that term by P.L. 1989, c.204 (N.J.S.A. 43:16A-1) as the same may be amended and supplemented from time to time. 9. "General supervision" means "direct supervision" of employees who perform "direct supervision" as defined by (b)5 above. 10. (No change.) 11. ["Policeman"]"Police officer" shall have the meaning ascribed to that term by P.L. 1989, c.204 (N.J.S.A. 43:16A-1) as the same may be amended and supplemented from time to time. 12.-13. (No change.) 14. "Retirement [system"] System" or ["system "] "System" means the Police and Firemen's Retirement System of New Jersey as defined in N.J.S.A. 43:16A-2. (c) Determinations by the Director and the Board of whether an employee of a law enforcement unit or firefighting unit is an administrative employee with the meaning of the definitions of ["policeman"] "police officer" or ["fireman"]"firefighter" under the law and these rules shall be on a case-by-case basis. An employee may perform some administrative functions without being an administrative employee. In determining whether an employee is an administrative employee, the Board shall consider the following factors: 1.-2. (No change.) 3. Whether the career path to become an administrative employee begins with or includes positions as non-administrative [policemen or firemen] police officers or firefighters. (d) Determinations by the Director and the Board of whether an employee of a law enforcement unit or firefighting unit is a supervisory employee within the meaning of the definitions of ["policeman"] "police officer" or ["fireman"] "firefighter" under the law and these rules shall be on a case-by-case basis. An employee may perform some supervisory functions without being a supervisor. In determining whether an employee is a supervisory employee, the Board shall consider the following factors: 1. Whether and to what extent the employee is responsible for conducting performance evaluations, disciplining, adjusting the grievances, rewarding, and assigning and directing the work of non-supervisory [policemen or firemen] police officers or firefighters or effectively recommending such actions; 2. Whether the individual [policemen or firemen] police officers or firefighters subject to some supervision by the employee have a primary supervisor other than the employee; 3. (No change.) 4. Whether the career path to become a supervisor begins with or includes positions as non-supervisory [policemen or firemen] police officers or firefighters. (e) Employers shall not use the same job title for both individuals whose job functions meet the definition of ["policeman"] "police officer" or ["fireman"] "firefighter" and individuals whose job functions do not meet those definitions. In the event that the Board determines that an employee's primary duties qualify that employee as a ["policeman"] "police officer" or ["fireman,"] "firefighter," but that employee holds a position held by other individuals whose primary duties do not qualify those employees as a [ policeman] police officer or [fireman] firefighter, then the employer shall promptly take the necessary actions to create a new job title to ensure that the same job title is not used both for individuals whose job functions meet the definition of [ "policeman"] "police officer" or ["fireman"] "firefighter" and individuals whose job functions do not meet those definitions. (f) In the event an employee, not currently included as a member of the system, believes that [he or she]the employee performs duties that meet the definition of ["policeman"]"police officer" or ["fireman,"] "firefighter," the employee may file an application for membership in the [system] System with the Director, stating in detail the basis for the employee's belief that the employee is a [policeman] police officer or [fireman] firefighter. A copy of the application shall be served on counsel for the employee's employer. (g) The Director shall review the application and determine whether the employee meets the definition of ["policeman"]"police officer" or ["fireman."] firefighter." The Director shall then make a recommendation to the Board as to whether the employee should be included in the [system] System. (h) If, after considering the recommendation of the Director, the Board determines that the employee meets the definition of ["policeman"] police officer" or ["fireman "] "firefighter" the Board shall, prior to making a final determination, publish in the New Jersey Register a notice that it proposes to include the employee's position in the System. Interested parties shall be given at least 30 days to comment on the proposal. (i) If, after considering the recommendation of the Director, the Board determines that the employee does not meet the definition of [ "policeman"]"police officer" or ["fireman,"] "firefighter," the employee shall be offered an opportunity for a hearing in accordance with the Uniform Administrative Procedure Rules, N.J.A.C. 1:1. (j) If the employee requests a hearing, the Board shall publish in the New Jersey Register a notice that a hearing will be conducted on the application of the employee that the employee's position be deemed to meet the definition of ["policeman"] "police officer" or ["fireman"]"firefighter" as the case may be, and that interested parties may seek to intervene in accordance with N.J.A.C. 1:1-16. (k) Guidelines for fire districts that have not adopted the provisions of Title 11A of the New Jersey Statutes (non-civil service) are as follows: 1. A Board of Fire Commissioners created under the provisions of N.J.S.A. 40A:14-81 shall have the powers, duties and functions within said district to the same extent as in the case of municipalities, relating to the prevention and extinguishment of fires and the regulation of fire hazards. 2. When establishing an eligible position for the PFRS, the commissioners must comply with the employment guidelines stated in N.J.S.A. 40A:14-81.1, excerpted below: i. The position must be established by resolution; ii. The appointment of persons to the position, determination of the term and compensation and prescribed functions and duties of the position must also be established by resolution; and iii. The resolution must be published at least once in a substantial newspaper in the district. (l) To determine the eligibility of a non-civil service position for the PFRS, the Board requires the following items: 1. A description of the physical and mental requirements for the position including evidence of the completion of a test determined by the Board to be comparable to the Fire Fighters' Physical Performance Test required by civil service employers; 2. A description of the training requirements including but not limited to, the Fire Fighter's I certification issued by the Division of Fire Safety, Department of Community Affairs. 3. A table of organization for the employing entity; 4. A list of employees currently in the position, with present pension status and job title; and 5. Proof of compliance with the provisions of N.J.S.A. 40A:14- 81.1. 17:4-2.2 Compulsory enrollment [(a)] Membership in the Police and Firemen's Retirement System of New Jersey is mandatory, a condition of employment for every [ "policeman"]"police officer" or ["fireman"] "firefighter" [appointed after July 1, 1944, in a county or municipality which had prior to July 1, 1944, adopted the provisions of N.J.S.A. 43:10, or in such county or municipality first providing coverage for such employees by referendum under N.J.S.A. 43:16A, or pursuant to the provisions of Chapter 92, P.L. 1973] under the provisions of N.J.S.A. 43:16A-1 et seq. [(b) It shall also be mandatory for eligible employees of the State or counties as provided by Chapter 156, P.L. 1973.] 17:4-2.3 Medical requirements (a) Applicants must furnish evidence of good health sufficient to satisfy the Board of Trustees: 1. In this connection, the Board may accept the medical determination [of the Civil Service Commission or] of the physician examining for the appointing [county or municipal] authority. If [either of these] this medical [sources] source indicates further examination is in order, the [ system] System will select and arrange an appointment with an independent physician. 2. Each question of [the] physical eligibility is decided individually and on the basis of recommendations and findings of the examiner. 3. The completed Report of Examining Physician shall be deemed unacceptable if there is more than one year's difference from the date of signature of the examining physician and the date of receipt time-stamped by the Division of Pensions and Benefits. 17:4-2.6 Enrollment date (a) An employee who is appointed to a permanent position from a [Civil Service] civil service list shall be considered as having begun [his or her] eligibility for enrollment on the date of [his or her] regular appointment. [The compulsory enrollment date shall be fixed as the first of the month for an appointee whose regular appointment date falls between the first through the 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an appointee whose regular appointment date falls between the 17th and the end of the month.] 1. For employers who report on a monthly basis, the compulsory enrollment date shall be fixed as the first of the month of regular appointment for an employee whose regular appointment date falls between the first through the 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an employee whose regular appointment date falls between the 17th and the end of the month. 2. For employers who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the pay period of regular appointment for an employee whose appointment date falls on the first through seventh day of the biweekly pay period. The compulsory enrollment date shall be fixed as the first day of the following biweekly pay period for an employee whose appointment date falls on any subsequent date within that pay period. (b) An employee in the unclassified service shall be considered as beginning service on the date [his or her] employment began. The compulsory enrollment date shall be fixed as the first of the month of hire for an appointee whose beginning employment date falls between the first through the 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an appointee whose beginning employment date falls between the 17th and the end of the month. [(c) The regular appointment of an employee appointed by a local employer not covered by Civil Service shall constitute the date the employee originally accepted employment in a regular budgeted position. The date of compulsory enrollment shall be fixed as the first of the month for an appointee whose beginning date of employment falls between the first through the 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an appointee whose beginning employment date falls between the 17th and the end of the month.] (c) For local employers not covered by civil service, a regular appointment shall constitute the date the employee originally accepted employment in a regular budgeted position. 1. For local employers not covered by civil service who report on a monthly basis, the compulsory enrollment date shall be fixed as the first of the month of hire for an employee whose beginning employment date falls between the first through 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an employee whose beginning employment date falls between the 17th and the end of the month. 2. For local employers not covered by civil service who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the pay period of hire for an employee whose date of hire falls on the first through seventh day of the biweekly pay period. The compulsory enrollment date shall be fixed as the first day of the following biweekly pay period for an employee whose date of hire falls on any subsequent date within that pay period. (d) An employee [who does not meet the requirements for enrollment cited in (a) (b) and (c) above] of a civil service employer who is not permanent in a classified position or an employee of a non-civil service employer who is not in a regular budgeted position may be considered a temporary employee by [his] the employer for [as long as a] the one-year period following the employee's date of hire, but if [his] the employment continues into [his] a second year, [he] the employee will be required to enroll immediately[; his compulsory enrollment date will be the first of the month following the end of the one year (12-month- period] in the Public Employees' Retirement System pursuant to the provisions of N.J.A.C. 17:2-2.8. SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS 17:4-3.1 Computation of insurance benefits (a) Full salary credit will be given for the month or biweekly pay period in which a member dies, if [he] the member was paid salary to date of death and the salary paid was sufficient to permit a full normal month's or biweekly pension [and insurance contribution] deduction [, provided such deduction was made by the employer]. (b) Death benefits and noncontributory insurance benefits shall be based on the base salary upon which contributions to the Annuity Savings Fund were actually made during the 12 months or 26 biweekly pay periods immediately preceding the member's death. [The salary, in the month] Months or pay periods in which no salary was paid[,] shall ] be counted as zero] not be used in the calculation. (c) If a member dies during the first year following [his] the date of enrollment , the insurance benefit shall be 3 1/2 times the member's base salary on which [he] the member contributed or would have contributed immediately prior to [his] death. [(d) For a member dying after the first year following the date of his enrollment, the noncontributory insurance benefits shall be determined on the base salary on which contributions to the Annuity Savings Fund were made or would have been made during the 12 months or 26 biweekly pay periods preceding death.] [(e) If a member has contributed pension contributions for less than a year but his enrollment has been in effect for more than a year, only those wages upon which pension contributions were based can be used as salary to determine the value of the noncontributory insurance benefit.] [(f)](d) Where a post-audit of insurance claim payments indicates the pension contributions reported by an employer were incorrect and resulted in the [overpayment ]underpayment of an insurance claim to a member's designated beneficiary or estate, [the employer will be billed for the value of the overpayment of the insurance benefits. Where post-audits establish the insurance benefits were underpaid,] an additional check would be sent to the beneficiary for the value of the underpayment. [(g)](e) [Refunds] If a deceased member does not have an eligible surviving spouse, child or parent, then refunds of a deceased member's pension contributions will be made to the member's designated beneficiary [or the employer after written confirmation is received from the employer setting forth the reason for the refund of pension contributions to either the beneficiary or to the employer]. [(h) Members who prove their insurability for the group life insurance benefits shall have their insurance benefit calculated on the basis of the salary they received or salary upon which pension contributions were based during their last year (12 months) of service prior to death, regardless of their effective date of insurance coverage.] [(i)](f) (No change in text.) [(j) In computing (i) above in the case of State employees reported on a 10-month basis, the total biweekly pays will include those pay periods in the third quarter of each year in which the member does not receive salary. The adjustment as specified in (i) above shall not be made.] [(k) If a member was reported on a biweekly basis on any combination of 10 and 12-month contract years, the last year's salary prior to death or retirement shall be determined on a proportional basis. The biweekly pay periods for which no contributions were made shall be counted as zero.] 17:4-3.3 [Proof of insurability] (Reserved) [When proof of insurability is required, the member's opportunity to prove such insurability shall expire one year (12 months) from the date the initial written notice is sent advising him that he must prove insurability by taking a medical examination.] 17:4-3.5 Beneficiary designation; pension contributions Only a primary and a contingent designation of beneficiary may be made by the member for the payment of [his] the member's accumulated pension contributions. 17:4-[1.10]3.7 Survivor benefits; establishing dependency (a) (No change.) (b) A [widower or] parent will be deemed to be dependent on the member if they were accepted as dependents of the member for Federal income tax purposes. [If the member and spouse file separate or joint tax returns, the widower will be deemed dependent on the member, if the claimant's income was less than one-half of the total income of both spouses.] SUBCHAPTER 4. MEMBERSHIP 17:4-4.3 Continuance of membership; transfer Once an employee establishes membership in the retirement system, [he]the member is eligible to continue such membership should [he] the member be temporarily employed in a position covered by the system. 17:4-4.5 Deductions (a) A full deduction shall be taken for the Police and Firemen's Retirement System in any payroll period in which the member is paid a sufficient amount to make a full normal deduction. [, plus any other] If wages are sufficient, deductions should also be made for any arrears or loan deductions then in effect. (b) (No change.) 17:4-4.6 Minimum adjustment In order to facilitate the reconciliation of a member's account, no rebates or additional contributions shall be made where an adjustment involves an amount of [$3.00] $2.00 or less during a calendar quarter. 17:4-4.7 Suspension (a) (No change.) (b) No [retirement] deductions will be made during such a break in service, nor will any [retirement] service credit accrue. (c) If during the period of suspension or at the conclusion of the penalty period adjustment is made in favor of the member, the [board] Board may allow the payment of pension deductions to reflect the lesser penalty or the [entire] elimination of the entire suspension. 17:4-4.8 [Military leave](Reserved) [(a) Military leave contributions remitted by an employer on behalf of an employee who does not return to the payroll for the minimum 90-day period required by N.J.S.A. 43:16A-11 shall be retained by the system. Such contributions shall be transferred from the Annuity Savings Fund to the Pension Accumulation Fund. Military leave contributions remitted by an employer shall be based on the employee's salary at the time he entered military service.] [(b) Payroll as referred to in (a) above shall be interpreted to mean any public payroll in New Jersey, not necessarily the payroll of the employer where the member was employed when he entered military service.] 17:4-4.9 Eligibility for loan Only [an] active contributing members of the System may exercise the privilege of obtaining a loan.[and the] The member's total outstanding loan balance [maximum loan] shall [be] not exceed 50 percent of the accumulated deductions posted to the member's account. 17:4-4.10 Termination; withdrawal (a) Under the terms of the statutes, a member may withdraw from the System only if [he] the member terminates all employment. (b) No application shall be approved if: 1. The member is on official leave of absence; 2. The member certifies that [his] employment has not ended or that [he] the member has taken another position subject to coverage; 3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if [he] the member has formally resigned from [his] the position or there is no legal action contemplated or pending and the dismissal has been adjudged final; or 4. The member has a claim pending for Workers' Compensation benefits. 17:4-4.11 Active employment; membership requirement All employees, otherwise eligible, who are not actively employed on the date of their enrollment, will not be covered by the group life insurance program until the day they return to service. SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE 17:4-5.5 Reinstatement of membership credit (a) A member, whose account has been terminated by the withdrawal of [his or her] contributions from the Annuity Savings Fund or whose account has been terminated because of a two-year lapse in contribution, may be reinstated to the [system] System under the provisions of Chapter 199, P.L. 1967 (N.J.S.A. 11A:4-9), Chapter 303, P.L. 1969 (N.J.S.A. 40:47-11.1 and 11.2), or Chapter 439, P.L. 1981 (N.J.S.A. 11A:4-9), provided that [he or she] the member meets the requirements of the System other than the age maximum: [1. A member reinstated under Chapter 199, P.L. 1967, shall be enrolled at a rate appropriate to his or her age at original enrollment.] [2.] 1. A member reinstated under Chapter 303, P.L. 1969 (N.J.S.A. 40:47-11.1 and 11.2), shall [reinstate] purchase the previous credit [he or she] the member had established in the Police and Firemen's Retirement System at enrollment. [The reinstatement will result in a rate assignment appropriate to his or her age at original enrollment.] The cost of [reinstating] purchasing the previous credit will be determined [by applying the factor certified by the actuary] using the formula for calculating shared-cost purchases found at N.J.A.C. 17:4-5.3(a). [3. All members reinstated and reenrolled under these acts will be required to prove insurability to resume insurance coverages.] [4. Should a member reinstating such credit retire or die before the completion of his or her payments, pension credits will be recognized in proportion to the amount paid to the total arrearage.] 17:4-5.6 Elected officials; continuation of membership Any member accepting an elective position may continue [his or her] membership and contribute [at his or her current rate of contribution] on the salary being received as an elected official as long as [he or she] the member holds elective office and remains a member of the retirement system. [17:4-5.7 Lump-sum purchases] [If a purchase is paid in a lump-sum, the member shall receive full credit for the amount of service covered by the purchase upon receipt of the lump-sum payment. The service may be used for any purpose for which it is authorized under the law governing the Police and Firemen's Retirement System (N.J.S.A. 43:16A-1 et seq.) and the rules of the retirement system.] SUBCHAPTER 6. RETIREMENT 17:4-6.1 Applications (a) Applications for retirement must be made on forms [prescribed] required by the [system] System. Such forms must be completed in all respects and filed with the [system] Division of Pensions and Benefits (Division) on or before the requested date of retirement. A member's retirement application becomes effective on the first of the month following receipt of the application unless a future date is requested. (b) In the event a member files an incomplete application, the [deficiency] deficiencies shall be brought to [his or her] the member's attention and [he or she] the member [will] shall be required to file a completed application with the [system] Division to enable [acceptance for] processing. (c) Before an application for retirement may be [accepted for processing] processed, the Division must receive proof of the member's age, if none is already in the member's record, and[it must be supported by] a [certificate] completed Certification of Service and Final Salary form from the employer setting forth the employment termination date and the salaries reported for contributions in the member's final year[s] of employment. (d) In addition to the [foregoing] requirements in (a) through (c) above, an application for disability retirement must be supported by at least two medical reports[a report of] one by the member's personal or attending physician and [a statement from the employer regarding the member's incapacity for further duty] the other in the form of either hospital records supporting the disability or a report from a second physician. (e) If a member's previous retirement allowance has been cancelled due to the member's return to employment and reenrollment in the Retirement System pursuant to the provisions of N.J.S.A. 43:16A-15.3, a new retirement application must be filed with the Division in accordance with (a) through (d) above. The previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. The previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. 17:4[6.3]6.2 Effective date; death prior thereto [(a)]A member's retirement allowance shall not become due and payable until 30 days after the date the [board] Board approved the application for retirement or [30 days] one month after the date of the retirement, whichever is later. [(b) A member who files an application for retirement and whose insurance coverage has not lapsed prior to filing a retirement application is covered under the insurance program as an active member in the event of death prior to the date the retirement allowance becomes due and payable.] 17:4[6.2] 6.3 Effective dates; changes (a) A member shall have the right to withdraw, cancel or change an application for retirement at any time before [his] the member's retirement allowance becomes due and payable by sending a written request signed by the member[; thereafter] Thereafter, the retirement shall stand as approved by the Board. (b) Except in the event of deferred retirement, if a member requests a change in [his] the retirement application before [his] the retirement allowance becomes due and payable, said change will require approval of the Board and the revised retirement allowance shall not become due and payable until [30 days have] one month has elapsed following the effective date or 30 days after the date the Board met and approved the change in the member's retirement application, whichever is later. [(c) If the applicant should die within 30 days following the date the board of trustees approved the revised application, the member shall be considered to be retired on the basis of the originally approved application for retirement, provided that the initial 30-day requirement was satisfied.] [(d)](c) A deferred retirement shall become effective on the first of the month following the member's 55th birthday. If the member's 55th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:16A-11.2 and requests that retirement date. [(e)](d) In the case of deferred retirement, if an applicant desires to amend [his] the retirement application, the amended application must be filed with the [system] Division a minimum of one month prior to [his] the effective date of retirement. [(f)](e) (No change in text.) (Agency Note: N.J.A.C. 17:4-6.3 is proposed for readoption as N.J.A.C. 17:4-6.2.) 17:4-6.6 Retirement credit (a) A member shall receive credit toward retirement for any month or biweekly pay period in which a full normal deduction is received by the [system] System. (b) A member who appeals the suspension or termination of [his or her] the member's employment and is awarded back pay for all or a portion of [his or her] the member's employment for the period of such suspension or termination shall receive retirement credit for the period covered by the award, regardless of the amount of the back pay awarded, provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the pension contribution will be determined by the provisions of the award. If the member receives full back pay, including normal salary increases, then the contribution will be computed on the base salaries that the employee would have earned for the reinstated, suspended or terminated period. When the settlement is less than the full back pay, the pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment. In the event that the amount of back payment is insufficient to deduct the value of the normal pension contributions due, such contribution shall be paid by the member. (c) (No change.) 17:4-6.7 Disability determination (a) A member for whom an application for accidental disability retirement allowance has been filed by the member, by [his] the member's employer or by one acting in behalf of the member, will be retired on an ordinary disability retirement allowance if the [board] Board finds that: [1. The member was under the normal retirement age at the time of filing application for a disability retirement allowance; and] 1. The applicant was considered a member in service at the time of filing the application for a disability retirement allowance; 2. The member is physically or mentally incapacitated for the performance of duty; [and] 3. The member is not eligible for accidental disability since the incapacity is not a direct result of a traumatic event occurring during and as a result of the performance of [his] the member's regular or assigned duties; and 4. (No change.) 17:4-6.9 [Average final] Final compensation [; 10 and 12- month members] (a) In order to determine the [average] final compensation [ (three-year average)] for benefits on a: 1. Member reported on a monthly basis, use the [creditable salaries]base salary upon which pension contributions were made to the [retirement system] Annuity Savings Fund for [his] the member's last [36] 12 months of service. [2. If a member was reported on any combination of 10 and 12-month contract years in such three-year period, the final average compensation shall be determined on a proportional basis.] 2. Member reported on a biweekly basis, use the base salary upon which pension contributions were made to the Annuity Savings Fund for the member's last 26 pay periods of service multiplied by the factor supplied by the actuary to compensate for biweekly payroll schedules. [3.] (b) The months or pay periods for which no contributions were made shall not be [counted as zero] used in the calculation. 17:4-6.10 Employer [disability application; employee notice] initiated disability retirement application (a) If an application for an accidental disability retirement benefit or for an ordinary disability retirement benefit is filed by an employer for an [one of his or her] employee[s], the member will be promptly notified by letter that: 1. [His] The member's employer has properly initiated a disability application signed by the Certifying Officer or other designated officer of the employer, on the member's behalf; [and] 2. [His] The member's employer has [certified that the member is permanently and totally disabled for the continued performance of duty] submitted a written statement as to the grounds for the employer's request for the member's involuntary disability retirement and all available medical documentation; and, if appropriate; 3. [His]The member's employer has certified that the member should be retired as a direct result of a traumatic event occurring during and as a result of the performance of [his] the member's regular or assigned duties; 4. [He] The member has a period of 30 days to contest [his] the involuntary retirement before the [board] Board acts on [his] the employer's application; 5. [He] The member will be required to appear for an examination before a physician designated to conduct such an examination for the retirement system; and 6. In the event the [board] Board finds that [he] the member is totally and permanently incapacitated for the performance of duty, [he] the member shall be granted [the maximum] a retirement allowance [payable under the statute, if he does not file a completed "Application for Disability Retirement Allowance" setting forth the type of allowance he desires, before his retirement goes into effect]; and 7. In the event the [board] Board finds that [he] the member is not totally and permanently incapacitated for the performance of duty, the employer's application shall be disallowed and the employer shall be informed that the member should be returned to duty. 17:4-6.11 Service or special retirement; eligibility (a) A member becomes eligible for "service" retirement [on]: 1. On the first of the month following [his] the member's 55th birthday. If the member's 55th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:16A-5, and requests that date; or 2. When the member has a minimum of 20 years of service credit if the member was enrolled in the PFRS as of January 18, 2000. (b) A member becomes eligible for "special" retirement on the first of the month following the establishment of 25 years of creditable service, regardless of [his] the member's age. 17:4-6.12 Disability retirant; annual medical examinations (a) (No change.) (b) Failure on the part of a retirant to submit to the required medical examination shall result in the automatic suspension of [his] the retirant's retirement allowance until [he] the retirant submits to a medical examination. 17:4-6.13 Medical examinations; physicians [Where the statute prescribes that a physician be designated by the system to perform a medical examination, such physician shall be selected from the current membership directory of the Medical Society of New Jersey and the New Jersey Association of Osteopathic Physicians and Surgeons; however, in the cases of those members whose personal physician has identified them as having a probable abbreviated life expectancy, such "imminent death" cases may be processed without the necessity of an examination by a physician designated by the system if corroborating medical evidence of the diagnosis can be obtained.] N.J.S.A. 43:16A-13(11) requires the Retirement System or the Board to designate physicians to perform medical examinations. A designated physician shall not be a member's personal physician, except in the case of a member whose personal physician has identified the member as having a probable abbreviated life expectancy if sufficient corroborating medical evidence of the diagnosis can be obtained. 17:4-6.14 Compulsory retirement (a) (No change.) (b) The retirement will be effective on the first day of the month following the 65th birthdate [, if not voluntarily established before that date]. (c)-(d) (No change.) (e) The [system] Division shall send written notice to the member and [his] the member's employer between 120 and 180 days in advance of the date on which the member shall be required to retire. (f) A member shall be retired automatically by the Board as of [his] the member's compulsory retirement date following [his] the member's 65th birthday. (g) Should a member fail to file an "Application for Retirement Allowance" before [his or her] the member's compulsory retirement date, no retirement checks will be disbursed until [he or she] the member files the required application. (h) When such a member files [his] an application with the [system] Division [he] the member shall be eligible to receive retirement benefits for the months that have elapsed since [his] the compulsory retirement date, provided satisfactory evidence is received to show that [he] the member terminated employment as of [his] the compulsory retirement date. (i) No retirement benefits shall be paid for any period the member continued in service beyond [his] the compulsory retirement date, nor shall [he] the member receive any credit for retirement purposes for salary received or for service rendered beyond [his] the compulsory retirement date. [(j) If a member's death occurs after the 30-day waiting period has been satisfied, but before he has filed the required application for retirement, the member shall be considered to be retired for death benefit purposes. His estate shall be entitled to the retroactive retirement allowance due, in addition to any insurance and survivorship benefits payable.]{ 17:4-6.15 Employer and employee notices If an applicant for accidental disability retirement is found to be physically or mentally incapacitated for the performance of duty but is rejected for accidental disability retirement because the [board] Board finds that the disability was not a direct result of a traumatic event occurring during and as a result of the performance of [his] the applicant's regular or assigned duties, and if the applicant does not meet the minimum statutory requirements for any other type of retirement allowance, the [system] Division will notify both the member and [his] the member's employer that the member was found to be physically or mentally incapacitated for the continued performance of duty, as was previously certified to the [system] Division by both the employee and his employer. [Both the employer and the employee will also be advised that a copy of such notice will be placed in the member's file and will be given full consideration in any future claim for disability retirement benefits]. 17:4-6.16 [Average final] Final compensation; [biweekly] salary computation for [State] employees reported by centralized payroll on a biweekly basis (a) In computing [average] final compensation upon which pension contributions were based in the case of a 12-month [State] employee reported on a biweekly basis, a total of [78] 26 biweekly pays will be used, including any retroactive salary payments [made within the prescribed] attributable to the covered period. (b) In computing (a) above, the total salary will be adjusted by the factors supplied by the actuary to convert biweekly salaries to compensate for [State] biweekly payroll schedules. Application of the factors to the salaries reported for pension purposes will develop "final compensation." [(c) In computing (a) above in the case of State employees reported on a 10-month basis, the total biweekly pays will include those pay periods in the third quarter of each year in which the member does not receive a salary. The adjustment as specified in (b) above shall not be made.] [(d) If a member was reported on a biweekly basis on any combination of 10 and 12-month contract years, the final average compensation prior to retirement shall be determined on a proportional basis. The biweekly pay periods for which no contributions were made shall be counted as zero.] 17:4-6.17 Work-related travel; accidental disability retirement and accidental death benefit coverage (a) A member whose duties include regular or occasional travel in the course of employment will be considered in the "performance of [his] regular or assigned duties" for the purposes of accidental disability retirement or "in the actual performance of duty" for the purposes of accidental death benefits during employment-related travel as provided in this section. For the purposes of this section, "in performance of duty" means and includes both "performance of regular or assigned duties" and "in the actual performance of duty." (b) (No change.) (c) If a member's duties require or authorize the member to travel between [his or her] the member's place of residence and a location other than an office or workplace of the employer to which the member is regularly assigned or near to the regularly assigned office or workplace to perform the duties of the employment, the member is in performance of duty when [he or she] the member completely leaves the property of [his or her] the member's residence and begins to travel to the other location, or until [he or she] the member begins entry to the property of residence after travel from the other location, and all expenses of the travel are paid for by the employer. A member's duties are considered to authorize or require travel from the place of residence to a location other than a regularly assigned office or workplace of the employer in the following situations: 1. The member's regular or assigned duties involve field work which requires or authorizes the member to travel to locations other than a regularly assigned office or workplace of the employer to perform [his or her] the member's duties and do not require the member to report to a regularly assigned office or workplace before or after traveling to other locations. Travel by the member between a regularly assigned office or workplace of the employer and the place of residence of the member is not considered part of the member's duties. 2. (No change.) 3. The member is authorized or required by [his or her] the member's employer to respond to an emergency situation outside of the member's regularly scheduled work hours, regardless of whether the member goes to a regularly assigned office or workplace or another location, or whether the expenses of the travel are paid for by the employer or the member. 4. (No change.) (d) (No change.) 17:4-6.18 Waiver (a) If for any reason a retirement allowance or portion thereof has been waived by a retired member or beneficiary, the benefit waived shall remain in the retirement reserve fund. (b) Retired members or beneficiaries may cancel the waiver effective as of the first day of any month subsequent to the receipt of the notice of cancellation; however, they may not make a claim for retroactive payment of any benefits waived prior thereto. SUBCHAPTER 7. TRANSFERS 17:4-7.1 Interfund transfers/State-administered retirement systems (a) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees of the present System shall disallow the transfer of all or a portion of prior service of any member of the System for misconduct occurring during the member's prior public service which renders that prior service, or part thereof, dishonorable. [(a)](b) The system will transfer membership to any State- administered [retirement system] Retirement System as follows: 1. A member, desiring to transfer [his or her credits] service credit and contributions from one [to any] State-administered retirement system to another, [must] shall file an [-application for "Transfer of Membership Credit"] "Application of Interfund Transfer" and an "Enrollment Application" in place of the customary [application for withdrawal of accumulated contributions.]"Application for Withdrawal." This application will void all possible claims against the present system when approved and the new membership is commenced in the new system. 2. [A check covering the] The member's accumulated contributions, [full interest included,] less any outstanding loan, shall be [drawn payable] transferred to the new system for the account of the respective member. Any outstanding loan, back deductions or arrears obligation will be scheduled for repayment. 3. A statement reflecting the member's status as of the date of transfer shall [accompany the check] be prepared by the Withdrawal Section of the Division and a copy forwarded to the old account. 4. The [member shall enjoy the same rate of contribution and] member's service credits established in the present system[, subject to the provisions of] shall be transferred to the new system. 5. [This procedure would not apply where a] The member is not eligible to transfer service credit if any of the following conditions apply: i. The member has withdrawn the previous membership; ii. The member has credit in the present system for service earned after the date of enrollment in the new system (concurrent service); or iii[where a person has ceased to be a member of the present system before establishing] The account has expired; that is, it has been more than two years from the date of the last contribution and there was notsufficient service credit to be eligible for deferred retirement. 6. [A copy of the transfer application, together with a check covering the withdrawal value and a statement of the service credits being transferred, is to be forwarded to the new system.] A data sheet shall be created for the member's new account that will indicate an interfund transfer from the member's previous retirement system and the service credit transferred into the new membership account. [(b)](c) [The new system will cause to be valued the reserves accrued for such employee as compared to the reserves required in the second system.] The reserves accrued in the present system will be valued and compared to the reserves required in the new system. 1.-2. (No change.) [(c)](d) (No change in text.) [(d) A member who makes a timely transfer in accordance with N.J.S.A. 43:2-1 et seq. will contribute to the new system at a rate based on his or her age at the time of enrollment in the present system and no refund of pension contributions will be made except for those contributions made by veterans covering service prior to January 1, 1955, where applicable. The contribution rate for a member granted a deferred retirement in the present system who makes a timely transfer at the time of enrollment in the new system will be determined in accordance with the rules concerning enrollment after deferred retirement in the new system. A member who does not make a timely transfer will contribute to the new system at a rate based on his or her age at the time of enrollment in the new system.] (e) A member is subject to all age and medical requirements for enrollment into the Police and Firemen's Retirement System before an interfund transfer into the PFRS shall take effect. 17:4-7.2 [(Reserved)]Intrafund transfers; State-administered retirement systems a) Members who leave one public employer and take a position with another public employer covered by the same retirement system are immediately eligible to transfer their membership to their new employers, as long as the following conditions are met: 1. The member has not withdrawn from the System; 2. The account has not expired; that is, it has not been more than two years between the date of the last contribution received from the old employer and the starting date of contributions with the new employer or there was enough service credit to be eligible for a deferred retirement; and 3. The account has not been canceled due to Board of Trustees action. It is the responsibility of the employer to establish the employee's pension account status. For accounts that are withdrawn, expired or canceled, an enrollment application is needed, and the age and medical requirements for enrollment are again in effect; (b) To transfer the member's account to the new employer, the new employer should file a Report of Transfer with the Division of Pensions and Benefits within 10 working days of the date employment begins. If more than one year elapses between the date that the member was required to contribute to the retirement system and the date contributions were first certified, the employer shall be assessed a late enrollment employer liability penalty plus delayed appropriation costs. [17:4-7.3 Intrafund transfers] [(a) A member who terminates employment with an employer but transfers as a policeman or fireman with another participating employer may continue his membership without interruption. b) A member transferring from the police to the fire department of the same employer may likewise continue his or her membership. Such a member may withdraw at such an occasion, but his or her reenrollment will be subject to age and physical requirements] POLICE
AND FIREMEN'S RETIREMENT SYSTEM Proposed Amendment: N.J.A.C. 17:4-3.4 Cite as 32 N.J. Reg. 3554(b) Adopted December 21, 2000 Summary Currently, should a survivor of a deceased member of the Police and Firemen's Retirement System remarry or attain the age of 18, the survivor's benefit is terminated as of the first of the month prior to the event which removed the survivor from qualification for benefits. The proposed amendment would provide for the payment of the benefit for the month in which the qualifying event takes place. For example, at the present time, should a widow remarry on July 15, the survivor's benefit would cease as of July 1 and there would be no entitlement to benefits for the month of July. The proposed amendment would provide for a benefit for the month in which the event occurred so that the survivor in the above example would receive a benefit for July and the entitlement for benefits would end on July 31. P.L. 1993, c.335, which became effective on December 27, 1993, provided for the payment of the full retirement allowance in the month in which a retiree died. Previously, if a retiree died during the month, only the widow's portion of 50 percent was payable. The proposed amendment to the rule would clarify that the survivor's benefit becomes effective on the first of the month after the retiree's death because the full amount of the benefit is payable in the month that the retiree died. The Board proposes in N.J.A.C. 17:4-3.4(a) to delete the words "Payment of benefits to" and begin this section with "Eligible survivors are entitled to benefits" to more clearly reflect to whom the rule applies. The word "following" would replace "of" to clarify to which date the rule refers. The Board proposes to add the sentence: "The pension payment shall begin on the first of the month following the survivor's eligibility for benefits date," to clarify that benefits are paid the first of the month following a member's eligibility date. Payments are made the first of the month for the immediately previous month. The Board proposes to make the last clause a new sentence, beginning with "Survivor benefits," and to also add "the last day of" before "the month" to further clarify when benefits cease. The Board proposes to delete subsection (b) because a pension is now paid to eligible survivors under PL 1999, c.428 regardless of whether the death was a result of a member's job duties. The benefits are paid in the same manner as in subsection (a). The Board also proposes to eliminate the subsection codification "(a)" because, with the deletion of subsection (b), there is no longer any need for codification within the section. Full text of the proposal follows: 17:4-3.4 Survivor benefits [(a) Payment of benefits to eligible] Eligible survivors shall become [effective] entitled to benefits on the first of the month [of] following the member's death [ and]. The pension payment shall begin on the first of the month following the survivor's eligibility for benefits date. Survivor benefits shall terminate as of the last day of the month in which the survivor no longer qualifies for such benefits. [(b) In the instance of an active member who died in the performance of duty (accidental death), the initial pension payment will be for the month following the month in which the member died and the last payment will cover the month immediately preceding the month the survivor dies or ceases to qualify for the continuance of benefits.]
POLICE
AND FIREMEN'S RETIREMENT SYSTEM Adopted New Rule: N.J.A.C. 17:4-3.6 Filed: August 28, 2000 as R.2000 d.388, with a substantive change not requiring additional public notice and comment (see N.J.A.C. 1:30-4.3) Cite as 32 NJ Reg. 3581(a) Summary of Agency-Initiated Change: The issue was recently raised within the Division as to whether beneficiaries designated on a retirement application that subsequently is withdrawn prior to the effective date of retirement remain the member's beneficiaries. The purpose of N.J.A.C. 17:4-3.6 when originally proposed was to ensure that members' most recent expression of beneficiary designation is given effect. When members file for retirement, they designate current beneficiaries which supersede prior beneficiary designations. The proposed amendment will allow the Division to recognize beneficiaries properly designated on a retirement application filed with and accepted by the Division, even if the member withdraws the retirement application prior to retirement. The Division will send written notification to members who withdraw their retirement applications that beneficiaries designated on their retirement applications will remain in effect. Therefore, because this clarification does not negatively impact any participant, the Division asserts that this addition is appropriate at adoption. Full text of the adoption follows: 17:4-3.6 Acceptable designations of beneficiaries (a) A member's designation of beneficiary or beneficiaries of group life insurance on a duly executed retirement application: 1. Is effective upon filing with and acceptance by the Division, even if the retirement date on the application is in the future or the member withdraws the retirement application; and 2. Supersedes any previous beneficiary designation on file. (b) If a deceased member has an eligible surviving spouse, child or parent, then the deceased member's aggregate contributions at the time of death shall be applied toward the payment of the benefit established at N.J.S.A. 43:16A- 9(1). (c) If a deceased member has no eligible surviving spouse, child or parent, then pursuant to N.J.S.A. 43:16A-9(2), the deceased member's designated beneficiary or beneficiaries of group life insurance also shall be the beneficiary or beneficiaries of the deceased member's aggregate contributions at the time of death. (d) If a deceased member has no eligible surviving spouse, child or parent, and the deceased member has not made an effective designation of beneficiary or has designated no beneficiary for group life insurance, then the Division shall pay the group life insurance and the deceased member's aggregate contributions to the deceased member's estate. STATE
HEALTH BENEFITS COMMISSION Proposed Amendment: N.J.A.C. 17:9-6.1 Cite as 32 N.J. Reg. 3385(a) Summary The purpose of the proposed amendment is to amend the definition of "retired employee" for State Health Benefits Program purposes, to reflect statutory changes made in the last 10 years and to better organize this rule. This proposed amendment is necessary to better explain and define who is an eligible retired employee for health benefits purposes. The State Health Benefits Commission proposes to break down and expand existing subsection (a) into subsections (a), (b) and (c). Subsection (a) will restate the definition found in the existing subsection (a) regarding a retired employee. Proposed subsection (b) would include the definitions of retired employee as they pertain to retired employees of the State and State agencies pursuant to N.J.S.A. 52:14-17.26, retired employees of educational and local employers, retired employees of educational employers and county colleges pursuant to N.J.S.A. 52:14-17.32f, 52:14-17.32f1 and 52:14-17.32f2, and retired employees of boards of education who become eligible for Medicare. Proposed subsection (b) would also include the definitions of retired employees who are eligible for participation due to their employer's election to join the State Health Benefits Program or through the inclusion of retired law enforcement personnel in the State Health Benefits Program under the provisions of P.L. 1997, c.330. Proposed subsection (c) would retain the exception for continuation of coverage for an employee who was on a leave of absence for personal illness and would add the requirement that an employee be retired on a disability retirement to receive the benefit of continuation of coverage. The proposed amendment to existing subsection (b) would recodify it as (d) and also delete "his or her" and add "the spouse" in its stead. The Commission also proposes to add the word "State" before Health Benefits Program to more accurately reflect the title of this program. The proposed amendments would also break this section into requirements for active and retired coverage for a spouse and codify the new paragraph as (e). Existing subsection (c) is proposed to be recodified as (f) and "he and she" is replaced with "the employee." "His or her" would be deleted. Paragraph (c)1 would be consolidated as the second sentence in new subsection (f). Existing paragraphs (c)2 and 3 would be deleted because Rutgers no longer acts as a collection officer for these charges and retirees are billed directly. The Commission proposes to recodify existing subsection (d) as (g), eliminate gender specific pronouns as stated above and delete references to the Teacher's Insurance and Annuity Association (TIAA) because there are now multiple providers of this plan pursuant to P.L. 1993, c.385. Members are now billed directly and not through their annuities; therefore, that provision in this paragraph is also proposed to be deleted. The Commission proposes to recodify existing subsection (e) as (h). "He or she" would become "the employee." The Commission proposes to delete the date, July 1, 1964, which was made obsolete by P.L. 1987, c.384 (N.J.S.A. 52:14-17.32f). This law which established the State-paid coverage for retirees from the TPAF, repealed the section of the statute limiting coverage to those who retired on or after that date. The Commission proposes to recodify existing subsection (f) as (i). "He or she" would become "the employee." The Commission proposes to recodify existing subsection (g) as (j), and to add that pursuant to the provisions of P.L. 1987, c.384 or P.L. 1992, c.126 (N.J.S.A. 52:14-17.32f and 52:14-17.32f1), deferred retirements for employees who qualify under these provisions are eligible for continuation of coverage. The Commission proposes to recodify existing subsection (h) as (k), and delete the word "charge" before "payments" because this term is no longer used by the Program. Full text of the proposal follows: 17:9-6.1 Retired employee defined [(a) "Retired employee" means a person who is eligible for coverage under the program, or under the health insurance plan of the person's employer where the employer is not participating in the program and the person is eligible to participate under P.L. 1987, c.384, immediately preceding retirement and receives a periodic retirement allowance from a State or locally administered retirement system or plan upon retirement. This "retired employee" status, once established, will continue in effect even though the employer is subsequently disbanded and no successor agency is created upon the dissolution of such employer. An employee who continued his or her coverage while on an official leave of absence for illness without pay but whose coverage terminated when his or her leave exceeded the period established by the statute for the continuation of coverage for such leave, will be permitted to elect to continue health benefits coverage into retirement provided such leave was in effect immediately preceding the date of his or her retirement.]
1. Retired employees of the State of New Jersey and of employers defined as State agencies in N.J.S.A. 52:14-17.26, who were eligible for coverage as active employees immediately prior to retirement and who continued coverage at retirement; 2. Retired employees of educational and local employers participating in this Program who were eligible for employer-paid coverage as active employees immediately prior to retirement and who continued coverage at retirement; 3. Retired employees of educational and county college employers, regardless of the employer's participation in the State Health Benefits Program (SHBP) who: i. Were full-time employees as defined by N.J.A.C. 17:9-4.6; ii. Were eligible for employer-paid group health plan coverage prior to leaving employment; and iii. Retired on disability retirements or on benefits based upon 25 or more years of service credit in the Teachers' Pension and Annuity Fund, the Public Employee's Retirement System, the Alternate Benefits Program, or in a locally administered pension fund established by N.J.S.A. 18A:66-94 et seq. under the provisions of P.L. 1987, c.384, P.L. 1992, c.126 or P.L. 1995, c.357 (N.J.S.A. 52:14-17.32f, 52:14-17.32f1 and 52:14- 17.32f2); 4. Qualified retired employees of boards of education who receive a retirement benefit from a State or locally administered retirement system and who: i. Have continued their employer's plan; [(b)] (d)the definition of "retired employee" shall include the spouse of [the] an active or retired employee, provided [he or she ]the spouse was covered as a dependent under the State Health Benefits Program immediately preceding the [retirement or the] death of the active or retired employee, and further provided that in the case of death of an active employee, the spouse is receiving a periodic pension or survivorship benefit from a State or locally administered retirement system or plan. (e) The definition of "retired employee" shall also include the spouse of the employee, provided the spouse was eligible for coverage immediately preceding retirement and is enrolled for coverage when the employee retires or is added to coverage pursuant to N.J.A.C. 17:9-6.3(a). [(c)] (f) The definition of "retired employee" shall include an employee who is eligible to receive a Federal pension based upon employment with the Cooperative Extension service staff of Rutgers University. [1.] This coverage is contingent upon the employee applying for and receiving a Federal pension immediately following the cessation of employment and further provided that the pension to which [he or she] the employee is entitled is being granted by reason of [his or her] age or disability and coverage based on [his or her] employment with Rutgers University. [2. The Personnel Office of Rutgers University shall act as a collection officer for the collection of the charges required on a direct payment basis from the employees] [3. This payment shall be required from the employee on a quarterly basis
in advance of coverage paid with the monthly billing.] [(e)] (h) The definition of "retired employee" shall include any former employee, who retired from a State or locally administered retirement system [on or after July 1, 1964,] or the spouse of the former employee of an employer who becomes a participating employer if the employee or spouse: 1. Is receiving a periodic retirement allowance or survivorship benefit from a State or locally administered retirement system;2. Was insured under a group medical insurance plan of the employer immediately prior to the date the employer became a participating employer; and 3. Elects to enroll in the State Health Benefits Program at the time the employer becomes a participating employer. [(f)] (i) The definition of "retired employee" shall include an employee who is eligible for continuation of coverage in the program at the time of retirement who terminates coverage at that time because [he or she] the employee is covered as a dependent of another covered employee or as an active employee and who applies for continuation of coverage within a reasonable time after termination of coverage as a dependent or active employee. [(g)] (j) The definition of "retired employee" shall not include an employee who on cessation of employment, elects a vested, deferred retirement benefit under which payments begin at a future date unless that employee is eligible for coverage under the provisions of P.L. 1987, c.384 or P.L. 1992, c.126 (N.J.S.A. 52:14-17.32f and 52:14-17.32f1). [(h] (k) The employer liability for [charge] payments on behalf of eligible retired employees which includes those employees who are eligible to receive long-term disability benefits is payable in accordance with the provisions of N.J.S.A. 52:14-17.32 and 17.38. STATE
HEALTH BENEFITS COMMISSION Proposed Repeal: N.J.A.C. 17:9-5.6 Cite as 32 N.J. Reg. 3384(a) The agency proposal follows: Summary When Health Maintenance Organization coverage was first offered in 1973, (N.J.S.A. 26:2J-29) the law stated that the employer could not pay more for HMO coverage than for "existing" coverage type. Under N.J.A.C. 17:9-3.6, any HMO cost that exceeded the cost of the State program was to be collected by payroll deductions from the employee enrolled in such HMO coverage. Beginning with the rates for July 2000, the State Health Benefits Commission considers HMOs as part of the State Health Benefits Program (SHBP) and no longer views HMOs as alternatives to traditional coverage. Presently, no distinction is made in the rate charts for local and educational employers. An employer paying the full cost of coverage for the member and dependents for the Traditional Plan and NJ Plus, should also pay for the full cost of HMO coverage. There are several reasons for this. First, the SHBP recognizes that HMOs are no longer alternative plans. Overall membership of active employees is split relatively evenly among the three plan types (Traditional, NJ PLUS and HMO). Further, the State Health Benefits Program Act was amended to specifically mention HMOs as part of the SHBP (N.J.S.A. 52:14-17.26). Finally, beginning July 1, 1998, several of the HMOs, including Horizon HMO, AETNA US Healthcare and CIGNA Health Care, have entered into administrative services only (ASO) contracts with the SHBP that changed the relationship of the HMOs to the SHBP. The Commission does not expect many HMOs to charge more than Traditional Plan coverage. The market for health care is very competitive. The SHBP and the plans are working to maintain the lowest possible rates by containing costs while still offering the highest quality of care. However, if the HMO rate is higher than Traditional Plan coverage, the Commission no longer expects that the member pay the difference. For the above stated reasons, the State Health Benefits Commission believes that it is necessary to repeal the rule. Full text of the proposed repeal follows: 17:9-5.6 [Health maintenance organization charges] (Reserved) [For purposes of State and local coverage, the employer who pays any portion of the cost for the employee and for dependent coverage cannot pay any more for the same type of coverage if the employee enrolls himself or herself and his or her dependents in a health maintenance organization as an alternative program. If the cost of the coverage in the alternative plan exceeds the cost of the State program, the additional charge would be collected by payroll deductions from the employee.] STATE
HEALTH BENEFITS COMMISSION Proposed Amendment: N.J.A.C. 17:9-6.9 Cite as 32 N.J. Reg. 3387(a) The agency proposal follows: Summary The proposed amendment is necessary to better identify the retirees who are eligible for coverage under P.L. 1997, c.330. This statute provides for the partial State payment of health benefits for eligible retirees of the Police and Firemen's Retirement System (PFRS), the Consolidated Police and Firemen's Pension Fund (CPFPF) and the Public Employees' Retirement System (PERS). The proposed amendment revises the State Health Benefits Commission's interpretation of P.L. 1997, c.330 eligibility by allowing retirees who were in a police and fire eligible position, but could not enroll in the PFRS because their employers did not join the PFRS by referendum, and who retired prior to the enactment of P.L. 1989, c.204 (N.J.S.A. 43:16A-1.2), to be covered under the provisions of the rule. There are approximately 15 to 20 retired members who could have received this coverage if they had retired after the enactment of Chapter 204. The proposed amendment would allow these members to receive the benefit of the partial State-paid coverage. 17:9-6.9 Eligibility for State payment of retiree coverage under P.L. 1997, c.330 (a) For the purposes of this section, "qualified retiree" means a person who: 1. Is a retiree from: i.-ii. (No change.) iii. The Public Employees' Retirement System of New Jersey (N.J.S.A. 43:15A-6 et seq.), hereinafter referred to as PERS, from a position included in the definition of "law enforcement officer" under section 1 of P.L. 1955, c.257 (N.J.S.A. 43:15A-97), from a PFRS covered position that would have made the member eligible for enrollment in the PFRS but for age, from a position that would have been eligible for enrollment in the PFRS had the employer joined the PFRS by referendum under the provisions of N.J.S.A. 43:16A-3(2) or from a position that is eligible for participation in PFRS as provided in section 9 of P.L. 1989, c.204 (N.J.S.A. 43:16A-1.2); 2.-4. (No change.) (b)-(d) (No change.) STATE
HEALTH BENEFITS COMMISSION Proposed Amendment: N.J.A.C. 17:9-3.1 Proposed New Rule: N.J.A.C. 17:9-3.8 Cite as 32 N.J. Reg. 3383(a) The agency proposal follows: Summary The purpose of the
proposed amendment and new rule is to clarify when children with disabilities
who are age 23 or older when their parents become eligible for health
benefits coverage under the State Health Benefits Program (SHBP) are eligible
to join the SHBP and when they may not join. The proposed new rule would permit the enrollment of children with disabilities who are age 23 or older in two instances involving New Jersey public employers who could have participated in the SHBP local employer group, thus entitling their employees to continuation of coverage for disabled dependents under the existing rule. The two instances are: (1) if the parent's employer is joining the SHBP and the employer's group coverage had covered the child prior to joining the SHBP, and (2) if the parent joined the SHBP at retirement due to meeting the requirements of N.J.S.A. 52:14-17.32f, as a qualified retiree of the Teachers' Pension and Annuity Fund (those with 25 years of service or a disability retirement), N.J.S.A. 52:14-17.32f1, as a qualified retiree of the Public Employees' Retirement System who retired from boards of education or county colleges (25 years of service or a disability retirement) or N.J.S.A. 52:14-17.32i, as a qualified retiree from the Police and Firemen's Retirement System, Public Employees' Retirement System and Consolidated Police and Firemen's Pension Fund (25 years of service or a disability retirement in a firefighter or law enforcement officer position), and had the child covered under the former group plan. Both exceptions pertain to local public employer group coverage and permit a continuation of group coverage in the SHBP for the overage dependent with disabilities as though the local employer was covered under the SHBP. The proposed new rule would codify these two exceptions to the enrollment of children with disabilities into the SHBP. The proposed amendment would also better define an eligible dependent child who is disabled by adding the requirements for continuation of coverage similar to those found under the general insurance statutes at N.J.S.A. 17B:27-30. The proposed amendment would change the term "wholly dependent" to "substantially dependent" because the Commission recognizes that the child may be receiving limited funds from other sources. The proposed amendment would delete subsection (b) and move the language under that subsection to the proposed new rule. The phrase "rather than before they attain age 19, as given in the general statute" would be deleted from the moved language because the insurance statutes are not at issue and this phrase merely serves to confuse the reader. Full text of the proposal follows: 17:9-3.1 Dependents and children defined [(a)] The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise. "Children" includes stepchildren, legally adopted children and foster children who are [wholly] substantially dependent upon the employee for support and maintenance. This includes children in a guardian-ward, legal relationship who are living with the employee. "Dependents" means an employee's spouse and the employee's unmarried children through the end of the calendar year in which they reach the age of 23 years who live with the employee in a regular parent-child relationship. "Dependents" also means unmarried children, covered by their parents under the State Health Benefits Program prior to the attainment of age 23, who: 1. Are incapable of self-sustaining employment by reason of mental or physical disabilities; 2. Became so incapable prior to attainment of age 23; and 3. Are substantially dependent upon such employees for support and maintenance while the insurance of the employees remain in force and the dependents remain in such conditions. "Living with" shall be defined so as to include children in the case of divorce who may not actually be living with the covered parent, but where such covered parent is required to provide for the support and maintenance of such children, and the parent's application for dependent coverage is documented by a copy of an appropriate court order. [(b) The determination as to the continuation of certain mentally retarded or physically handicapped children will be made before they attain age 23 rather than before they attain age 19, as given in the general statute.] 17:9-3.8 [(Reserved)] Children with disabilities age 23 or older; determination of eligibility for continuation of coverage (a) The determination as to the continuation of certain children with disabilities as "dependents" as defined by N.J.A.C. 17:9-3.1 shall be made by the State Health Benefits Program's medical advisor. A form requesting continuance of enrollment for an eligible dependent with disabilities must be submitted to the State Health Benefits Program no later than January 31 of the year following the calendar year in which the child attained the age of 23. (b) Children with disabilities who are age 23 or older at the time their parents obtain coverage under the State Health Benefits Program who are determined by the State Health Benefits Program's medical advisor to be incapable of self-sustaining employment by reason of mental or physical disabilities and who meet the requirements of "dependents" as defined by N.J.A.C. 17:9-3.1, shall not be enrolled for coverage as "dependents" as defined by N.J.A.C. 17:9-3.1 unless: 1. They were covered as dependents under a public employer's group
plan immediately preceding that employer's entrance into the State Health
Benefits Program; or PUBLIC
EMPLOYEES' RETIREMENT SYSTEM Proposed Amendment: N.J.A.C. 17:2-3.14 Cite as 32 N.J. Reg. 3213(a) The agency proposal follows: Summary The issue was recently raised within the Division as to whether the designated beneficiaries on a retirement application, which is subsequently canceled by the member prior to the effective date of retirement, remain the designated beneficiaries. The initial purpose of this rule when originally adopted was to ensure that the member's most recent expression of beneficiary designation is given effect. When members file for retirement, they designate the current beneficiaries. This proposed amendment will allow the Division to recognize the beneficiary properly designated on a form acceptable by the Division, the retirement application, even if the retirement is later canceled. The Division will send written notification to members who cancel their retirement that their designated beneficiaries on the retirement application will remain in effect. 17:2-3.14 Acceptable designations of beneficiaries (a) The beneficiary designation on a duly executed retirement application that is filed with and accepted by the Division supersedes any older designation of beneficiary on file. The designation is effective upon acceptance by the Division, even if the retirement date on the application is in the future or the member cancels the retirement 1.-2. (No change.) (b) (No change.) TEACHERS'
PENSION AND ANNUITY FUND Adopted Amendment: N.J.A.C. 17:3-1.2 Cite as 32 N.J.R. 3996(b) Adopted November 6, 2000 Summary The proposed amendment to N.J.A.C. 17:3-1.2 is necessary to remove the exception to the Fund's fiscal year of the actuarial valuation of the Teachers' Pension and Annuity Fund. Under the existing rule, the actuarial valuation is prepared on the basis of the membership payroll status of all account results as of March 31 of each year. The proposed amendment would change this date from March 31 of each year to July 1 of each year. This change would make all retirement systems administered by the Division have a uniform valuation date. The Teachers' Pension and Annuity Fund and the Public Employees' Retirement System are the only systems valued as of March 31. All other systems are valued as of July 1. Having a uniform date would help to make the overall operation of the Division more efficient. The proposed amendment would. This change also would render unnecessary the preparation of one of the two sets of comprehensive financial statements required under the existing rule. TPAF and PERS comprehensive financial statements are prepared as of March 31 of each year, thereby providing each respective system's actuary the basis for determining the appropriation payable by employers for the fiscal year beginning July 1. A change in the actuarial date to July 1 would eliminate the need to prepare March 31 financial statements. Full text of the proposal follows: 17:3-1.2 Fiscal year The transaction of business and control of funds shall be conducted on a July 1 to June 30 fiscal year [, with the exception of the actuarial valuation, which shall be prepared on the basis of the membership payroll and status of all accounts as of March 31 of each year.] TEACHERS'
PENSION AND ANNUITY FUND Adopted Amendment: N.J.A.C. 17:3-3.13 Cite as 32 N.J. Reg. 3996(c) Adopted November 6, 2000 Summary The issue was recently raised within the Division as to whether beneficiaries designated on a retirement application that subsequently is withdrawn prior to the effective date of retirement remain the member's beneficiaries. The purpose of N.J.A.C. 17:3-3.13 when originally adopted was to ensure that members' most recent expression of beneficiary designation is given effect. When members file for retirement, they designate current beneficiaries which supersede prior beneficiary designations. The proposed amendment will allow the Division to recognize beneficiaries properly designated on a retirement application filed with and accepted by the Division, even if the member withdraws the retirement application prior to retirement. The Division will send written notification to members who withdraw their retirement applications that beneficiaries designated on their retirement applications will remain in effect. 17:3-3.13 Acceptable designations of beneficiaries (a) The beneficiary designation on a duly executed retirement application that is filed with and accepted by the Division supersedes any older designation of beneficiary on file. The designation is effective upon acceptance by the Division, even if the retirement date on the application is in the future or the member withdraws the retirement application. 1.-2. (No change.) (b) (No change.) STATE
POLICE RETIREMENT SYSTEM Adopted New Rule: N.J.A.C. 17:5-2.4 Cite as 32 N.J. Reg. 3996(d) Adopted November 6, 2000 Summary At the present time, when a member files for a retirement allowance, the beneficiaries designated on the retirement application are not in effect until the member's retirement date, even though the designation has been duly executed on a form acceptable to the Division. If members neglect to change beneficiaries when necessary, problems may arise. In some cases, members have not changed their designated beneficiaries since their enrollment into the retirement system, some 25 or 30 years earlier. They may have their parents or friends named as beneficiaries and not their spouses or children. When members file for retirement, they designate current beneficiaries, but if those members die before retirement or otherwise withdraw a retirement application, the Division must pay the previously designated beneficiaries and not those named on the retirement application. The proposed new rule would allow the Division to recognize beneficiaries properly designated on a retirement application as beneficiaries, even if the member dies or withdraws a retirement application prior to the retirement having become effective. 17:5-2.4-[(Reserved)]Acceptable designations of beneficiaries (a) A member's designation of beneficiary or beneficiaries of group life insurance on a duly executed retirement application:
(b) If a deceased member has an eligible surviving spouse, child or parent, then the deceased member's aggregate contributions at the time of death shall be applied toward the payment of the benefit established pursuant to N.J.S.A. 53:5A-12a. (c) If a deceased member has no eligible surviving spouse, child or parent, then pursuant to N.J.S.A. 53:5A-12b, the deceased member's designated beneficiary or beneficiaries of group life insurance also shall be the beneficiary or beneficiaries of the deceased member's aggregate contributions at the time of death. (d) If a deceased member has no eligible surviving spouse, child or parent, and the deceased member has not made an effective designation of beneficiary or has designated no beneficiary for group life insurance, then the Division shall pay the group life insurance and the deceased member's aggregate contributions to the deceased member's estate. PUBLIC
EMPLOYEES' RETIREMENT SYSTEM Notice of Admnistrative Change N.J.A.C. 17:2-2.3 Cite as 32 N.J. Reg. 2925(a) August 7, 2000 Take notice that the Public Employee's Retirement System Board of Trustees has requested, and the Office of Administrative Law has agreed to permit, an administrative change to N.J.A.C. 17:2-2.3(a)7, revising the cross- reference therein to the rule establishing when a member's retirement allowance becomes due and payable from N.J.A.C. 17:2-6.3 to 6.2. As adopted effective January 18, 2000, it is N.J.A.C. 17:2-6.2 that establishes when a member's retirement allowance becomes due and payable, and revision of this cross-reference was overlooked in the promulgation of that rule. This notice of administrative change is published pursuant to N.J.A.C. 1:30-2.7. Full text of the changed rule follows: 17:2-2.3 Ineligible persons (a) The following classes of persons are ineligible for membership in the System: 1.-6. (No change.) 7. Any retired member who returns to a PERS eligible position for which the calendar year compensation is less than the calendar year compensation limit for exclusion from membership pursuant to N.J.S.A. 43:15A-57.2b. To determine if the calendar year compensation for employment received by a retired member is below the calendar year compensation limit, all of the calendar year compensation received from employment with the same employer shall be combined, and all of the calendar year compensation from employment with more than one employer shall be considered separately. For the purposes of this paragraph, a "retired member" is a former member who has terminated all employment covered by the retirement system, who has not received compensation from employment covered by the retirement system for at least 30 consecutive calendar days, who is not receiving a disability retirement allowance and whose retirement benefit has become due and payable as provided in N.J.A.C. 17:2[6.3] 6.2; and 8. (No change.) DIVISION
OF PENSIONS AND BENEFITS Adopted Amendment: N.J.A.C. 17:2-1.2 Cite as 32 N.J. Reg. 3996(a) Adopted November 6, 2000 The agency proposal follows: Summary The proposed amendment to N.J.A.C. 17:2-1.2 is necessary to remove the exception to the System's fiscal year of the actuarial valuation of the Public Employees' Retirement System. Under the existing rule, the actuarial valuation is prepared on the basis of the membership payroll status of all account results as of March 31 of each year. The proposed amendment would change this date from March 31 of each year to July 1 of each year. This change would make all retirement systems administered by the Division have a uniform valuation date. The Teachers' Pension and Annuity Fund and the Public Employees' Retirement System are the only systems valued as of March 31. All other systems are valued as of July 1. Having a uniform date would help to make the overall operation of the Division more efficient. The proposed amendment also would render unnecessary the preparation of one of the two sets of comprehensive financial statements required under the existing rule. TPAF and PERS comprehensive financial statements are prepared as of March 31 of each year, thereby providing each respective system's actuary the basis for determining the appropriation payable by employers for the fiscal year beginning July 1. A change in the actuarial date to July 1 would eliminate the need to prepare March 31 financial statements. Full text of the proposal follows (deletions indicated in brackets [thus]): 17:2-1.2 Fiscal year The transaction of business and control of finance shall be conducted from a July 1 to June 30 fiscal year [, with the exception of the actuarial valuation, which shall be prepared on the basis of the membership payroll status of all account results as of March 31 of each year]. CONSOLIDATED
POLICE AND FIREMEN'S PENSION FUND Adopted Amendment: N.J.A.C. 17:6-1.4 Cite as 32 N.J.R. 3863(a) Adopted October 16, 2000 Summary The Consolidated Police and Firemen's Pension Fund (CPFPF) was established in 1952 to place 212 local police and firemen pension funds on an actuarial basis. The membership of the Fund consists of police and firemen appointed prior to July 1, 1944. There are no active members of the Fund, and the retired membership totals 311; with beneficiaries, it totals just 1,646. The average age of the retired members is approximately 90 years old. It is becoming increasingly more difficult for someone interested in running for election to the Commission (as established by N.J.S.A. 43:16-6.1) to obtain five signatures on a petition as required by N.J.A.C. 17:6-1.4(b)3. Therefore, the Commission is proposing that the number of signatures required on a petition be reduced to two members instead of five. The Commission is proposing to better organize this rule by eliminating redundant text and consolidating the election process provisions. The Commission has not sent out ballots under the existing rule in 20 years. Election notices now appear as a message on a member's monthly retirement allowance check stub. The Commission is also proposing to eliminate references to "active members" because the last active member retired 10 years ago. At N.J.A.C. 17:6-1.4, the Commission proposes to amend existing subsection (b) to address the matters covered by existing subsection (a), to delete existing subsection (a), and to recodify existing subsection (b) as new subsection (a). The Commission proposes to combine the requirements and rules of election notices and nominating petitions, which appear in both existing subsections (b) and (d), as part of new subsection (a). The Commission proposes to recodify ballot requirements contained in existing subsections (c) and (e) as new subsection (b). Proposed new N.J.A.C. 17:6-1.4(a)9 would deal with what will occur in those elections in which only one candidate runs. The Commission proposes the elimination of references to colored forms or different forms. Only one form is now used, so both N.J.A.C. 17:6-1.4(d)2 and (e)2 would be deleted. Current N.J.A.C. 17:6-1.4(f) would become N.J.A.C. 17:6-1.4(c)7 and references to a "sealed container" and use of election judges would be eliminated. No ballots have been needed for 20 years and are expected not to be needed in the future. Election judges are also not necessary where there is no ballot. The Commission proposes that the results go before the entire Commission and not just the police or fire members in N.J.A.C. 17:6-1.4(i). The Commission also proposes eliminating the word "certified" before "statement" and changing the word "advice" to "notice" in the last line of this section. The Commission is also proposing to change the word "register" to "Social Security" number in N.J.A.C. 17:6-1.4(f). Register numbers are no longer used by the Division to identify members of the CPFPF. Finally, the Commission proposes to add "or she" after the use of a male pronoun in N.J.A.C. 17:6-1.4(b)6. Full text of the proposal follows: 17:6-1.4 Election of members--Commission [(a) The election of Commission members will include the use of nominating petitions] [1. This will entail the distribution to retired members of at least two forms.] [2. The first will be an election notice setting forth the rules for filing nominating petitions and other pertinent data.] [3. The second will be the ballot, containing the names of the candidates who have been properly nominated as well as the rules governing the election.] [(b)] (a) The election of Commission members shall include the use of election notices and nominating petitions. Requirements for the election notice and petition shall include: 1. A notice [will be] prepared and forwarded to retired members advising [the retired members] them of the position to be voted upon. All present members of the Commission and the expiration of their terms will be shown. 2. (No change.) 3. The election notice will also indicate that at least [five] two eligible retired members must sign the petition in order for a candidate's name to be placed on the ballot. 4. Petitioners [should] shall indicate their Social Security or retirement number, and sign the petition. 5. A retired member may sign a petition for only one candidate. 6. The candidate named on the petition must sign the petition in a designated space indicating that he or she is willing to be a candidate. 7. The instructions will indicate the closing date for the filing of such petitions and also indicate that a ballot bearing the names of such candidates will be forwarded to each eligible voter. 8. The qualified candidates will be invited to a drawing to determine the order in which the candidates' names will appear on the ballot. 9. If only one candidate is nominated for a position, the candidate shall be deemed elected to the position without balloting. [(c)] (b)The requirements for the ballot shall include the following: [1. Each eligible voter will have a ballot bearing his name.] 1. Ballots bearing the name and retirement number of retired members shall be forwarded directly to retired members. 2.-6. (No change.) [(d) Rules concerning election notice and petition include:] [1. The election notice will be forwarded directly to retired members.] [2. Police and firemen notices will be differentiated by colored forms or by some other mark explained in the instructions.] [(e) Rules concerning ballots, forwarding include:] [1. The ballots bearing the name and retirement number of retired members will be forwarded directly to the retired members.] [2. Police and firemen ballots and return envelopes will be differentiated by colored forms or by some other symbol.] [(f)] 7. The returned ballot-bearing envelop is to be examined for proper signature. A record will be maintained to identify the [register] Social Security or retirement number of the members who have voted. [The sealed ballot will then be deposited in a locked container. Immediately prior to the counting of the ballots, the information identifying the individual voters will be separated from the still sealed ballot in the presence of the election judges.] Recodify existing (g) and (h) as (c) and (d) (No change in text.) [(i)] (e) In the event there is but one qualified candidate who has indicated his or her willingness to be such a candidate, the Secretary will call for a vote cast in favor of the candidate by [a policeman and/or fireman member] the members of the Commission [whichever is appropriate]. In the event that the candidate is so elected, a [certified] statement as to the ineligibility of any other candidate will be filed with the Secretary of State, together with [advice] notice that the candidate has been so elected. TEACHERS'
PENSION AND ANNUITY FUND Adopted Amendment to N.J.A.C. 17:3-1.4 Cite as 32 N.J. Reg. 2926(a) Adopted August 7, 2000 Summary The proposed amendment to N.J.A.C. 17:3-1.4 is being made to include retired members of the Teachers' Pension and Annuity Fund in the election process. Prior to the enactment of P.L. 1999, c.230 (N.J.S.A. 18A:66-56), retired members were not permitted to participate in the election of trustees to the Board. Although retired members now may participate in the election process and have representation on the Board, the rules regarding the election procedures have not been amended to reflect these changes. Until five years ago, the convention to elect new members was held in Trenton on a Saturday morning. Members found this time and place to be inconvenient to them, and the convention was moved to Atlantic City to coincide with an annual gathering of education professionals. This move ensured greater convenience to the members and higher participation for the convention. The proposed amendment would reflect the changes to the election process. Because retired members are now permitted to participate in this process, an additional 50,000 people are eligible to become delegates. Because space is limited on the convention floor, the number of members represented by each delegate is proposed to be changed from 400 per member to 550 per member in N.J.A.C. 17:3-1.4(g) to reflect this large increase in eligible participants. The Secretary of the Board handles much of the procedures of running the convention, and so changes are also proposed to reflect the Secretary's responsibilities. N.J.A.C. 17:3- 1.4(p) is proposed to be amended to include the dates provided in N.J.S.A. 18A:66-56.1 for the terms of office of elected members of the Board. These dates would replace those in effect since 1958. Finally, reimbursements for travel expenses are proposed to be determined by the Department of Treasury and are subject to change. Mileage reimbursement will not exceed 150 miles each way, which is the distance from High Point to Atlantic City. Full text of the proposal follows: 17:3-1.4 Election of member-trustee (a) (No change.) (b) Such [annual] convention shall be held [each year at 10:30 A.M., on a Saturday in November designated by the trustees,] annually at a time and [at a] location [to be announced] designated by the Board. (c)-(d) (No change.) (e) The delegates to the convention must be active members of or former members receiving a retirement allowance from the Fund. (f) The delegates shall be [elected at a meeting of] selected from the membership [in] of each county [to be called by the county superintendent no later than the 27th day of May]. The selection date shall be determined by the Board. 1. (No change.) [2. The meeting shall organize by the election of a chairman and secretary.] [3.]2. The [secretary, shall,] County Superintendent within five days after the meeting [and no later than the 10th day of June], shall forward to the secretary of the Board a certificate containing the membership [register] numbers, retirement numbers, names, addresses and school districts of the delegates and alternates. (g) Each county shall be entitled to one delegate for each [400] 550 members employed in or retired from the county or major fraction thereof [; provided, however, that each county shall have at least one delegate]. (h) (No change.) (i) The secretary of the Board shall forward to each delegate and alternate his or her identification for admission to the convention, a copy of the election rule, convention agenda, annual report of the Board of Trustees for the preceding fiscal year and the name of the trustee whose term is expiring. (j) The candidate for trustee must be employed in or retired from one of the counties of the group so designated for electing a trustee that year and must be a resident of New Jersey. (k) The secretary of the Board shall also notify each delegate and alternate of the names of the candidates to be nominated for trustee that have been registered [with him before the first day of November]. (l)-(o) (No change.) (p) The trustee for the three-year term commencing January 1, [1958] 1997, must be employed in a county in Group A; for the three-year term commencing January 1, [1959] 1998, in a county in Group B; for the [three] two-year term commencing January 1, [1960] 1997, in a county in Group C and so forth. Members elected thereafter shall serve three-year terms. (q)-(r) (No change.) (s) The secretary of the convention will conduct a roll call of the delegates. Alternates will be seated in the place of respective county absentee delegates in the order in which they are listed by the secretary of the county meeting: [1. Delegates, as well as alternates, shall be seated by 10:30 A.M.] [2.]1. The election of the member-trustee shall require a majority vote among the delegates actually seated in the convention. (t) (No change.) (u) The minutes of the convention [will be forwarded to each delegate as soon as possible following the conclusion of the convention, but only those delegates who clearly identify themselves and the county they represent will be recorded in the minutes as having participated in the convention] shall be submitted by the secretary for approval at the next annual meeting. (v) (No change.) (w) Delegates and alternates will be reimbursed for actual travel expenses incurred in connection with the convention [at the rate of $0.18 per mile for travel by auto, actual tax exempt fare for travel by bus or train, and meals not in excess of $2.50 per day] in accordance with State of New Jersey, Department of Treasury reimbursement schedules. Mileage reimbursement shall not exceed 150 miles each way. POLICE
AND FIREMEN'S RETIREMENT SYSTEM Adopted Amendment N.J.A.C. 17:4-1.4 Cite as 32 N.J.R. 2598(a) Adopted July 17, 2000 Summary The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-1.4 due to the advent of electronic voting. The Division currently uses an outside vendor to mail and tabulate paper ballots for approximately 40,000 police and 6,500 fire members of the PFRS. The proposed amendment will serve as a guideline for the Division's move to a more automated voting system. While the initial ballots and their distribution remain similar to old requirements, the voting method through telefacsimile, touch-tone phone and internet access has changed. Paper ballots are still an option, but the new method should save time and resources while efficiently and accurately getting the job done. References to "retirees" are proposed to be deleted because their voting procedures are found at N.J.A.C. 17:4-1.13 and they will not be affected initially by the advent of electronic balloting. N.J.S.A. 43:16A-13 changed the voting procedures and provided for a retiree to sit on the Board. Retirees may only vote for the retired seat and active members may only vote for active seats. The requirement of a written request for challenges and questions is proposed to be added. Some of the requirements found at N.J.A.C. 17:4-1.4(e) are proposed to be rearranged to better organize the rule. The Board proposes to add subparagraph (j) to cover the situation where an elected candidate is unable or unwilling to serve as a member-trustee prior to taking the oath of office. The Division is currently issuing an RFP (Request for Proposals) to obtain a vendor for this electronic process, and would like the rules which will guide the voting process in place before the vendor begins. Full text of the proposal follows: 17:4-1.4 Election of active member-trustee
1. At least [four] nine months prior to the expiration of the term of each elected trustee or immediately upon a vacancy on the Board, a notice shall be prepared and distributed by the Secretary of the Board or a contracted vendor through the certifying officers to each member who is eligible to vote. [The notice shall also inform the members that petition forms are available at the office of the retirement system.] 2. The election notice shall also: i.-ii. (No change.) iii. State that nominating petitions are required and that petition forms are available from the Board Secretary at the Division of Pensions and Benefits; iv. State the date[s] of the election; v. (No change.) vi. [Contain] Include any other information regarding that election as specified by the Board of Trustees. 3. (No change.) 4. A [receipt and report] confirmation form shall also be forwarded to each certifying officer or appropriate fiscal officer. Such form shall be returned to the Board Secretary or contracted vendor and shall include documentation of: i.-ii. (No change.) 5. Election notices shall be distributed to each member who is eligible to vote, as shown on a master list of members that shall be compiled by the Board Secretary stored and made available for review to any candidate at the office of the [Division of Pensions and Benefits] Board Secretary. Only active members of the PFRS may vote in an election of member-trustee of the Board of Trustees of the PFRS. Any challenge of questions concerning eligible voters shall be made in writing, prior to the close of the voting deadline. Failure to challenge the list or any part of it prior to [this] the voting deadline shall disallow any challenges or questions raised after the close of voting.
1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count. 2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be elected to the position. 3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count. 4. The eligible candidates for the election shall be informed as to the method and the date of counting the ballots and shall be invited to be present or to be represented at the counting of the ballots. [(g)] (i) The following apply to recount procedures:
2. If a candidate or other interested party requests a recount in writing within the prescribed time, this request shall be reviewed and granted by the Board of Trustees if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the [election board] Board Secretary. The [election board] Board Secretary shall certify the results of the recount to the Board of Trustees. If a recount is not requested within 20 days, the ballots may be destroyed. 3. Upon election and the taking of an oath of office, police and fire member-trustees shall serve for a term of four years. In the event that no member is certified as the winner of an election, the incumbent trustee shall serve until a successor is certified by the Board of Trustees. (j) If there are at least two candidates in an election for member- trustee and the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the candidate who obtained the next highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up, the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a member- trustee's term begins upon the taking of the oath of office. POLICE
AND FIREMEN'S RETIREMENT SYSTEM
Adopted Amendment Cite as 32 N.J.R. 2599(a) Adopted July 17, 2000 Summary The Retirement System and the Division recently have been receiving many questions regarding what military service is permissible to use to reduce one's age for meeting the maximum age requirements for enrollment in the Police and Firemen's Retirement System (PFRS). The statute which provides for this age reduction, N.J.S.A. 38:23A-2, was written many years ago, and did not cover any conflicts after Vietnam. The Department of Personnel requested clarification of the applicability to this statute to later conflicts, and regarding which types of service could be used to reduce age. The reply the Department of Personnel received, Opinion No. 97-0074, Follow Up Questions to Attorney General Formal Opinion 1 (1997), clarified these issues, but this clarification was never reflected in the rule. Therefore, the PFRS is proposing to amend N.J.A.C. 17:4-2.5, Age requirements, to include the clarifications provided by the Attorney General's Office. At N.J.A.C. 17:4-2.5(c), the Board proposes to add "conflicts as defined in N.J.S.A. 43:16A-11.7," which statute provides the dates of the conflicts for determining veteran status. The Board proposes to delete existing subsection (d) through paragraph (d)2 and replace it with the clarification that the period of time to be deducted from an individual's age is limited to actual time served during the war or conflict. The limitation previously found at paragraph (d)1 will be combined with this subsection. Paragraph (d)2 regarding merchant marine service will be deleted as Federal law regarding this type of service during specific dates changed and, in 1991, N.J.S.A. 43:16A-11.7(16) were corrected by the Legislative Council to reflect this Federal change. Paragraph (d)3 would become subsection (e). Full text of the proposal follows: 17:4-2.5 Age requirements (a)-(b) (No change.) (c) N.J.S.A. 38:23A 1 et seq. is recognized as a modification of the age maximum for certain "veterans". Persons having served in the active military service of the United States during "time of war " and conflict as defined in N.J.S.A. 43:16A-11.7 can for the purpose of meeting the maximum age requirement for entrance into this retirement system[,] reduce their actual age by the stipulated period of such military service. Should this reduced age meet the age maximum in effect [at the time of entrance into such military service], the applicant will be considered as having met the age maximum for enrollment. [(d) An initial period of military service, a part of which was rendered in "time of war," will be credited in full for such purpose:] [1. Any succeeding periods of military service will not be considered.] [2. Maritime service or service with the merchant marine is not considered.] (d) The period of time to be deducted from an individual's age is limited to actual time served during the war or conflict. Earlier or later periods of military service cannot be used to reduce individuals' ages so as to enable them to meet any maximum age limits. [3.](e) Any active military service terminating in dishonorable discharge is not creditable. POLICE
AND FIREMEN'S RETIREMENT SYSTEM Adopted Amendment: N.J.A.C. 17:4-5.1 Adopted Repeal and New Rule: N.J.A.C. 17:4-5.3 Cite as 32 N.J.R. 2600(a) Adopted July 17, 2000 Summary The proposed amendment to N.J.A.C. 17:4-5.1 would delete the word "contributing" and thus eliminate the requirement that an active member of the Police and Firemen's Retirement System also be on payroll to purchase service. This requirement has resulted in a number of people being placed on payroll for one pay period to be eligible to make a purchase. It makes more sense to allow the member to purchase time without having to return to payroll in order to do so. Payment for purchases by members not on active payroll would have to be by lump sum because they would not be on payrolls from which installment payments could be deducted. Another change would delete the word "temporary" and the one-year limitation of temporary purchases from N.J.A.C. 17:4-5.1(b) as this limitation was removed by P.L. 1991, c.138. Proposed N.J.A.C. 17:4-5.1(c) would provide that the Board of Trustees may disallow the purchase of all or a portion of former service it deems dishonorable as provided under N.J.S.A. 43:1-3. The proposed repeal and new rule at N.J.A.C. 17:4-5.3 would categorize purchases into "shared-cost" and "full-cost" purchases to correspond with adopted amendments to the rules governing the Teachers' Pension and Annuity Fund (TPAF) and the Public Employees' Retirement System (PERS). See N.J.A.C. 17:3-5.1, 5.5 and 5.8 (TPAF rules) and N.J.A.C. 17:2-5.1, 5.5 and 5.11 (PERS rules). Existing subsection (a) of N.J.A.C. 17:4-5.1 governing the purchase of temporary service would be addressed at proposed N.J.A.C. 17:4-5.3(a)3. The types of service eligible for purchase and the classification of those purchases as shared cost or full cost purchases, and the formula for calculating the cost of those purchases would be added to this paragraph. N.J.S.A. 43:16A-11.10 gave members the ability to purchase leaves of absence. Proposed N.J.A.C. 17:4-5.3(a)4 reflects the authority provided to members under the statute and would establish that childcare is classified for purchase by the Division as a leave for personal reasons and that the Division may require proof that an illness existed for the length of a leave. Proposed N.J.A.C. 17:4-5.3(a)5 would articulate members' ability to purchase out-of-State public employment pursuant to N.J.S.A. 43:16A-11.10, and that out-of-State service cannot be used toward an ordinary disability retirement, pursuant to N.J.S.A. 43:16A-6(1). N.J.S.A. 43:16A-11.9, 11.11 and 11.12 provides PFRS members with the ability to purchase certain periods of service with public agencies, military services before enrollment and United States Government service, but also provide that employers should not be liable for any of the costs associated with these types of purchases. Proposed new rule N.J.A.C. 17:4-5.3(b)1 and 2 provide that this type of service cannot be used to qualify for ordinary disability retirement, pursuant to N.J.S.A. 43:16A-6(1). In addition, recent legislation, P.L. 1999, c.338, N.J.S.A. 43:16A- 11.13, authorized police members to purchase service credit during a period of layoff. Proposed new N.J.A.C. 17:4-5.3(b) reflects these statutory authorizations. N.J.S.A. 43:16A-11.11 limits the total amount of service a member is able to purchase to 10 years unless the member is a veteran, in which case the member may purchase an additional 5 years of service during periods of war as defined by N.J.S.A. 43:16A-11.7. Proposed new N.J.A.C. 17:4-5.3(c) reflects this statutory provision. Full text of the proposal follows: 17:4-5.1 [Temporary service] Eligibility for purchase (a) Only active [contributing] members of the [system] System shall be eligible to make application for [the] purchase of credit. Active members who are not currently contributing to the Retirement System must purchase their requested service in a lump sum. (b) In order to be eligible to purchase [temporary] service, a member must submit a written request to purchase such service [within one year from the date of his initial pension contributions are certified to begin] and such purchase must be authorized by the member before the expiration date indicated on the [latter which quotes the terms of the purchase] quotation letter. (c) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3. 17:4-5.3 Optional purchases of eligible service [(a) Members, who purchase temporary service, must purchase all such service immediately preceding enrollment. The purchase will be calculated on the basis of the member's current salary multiplied by the factor established by the actuary. "Special Police" service cannot be purchased.] [(b) The cost of purchase of former Police and Firemen's Retirement System or any other State-administered retirement system membership credit will be calculated on the basis of the actuarial factor established for the member's age at the time of purchase multiplied by his or her current salary. All of the service from a former membership must be included in the purchase of such service.] (a) A shared-cost purchase is one in which the member pays only the employee's share and not the employer's share of the purchase. A member may purchase all or a portion of such eligible service. A shared-cost purchase will be calculated on the basis of the actuarialpurchase factor established for the member's age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The following types of purchases are shared-cost purchases: 1. Former membership credit with a State-administered retirement system; 1. Former service with any other employer that was not certified for membership but which would have qualified on an optional or compulsory basis at the time the service was rendered; 3. Continuous temporary service as a police officer or firefighter immediately preceding enrollment. "Special Police" service cannot be purchased; 2. Leaves of absence without pay: i. The period of the leave for personal reasons which does not exceed 93 days. Childcare is considered leave for personal reasons. ii. The period of the leave up to two years for personal illness. The Division may require proof that the illness existed for the length of the leave. 5. Eligible out-of-State public employment, up to a total purchase of 10 years. Out-of-State service cannot be used to qualify for an ordinary disability retirement.
(c) A member shall be eligible to purchase an aggregate of up to 10 years of out-of-State public employment, military service and Federal employment provided that the member is not receiving nor is entitled to receive a retirement allowance for such service from any other public retirement system and provides proof to the Division of Pensions and Benefits that the member has withdrawn from such other system. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service. STATE
HEALTH BENEFITS PROGRAM Adopted Amendments: N.J.A.C. 17:9-5.12 and 6.8 Cite as 32 N.J.R. 2601(b) Adopted July 17, 2000 Summary The purpose of the proposed amendments is to continue to fulfill the responsibility of the State Health Benefits Commission ("Commission") established by P.L. 1996, c.8, which provided, among other things, that the Commission may modify the payment obligations for premiums or periodic charges for health benefits coverage under the State Health Benefits Program (SHBP) for the State and State employees and retirees for whom there is no majority representative for collective negotiations purposes ("nonaligned employees") in a manner consistent with the terms of any collective negotiations agreement binding upon the State. P.L. 1996, c.8, § 6; N.J.S.A. 52:14-17.28b. The proposed amendments affect all nonaligned personnel and some future retirees for whom the State pays the cost of health benefits coverage. This includes not only employees paid through the State's centralized payroll unit, but employees of State colleges and universities for whom there is no majority representative for collective negotiations purposes. The proposed amendments modify the payment obligations for these employees and retirees based on the recently negotiated labor agreements between the State and the unions representing the majority of State employees. The proposed amendments provide that nonaligned monthly and biweekly employees and retirees (who reached 25 years of service credit after July 1, 2000 or retired on a disability benefit after July 1, 2000) who elect to remain in the Traditional Plan under the SHBP shall pay 25 percent of the cost of the premium of that Plan as established by the Commission effective July 1, 2000 and thereafter. Nonaligned monthly and biweekly employees who elect coverage in an HMO must pay five percent of the cost of the premium of that Plan as established by the State Health Benefits Commission effective July 1, 2000 and thereafter. The State will continue to pay the full cost for coverage for employees and dependents who elect coverage in NJ PLUS, the State of New Jersey Managed Care/Point of Service plan. Presently, 50 percent of State employees participate in HMOs, 30 percent in NJ PLUS and 20 percent in the Traditional Plan. Employee deductions will begin in accordance with normal payroll schedules to pay for coverage effective July 1, 2000. Full text of the proposal follows: 17:9-5.12 Premium-sharing for [Traditional Plan] active employee State Health Benefits Coverage
1. Employees who elect coverage in the Traditional Plan shall pay 25 percent of the cost of that plan's premium as established by the State Health Benefits Commission pursuant to N.J.S.A. 52:14-17.32b; 2. Employees who elect coverage in an HMO Plan shall pay five percent of the cost of that plan's premium as established by the State Health Benefits Commission pursuant to N.J.S.A. 52:14-17.32b; and 3. Employees who elect coverage in NJ PLUS, the State of New Jersey Managed Care/Point of Service plan, shall have no premium payment. 17:9-6.8 Premium-sharing for [Traditional Plan] retired employee State Health Benefit Coverage
1. Retirees electing the Traditional Plan shall pay 25 percent of the cost of that plan's premium as established by the State Health Benefits Commission pursuant to N.J.S.A. 52:14-17.32b; and 2. Retirees electing NJ PLUS, the State of New Jersey Managed Care/Point of Service Plan, or an HMO shall have no premium payment. POLICE
AND FIREMEN'S RETIREMENT SYSTEM Adopted Amendment: N.J.A.C. 17:4-6.4 Cite as 32 N.J.R. 2601(a) Adopted July 17, 2000 Summary Until recently, if a member retired with an outstanding loan balance, either that balance had to be paid in full at retirement, or the member's entire pension check was withheld until the loan was satisfied. The only way loan repayment at the same amount the member was paying as an active employee could be carried into retirement was if the member retired on a disability retirement allowance or retired on another type of benefit but was ill or disabled. Proof of the disability had to be provided before loan deductions could be carried into retirement. P.L. 1999, c.132 changed the repayment method of outstanding loans at retirement. The new law provides that a member who retires with an outstanding loan will repay the loan through deductions from the retirement benefits payable in the same monthly amount that was deducted from the member's compensation immediately before retirement until the balance of the loan together with the interest is repaid. If the retiree dies before the loan with interest is repaid, the remaining loan balance will be repaid from the proceeds of any other benefits payable on the account of the retiree either in the form of monthly payments due to the beneficiaries or in the form of a lump sum payment from the pension or group life insurance. This proposed amendment will reflect this statutory change. The proposed deletion of N.J.A.C. 17:4- 6.4(b) and (c) will eliminate any redundancies from this rule because the proposed amendment will make the repayment option available to all retirees regardless of disability. The proposed amendment at N.J.A.C. 17:4-6.4(a)2i provides that withholding for New Jersey State income tax is an authorized deduction that will be taken prior to withholdings for a loan. P.L. 1989, c.328 permitted withholding State income tax from retirement allowances. The Division began implementing voluntary State income tax withholding in 1989 and proposes to update the rule to reflect this change. Full text of the proposal follows: 17:4-6.4 Outstanding loan (a) A member who has an outstanding loan balance at the time of retirement may repay the loan balance, with interest, as follows: 1. In full before the retirement allowance becomes due and payable as provided in N.J.A.C. 17:4-6.3; [or] 2. By retention of retirement benefit payments, excluding authorized deductions, by the [retirement system] Retirement System until the loan balance, with interest, is repaid.. . . . i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding. [If the member does not request repayment in full, repayment is by retention of retirement benefits.]; or 3. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by P.L. 1999, c.132. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement. [(b) A member who retires on a disability pension or because of medical illness or disability as determined by the board of trustees with an outstanding loan balance may repay the balance as follows:] [1. In the manner prescribed in (a) above; or] [2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid.] . . . . [i. If a member who retires on a disability pension does not request another repayment option, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.] . . . . [(c) A member whose retirement is other than a disability retirement and who wants to establish that the retirement is necessitated by medical illness or disability shall submit an application acceptable to the retirement system together with a report of the member's personal or attending physician and all other physicians and all other physician's reports, hospital records or other medical evidence which the member can supply pertaining to the illness or disability. The medical evidence shall be sufficient to show to the satisfaction of the board of trustees that the member is totally and permanently disabled and would qualify on a medical basis for ordinary disability retirement. The board may require the member to be examined by a physician designated by the retirement system, and may refer the medical evidence to the medical panel for its report on whether the member is totally and permanently disabled and retirement is necessitated by medical illness or disability.] [(d)] (b) If a retirant dies before the loan balance, with interest, is repaid, the remaining balance is paid first from the group life insurance proceeds, and then from the proceeds of any other benefits payable on account of the retirant in the form of monthly payments or the balance of the Option I reserves or the balance of the retirant's accumulated deductions and regular interest that are due to the beneficiary or estate. If the retirant designated multiple beneficiaries to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which they are entitled to the benefits. TEACHERS' PENSION AND ANNUITY FUND Proposed New Rule: N.J.A.C 17:3-3.13 Summary The purpose of this proposed new rule is to clarify the death benefits payable under the Teachers' Pension and Annuity Fund (TPAF) when beneficiaries request that retirements become effective under Chapter 221, Laws of 1995. This law amended Chapter 96 of the Laws of 1984 which first authorized beneficiaries to request that retirements become effective under certain circumstances where members died before retirements became effective. Prior to Chapter 96, a retirement was not effective until 30 days after the date specified by the member or the date of Board action on the retirement, whichever was later. Chapter 221 eliminated all the requirements for beneficiaries to be eligible to make such requests other than the requirement that a member file a retirement application. Chapter 96 was interpreted by the Division of Pensions and Benefits as giving the beneficiaries of members who met the requirements of the law the option of receiving the death benefits payable on behalf of a member who died in active service (1 1/2 or 3 1/2 times final year salary) and the return of the member's contributions plus accrued interest, or a retirement allowance under an optional retirement benefit selection and the death benefits payable on behalf of a retiree (3/16 or 7/16 times final year salary). If a member took the steps necessary to convert the difference between the amount of active and retired death benefits, the beneficiary would also receive the converted death benefit. After the enactment of Chapter 221, questions arose concerning the appropriate interpretation of these laws and the benefits which should be paid under them. Clarifying advice was requested from the Attorney General. The advice confirmed that the interpretation and practice of the Division was the correct application of the law. The proposed new rule provides that the beneficiary designated for an optional settlement on a retirement application may request that the retirement take effect and that the optional settlement be made under Chapter 221. If there is no such beneficiary, the beneficiary designated to receive the return of contributions or unpaid benefits at the date of death may make the request. If a beneficiary requests that a retirement become effective, the death benefits payable on behalf of the member shall be the benefits payable on behalf of a member who dies after retirement as provided under the laws governing the retirement system. If a member files the required application to convert some or all of the difference between the amount of active and retired death benefits and pays the initial premium, the amount of the converted death benefits shall be paid as claims under the group insurance policies for noncontributory and contributory death benefits. The premiums paid shall be retained by the carrier and shall be applied to the premiums payable by the State and the retirement system for the group policies. Full text of the proposed new rules follows: 17:3-3.13 Benefits payable under Chapter 96, Laws of 1984, as amended by Chapter 221, Laws of 1995 1. For the purposes of section 1 Chapter 96, Laws of 1984, as amended by section 2 of Chapter 221, Laws of 1995 (N.J.S.A. 18A:66-47), the person designated as the beneficiary for an optional settlement on the retirement application may request that a retirement become effective and that a selection of an optional settlement be made as authorized by the law. If there is no designated beneficiary for an optional settlement, the person designated as the beneficiary to receive the return of contributions or unpaid benefits due to a retiree at the date of death may make this request. If a beneficiary requests that an optional settlement be made, the death benefits payable on behalf of the member shall be the death benefits payable on behalf of a member who dies after retirement as otherwise provided in the Teachers' Pension and Annuity Fund Law, as amended and supplemented (N.J.S.A. 18A:66-1 through 93). 2. Where a beneficiary of a member requests that a retirement take effect and that a selection of an optional settlement be made as authorized under section 2 of Chapter 96 Laws of 1984, as amended by section 1 of Chapter 221, Laws of 1995, an additional amount of insurance, not to exceed the amount of insurance that could be converted under the group policies for noncontributory and contributory death benefits, shall be paid as claims under the group policies only if the member files an application for conversion of the insurance upon retirement as provided under N.J.S.A. 18A:66-79 and pays the initial premium for the converted insurance. The premiums paid for the converted insurance shall be retained by the carrier and be applied to the premiums payable by the State and the retirement system for benefits provided under the group policies. PUBLIC
EMPLOYEES' RETIREMENT SYSTEM Proposed Repeal and New Rule: N.J.A.C. 17:2-1.4 Cite as 31 N.J.R. 3926(a) Summary The Division is
proposing to revise completely N.J.A.C. 17:2-1.4 due to the advent of
electronic voting. The Division currently uses an outside vendor to mail
and tabulate approximately 236,000 paper ballots for members of the Public
Employees' Retirement System. The proposed new rule will serve as a guideline
for the Division's move to a more
automated voting system. While the initial ballots and their distribution
remain similar to old requirements, the voting method through fax, touch-tone
phone and internet access has changed. Paper ballots are still an option,
but the new method should save time and resources while efficiently and
accurately getting the job done. The voting process itself
remains the same except for the addition of a new mechanism by which voters
may vote and ballots may be collected. 1. At least nine
months prior to the expiration of the term of each elected trustee or
immediately upon a vacancy on the Board, a notice shall be prepared
and distributed by the Secretary of the Board or a contracted vendor
through the certifying officers to each member who is eligible to vote. i. Advise the
member of the election; 3. Election notices
shall be forwarded in bulk and in appropriate number to the certifying
officer or other appropriate fiscal officer of each employing agency,
together with instructions as to who is to receive the notices. i. Receipt
of the notice by the certifying officer or other appropriate fiscal
officer; and 5. Election notices shall be distributed to each member who is eligible to vote, as shown on a master list of members that shall be recorded and stored at the Board Secretary's Office and made available for review to any candidate at the Division of Pensions and Benefits. Only active members of the PERS may vote in the election of member-trustees of the Board of Trustees of the PERS. Any challenges or questions concerning eligible voters shall be made prior to the close of the voting deadline. Failure to challenge the list or any part of it in writing prior to the voting deadline shall disallow any challenges or questions raised after the close of voting. (d) The following apply to nominated petitions: 1. Nominating
petition forms shall be available from the Secretary of the PERS. i. For State
trustee, at least 500 active State members, who are eligible to vote
for the position, are required to sign the petition for the candidate. 4. The petition
form shall require the candidate's name and employer, and the pension
membership or Social Security number of each petitioner. (e) The following applies to distribution of election packets: 1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to cast a ballot through one of the following: i. Telephone
(voice retrieval system--electronic vote); 2. For each eligible voter, there shall be forwarded to the certifying officer individual member packets with instructions for balloting which shall include the following information: i. The eligible
member's name, pension membership number, pension location number,
ballot number and personal identification number (PIN); 3. The ballot
positions shall be determined by a drawing conducted at a time and place
determined by the Board Secretary. All candidates may attend such drawing
by contacting the Board Secretary's Office. (f) The Board shall assess the percentage of returned votes after the conclusion of each respective election and determine whether or not the paper ballot should continue to be incorporated in the election packet as denoted in (e) above. The Secretary shall notify the vendor handling the election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots no longer need to be included in the initial election packet, then the following apply to the distribution of paper ballots upon member request: 1. Active members
may contact the vendor handling the election to request a paper ballot
if the voter is unable to cast a ballot through any of the other electronic
methods mentioned in (e) above. Members shall provide the vendor with
their proper ballot/pension number and home address. (g) The following applies to biographical information: 1. An informational
sheet of biographical information regarding each candidate shall be
prepared by the candidate and submitted to the Secretary for approval. (h) Vote tabulation shall be as follows: 1. Only a member's
first vote shall be counted as the official electronic or paper ballot.
All duplicate or subsequent votes shall be considered invalid and not
included in the final election count. (i) The following applies to recount procedures: 1. Any candidate
or member, who shall have reason to believe that an error has been made
in counting or declaring the vote, may request, in writing, within 20
days of the certification of the results of the election, that the Board
of Trustees, at its next regular meeting or at a special meeting, hold
a hearing to consider the request and determine
whether a recount shall be held. The Board shall notify all candidates
of its decision within 10 days thereafter. At such hearing, any member
of the Board who is a candidate on the contested ballot shall not vote
in the Board's decision on the request. All candidates on the contested
ballot shall be invited to attend the Board's meeting and may present
evidence to support their beliefs. (j) If there are
at least three candidates in an election for member- trustee and the victorious
candidate dies or declines to serve as such member- trustee prior to the
beginning of the candidate's term as trustee, the candidate who obtained
the next highest number of votes in that election (that is, the first
runner-up) shall be selected to fill the Board vacancy caused by the death
or inability or unwillingness to serve of the successful candidate. If
the Board selects the first runner-up in such election and that person
is unable or unwilling to accept the position, then the Board shall select
the candidate who obtained the next highest number of votes in that election.
If there is no second runner-up, the Board shall conduct a new election
to fill the Board vacancy. For purposes of this provision, a member-trustee's
term begins upon the taking of the oath of office. TEACHERS'
PENSION AND ANNUITY FUND Proposed New Rule: N.J.A.C. 17:3-3.13 The agency proposal follows: Summary At the present time, when a member files for a retirement allowance, the beneficiaries designated on the retirement application are not in effect until the member's retirement date, even though the designation has been duly executed on a form acceptable to the Division. If members neglect to change beneficiaries when necessary, problems may arise. In some cases, members have not changed their designated beneficiaries since their enrollment into the retirement system, some 25 or 30 years earlier. They may have their aunts or uncles named as beneficiaries and not their spouses or children that were acquired after enrollment. When members file for retirement, they designate current beneficiaries, but if those members die before retirement, the Division must pay the previously designated beneficiaries and not the current ones named on the retirement application. The proposed new rule would allow the Division to recognize the beneficiary properly designated on the retirement application, even if the retirement has not yet become effective. 17:3-3.13 Acceptable designations of beneficiaries (a) The beneficiary designation on a duly executed retirement application that is filed with and accepted by the Division supersedes any older designation of beneficiary on file. The designation is effective upon acceptance by the Division, even if the retirement date on the application is in the future. 1. The beneficiary
or beneficiaries designated on the retirement application for the retirement
allowance shall be the beneficiary or beneficiaries for the return of
the member's accumulated contributions. (b) The beneficiary or beneficiaries of the group life insurance designated on the retirement application shall be the beneficiary or beneficiaries of the active group life insurance. 1. If no beneficiary designation is in effect at the time of the member's death, or if no one is named as beneficiary for life insurance, the Division shall pay the benefit to the member's estate. Cite as 31 N.J. Reg. 3930(a) Please send your comments to: Division of Pensions and Benefits POLICE
AND FIREMEN'S RETIREMENT SYSTEM Reproposed Repeal and New Rule: N.J.A.C. 17:4-4.1 Summary The Police and Firemen's Retirement System Board of Trustees, upon further review of the proposed repeal and new rule regarding creditable compensation originally published in the March 1, 1999 New Jersey Register, 31 N.J.R. 591(a), has determined that a revision to the proposed new rule is necessary. The Board also determined that the proposed revision is sufficiently substantive to require the republication of this proposed rule for comment. The grandfather clause found at proposed subsection (i), after much review and discussion by the Board, is modified on reproposal to state that the rule shall not be applicable to longevity pay, holiday pay, or education pay which is included in the creditable compensation of a retiree or member on a mandatory basis in accordance with the provisions of a collective negotiations agreement or employment policy of an employer which has been approved and executed on or before March 1, 1999 until the termination date of the agreement or policy or December 31, 2000, whichever occurs first. Subsection (i) as originally proposed was effective for participants who retired on or before the effective date of the rule; or for participants who retired on or before January 1, 2002 and whose total compensation was based on collective bargaining agreement provisions in effect on the effective date of the rule. This change is being made due to advice received from the Division's legal advisor as well as in response to some of the comments received during the original comment period, as discussed below. Subparagraph (a)2xi is modified on reproposal to add "or employment policy" to the collective bargaining agreement, to include those not covered by collective bargaining. Subsection (c) is modified on reproposal to include the word "employee" before "contributions" to clarify whose contributions are to be returned. Finally, subsection (d) is modified on reproposal to allow for additional sources of information to be used to determine if a percentage increase in salary is excessive. The purpose of the reproposed repeal and new rule is to clarify the compensation of members which shall be used for the purposes of employer and employee contributions to the Police and Firemen's Retirement System, and for the determination of benefits under the system. The basic design of the retirement system is that employers and members pay contributions to the retirement system based upon the salaries of the members during their active service to pay for statutorily defined death and retirement benefits. These benefits are based in large measure upon the salaries upon which the contributions are made. The law governing the retirement system, at N.J.S.A. 43:16A-1, defines compensation for the purposes of the system as follows: "Compensation" shall mean the base salary, for services as a member as defined in this Act, which is in accordance with established salary policies of the member's employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement or additional remuneration for performing temporary duties beyond the regular workday. It is clear from the basic design of the retirement system and the definition
of "compensation" that the law contemplates a system of employer
and employee contributions on the regular weekly, bi-weekly or monthly
base salary of members to fund death or retirement benefits based upon
such regular salary in the year before death or The proposed new rule attempts to clarify this area by indicating specific types of remuneration which are not includable for pension purposes. Unfortunately, there is still a significant amount of misunderstanding or lack of understanding among employers, members, and member representatives on this subject. The lack of clarity on what types of remuneration may be included in compensation for pension purposes has led to many cases where the Board of Trustees has had to review the compensation of members about to retire or already retired, and to deny the use of certain remuneration in the calculation of retirement benefits. In some cases, the benefits of retirees had to be recalculated and the retirees had to repay the retirement system for benefits they received based upon the excluded remuneration. These cases have usually involved situations where some forms of compensation, such as longevity or holiday pay, were not included in members' base pay for most of their working careers, but were included when the members' service was close to eligibility for retirement, for example, beginning in the 20th year of service. The benefits based upon the compensation were not adequately funded through employer and employee contributions. If compensation handled in this manner is not excluded from benefit calculations, the unfunded liability of the retirement system is increased and must be paid for by all employers. In the decision in Wilson v. Board of Trustees of the Police and Firemen's Retirement System, Dkt. No. A-002123-96T2 (App. Div. 1992), which upheld the Board's denial of inclusion of longevity pay after 20 years of service, the Appellate Division clearly stated the problem for the retirement system as follows: "Utilizing uniform salaries enables the actuary of the fund to predict with greater precision the amount of monies necessary to fund benefits and to adjust contribution rates in order to maintain the stability and sufficiency of available fund assets. The soundness of the fund is directly related to the certainty and predictability of past transactions from which certain assumptions are derived. Not only can the fund not predict whether an employee will or will not choose to exercise the option to receive longevity payments in his salary shortly before retirement, but a pension calculated on these payments that have been unfunded for a minimum of twenty years can only threaten the actuarial soundness of the fund." (Wilson, at 8 and 9). The New Jersey Employer Employee Relations Act, N.J.S.A. 34:13A-8.1, provides that: "nor shall any provision hereof annul or modify any pension statute or statutes of this State." In interpreting this provision, the State Supreme Court has stated that public "employees and employee representatives may neither negotiate nor agree upon any proposal which affect the sacrosanct subject of employee pensions." See State v. State Supervisory Emp. Ass'n, 78 N.J. 54, 83 (1978). The law providing for binding arbitration when collective bargaining between employers and representatives of policemen and firemen reach an impasse specifically prohibits an arbitrator from considering and ruling on matters related to employee pensions. See N.J.S.A. 34:13A-18. The primary purpose of the reproposed repeal and new rule is to clarify what types of remuneration may be included in compensation for pension purposes to serve as a guide to employers, members, and member representatives. Hopefully, it will help to eliminate situations in the future where negotiated compensation is excluded from the compensation used for pension purposes with significant hardship to the members, retirees and employers involved. The Board received a number of comments to the original proposal. A summary of the public comments and the agency's responses are as follows: COMMENT: Martin M. McElroy, of Millburn, NJ, responded on March 16, 1999 to this proposed new rule. The commenter, who is a Chief Financial Officer and a member of the PERS Board, noted that he objected to subsection (i) and added that "the Board is, in effect, advocating member mismanagement by permitting inclusion of disqualifying pension contributions." He added that this paragraph "would require management to negotiate these illegal contributions into the labor contract until the year 2002." He offered the opinion that because there is no municipal representation on the Board, that this action is "tantamount to State mandated, State pay." The commenter concluded that this rule would "hinder the collective bargaining process and the unanticipated pension cost would trigger local property tax increases for a number of years." RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks Mr. McElroy for his comments, but believes that this proposed new rule is necessary to clarify what is includable in compensation, and believes that its adoption will actually limit costs to the retirement system. Paragraph (i) has been modified on reproposal to include only collective negotiations agreements approved and executed on March 1, 1999, the date of the original publication of the proposed repeal and rule. Labor contracts negotiated after that date would be subject to its provisions until the contract's expiration or December 31, 2000, whichever is earlier Subparagraph (i), as reproposed, is necessary because some members and employers previously have been authorized by the Board to include compensation in base salary which would not be permitted under the rule as proposed. Other members and employers made similar provisions in their labor contracts based upon these approvals. To make such inclusions impermissible now without some transition for employers and members who acted in good faith based upon the previous approvals would be inequitable to the members and the employers. COMMENT: Arthur Biber, from Springfield, NJ, responded on March 25, 1999 to the proposed new rule. The commenter expressed support for the proposal and stated that he found the rule to be "comprehensive, reasonable and fair." RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks the commenter for his support of this proposed new rule. COMMENT: Brian Hagal, of Rutherford, NJ, responded on March 31, 1999 to the proposed new rule. The commenter, who writes for the membership of PBA Local 300, expressed support for the proposal. The commenter supported a grandfather clause to "allow for those retired or about to retire to remain secure in their pensions." The commenter added that "the proposed rule would certainly provide for equal treatment by all members of the system" and urged that the rule be adopted. RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks the commenter for his support of this proposed new rule. COMMENT: David J. Kowalski, from East Rutherford, NJ, responded on March 15, 1999 to the proposed new rule. The commenter, who represents PBA Local 275, expressed concern for the proposed new rule's treatment of holiday pay, which is not included in a member's base salary during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service (see proposed subparagraph (a)2xiii). The commenter's location had received an interest arbitration award which did not disallow such additions of holiday pay to base salary in the 23rd or greater year of service. The commenter states that taking away this "would deprive the conscientious police officers who enjoy their work and wish to continue to give service to the people of E. Rutherford." RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks Mr. Kowalski for his comments, but points out that the benefits based upon the type of compensation referred to in the comment were not adequately funded through employer and employee contributions. If this type of compensation is not excluded from benefit calculations, the unfunded liability of the retirement system is increased and must be paid for by all employers. The Board of Trustees is the body responsible for determining the compensation to be used to determine benefits and contributions under the retirement system. Furthermore, the law governing interest arbitration specifically prohibits an arbitrator from considering or ruling on matters related to employee pensions. The pertinent provision, N.J.S.A. 34:13A-18, reads as follows: The arbitrator shall not issue any finding, opinion or order regarding the issue of whether or not a public employer shall remain as a participant in the New Jersey State Health Benefits Program or any governmental retirement system or pension fund, or statutory retirement or pension plan; nor, in the case of a participating public employer, shall the arbitrator issue any finding, opinion or order regarding any aspect of the rights, duties, obligations in or associated with the New Jersey State Health Benefits Program or any governmental retirement system or pension fund, or statutory retirement or pension plan; nor shall the arbitrator issue any finding, opinion or order reducing, eliminating or otherwise modifying retiree benefits which exist as a result of a negotiated agreement, ordinance or resolution because of the enactment of legislation providing such benefits for those who do not already receive them. COMMENT: Timothy Gordon, Business Administrator for Millburn Township, NJ, responded on March 30, 1999 to this proposed new rule. The commenter stated that his concerns regarding the originally proposed subsection (i) were three- fold: that "the proposed amendment would result in a substantial increase in unfunded liability which would be imposed on the 566 municipalities and financed by local property tax," that "the absence of municipal representation on the police and fire pension system results in a 'state mandate, state pay' condition" and that "the continued efforts to enhance pension benefits will erode the financial integrity of the pension system." The commenter asks why this is not considered a legislative matter. He also asks who pays the unfunded liability due to the increases in pension cost, and why a financial analysis of the cost, both present and future, was not performed. He asks why this is not a "state mandated, state pay" item? RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks Mr. Gordon for his comments. One of the purposes of the proposed new rule as reproposed is to limit unfunded liabilities by specifically listing what cannot be includable in base salary; therefore it should reduce costs to municipalities, and not increase them. The reasons for subparagraph (i) are indicated in the response to the comments of Mr. McElroy above. Compensation is already defined by statute at N.J.S.A. 43:16A-1(26). It is one of the duties of the Police and Firemen's Retirement System's Board to establish rules consistent with the statutory requirements. N.J.S.A. 16A-13(7). Therefore, this is an appropriate subject for rulemaking. COMMENT: Paul Kleinbaum, Esq., Newark, NJ, whose firm is counsel to the
New Jersey State Policemen's Benevolent Association (State PBA), responded
on March 29, 1999 to the proposed new rule. The commenter, noted that
it is the State PBA's position that the proposed rules defining extra
compensation "violate the statutory mandate defining creditable compensation."
Specifically, the commenter objects to subparagraph (b)2xiii of the proposed
new rule which "interprets compensation to deny creditability to
salary which include benefits in base pay after a specified number of
years of service." The commenter uses the example of a contract provision
which incorporates a benefit into base pay
for all officers for a particular employer after 20 years of service.
He states that "it is part of an established salary policy which
has been negotiated for all officers, and is not an individual salary
adjustment granted in anticipation of retirement. Even if for the sake
of argument only, it is granted in anticipation of retirement, it is not
an individual salary
adjustment but an adjustment granted across the board for all employees
of the bargaining unit." "Thus," he concludes, "the
salary established by such a provision must be considered as creditable."
The commenter then adds that "many of the examples of extra compensation
go beyond statutory definition." He notes that the Board has over
the years consistently credited salary based on the inclusion of benefits
into base pay after a specified number of years of service. He concludes
this portion of his comments with the statement that "quite apart
from the substantial legal questions raised by the proposed new rules,
it is just plain wrong to change the rules." Mr. Kleinbaum's analysis as to the proposed new rule's compliance with legislative mandate is limited to the definition of "compensation" under N.J.S.A. 43:16A-1(26). The Board believes that the appropriate interpretation of the compensation which should be included for pension purposes should be based upon the entire law governing the retirement system, and not on the definition of "compensation" alone. The general responsibility for the administration of the system is vested in the Board, and accordingly, the Board has the responsibility to interpret the statutes applicable to the system. N.J.S.A. 43:16A-13(1). In the Summary of the original proposal, the Board set forth what it considered to be the appropriate interpretation of the law for compensation to be included for pension purposes. The Board said: The basic design of the retirement system is that employers and members pay contributions to the retirement system based upon the salaries of the members during their active service to pay for statutorily defined death and retirement benefits. These benefits are based in large measure upon the salaries upon which the contributions are made. The law governing the retirement system defines compensation for the purposes of the system as follows: "Compensation" shall mean the base salary, for services as a member as defined in this act, which is in accordance with established salary policies of the member's employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement or additional remuneration for performing temporary duties beyond the regular workday. It is clear from the basic design of the retirement system and the definition of "compensation" that the law contemplates a system of employer and employee contributions on the regular weekly, bi-weekly or monthly base salary of members to fund death or retirement benefits based upon such regular salary in the year before death or retirement. The "compensation" for pension purposes is not intended to include temporary remuneration such as bonuses or overtime pay, or adjustments in anticipation of retirement to enhance retirement benefits. 31 N.J.R. 591. The Summary further indicates why this interpretation is appropriate and necessary as follows: The benefits based upon the compensationwere not adequately funded through employer and employee contributions. If compensation handled in this manner is not excluded from benefit calculations, the unfunded liability of the retirement system is increased and must be paid for by all employers. Id. Mr. Kleinbaum further states that the Board cannot fund support for the proposed rule in the Wilson decision because the important element in that case was that employees had the option of having longevity pay folded-in to their base pay after 20 years. The Board believes that the Wilson case not only supports the proposed
rule, but also provides a clear statement of why it is necessary. The
Summary of the original proposal clearly sets forth the basis for the
Board's reliance on it. Utilizing uniform salaries enables the actuary of the fund to predict with greater precision the amount of monies necessary to fund benefits and to adjust contribution rates in order to maintain the stability and sufficiency of available fund assets. The soundness of the fund is directly related to the certainty and predictability of past transactions from which certain assumptions are derived. Not only can the fund not predict whether an employee will or will not choose to exercise the option to receive longevity payments in his salary shortly before retirement, but a pension calculated on these payments that have been unfunded for a minimum of twenty years can only threaten the actuarial soundness of the fund. (Wilson, at pages 8 and 9) The Board feels
that the important element of the Wilson case is not that the employees
had the option of the fold-in, but that the fold-in would be unfunded
for 20 years and this would "only threaten the actuarial soundness
of the fund." "These types of 'fold-in' provisions benefit both parties. For the PBA, it is a way to enhance salaries for overtime, pension, and other purposes. For the employer, it is a way to avoid percentage increases in base salaries. PBAs often give up something in the give and take of negotiations. For example, a PBA might forego the opportunity to obtain a higher salary increase to obtain a provision folding a benefit into base pay. Such provisions, through the negotiations process, benefit both sides." (Emphasis added) The problem with this analysis is that while fold-ins may be a benefit to both the employers and employees who negotiate them, they clearly threaten the actuarial soundness of the pension fund and require all the other employers participating in the retirement system to fund the "benefit" enjoyed by the parties to the fold-in agreement. Using the negotiations process to "enhance salaries for ... pension ... purposes" is precisely what both the pension laws and the laws governing collective bargaining were designed to prevent. Mr. Kleinbaum's analysis further states that the suggestion in the Summary that Public Employment Relations Commission (PERC), court and arbitrator decisions which have approved fold-in provisions modify pension statutes and are contrary to N.J.S.A. 34:18A-8.1 is incorrect. The analysis states that the decisions have upheld fold-ins in labor contracts and seems to offer them as support for their inclusion as creditable salary for pension purposes. However, it does indicate that none of the cases made a determination that the fold-ins were creditable for pension purposes, and that PERC carefully noted that that responsibility belonged to the Board of Trustees. It was not the intent of the Summary of the original proposal to suggest that the decisions in these other forums were contrary to N.J.S.A. 34:13A-8.1, but to indicate that it was the Board's understanding that collective bargaining agreements were not supposed to intentionally affect pension benefits. The State Supreme Court stated this principle emphatically as follows: Public "employees and employee representatives may neither negotiate nor agree upon any proposal which affects the sacrosanct subject of employee pensions." See State v. State Supervisor Emp. Ass'n, 78 N.J. 54, 83 (1978). The Legislature reiterated this principle in the law governing interest arbitration. The Summary cites these provisions of the collective bargaining laws and the related case above because it believes that it is the Board's responsibility to administer the retirement system consistent with both the pension laws and the collective bargaining laws. If the fold-in provisions are not designed to affect pensions, then there should be no problem with the new rule as reproposed which is designed to ensure that they do not affect pensions.
COMMENT: Henry Zerella, Esq., Vineland, NJ, on behalf of the City of Vineland,
NJ, responded on March 30, 1999 to the proposed new rule. The commenter
notes that "prior to the unpublished decision the Board of Trustees
had routinely advised that items such as holiday pay could be included
in base salary for pension purposes." He adds that if this rule is
to be changed, "it is of the utmost importance to the orderly administration
of the various departments that are covered by collective bargaining agreements
that these rules not be given retrospective application." The commenter
was pleased with subparagraph (i) which provides for some retroactive
application of the proposed new rule. He expressed concern relative to
subparagraph (a)2xi which excludes compensation which is not
uniformly included in base pay for all employees in the same position
or covered by the same collective bargaining agreement. He pointed out
that not all employees receive some types of compensation, such as compensation
for college credits. The commenter also expressed concern over subparagraph
(a)2xiii which would generally exclude compensation that was treated differently
during a member's service. He was concerned that this might exclude longevity
increases. The commenter also felt that the administrative provisions
denying interest on return of contributions and denying return of employer
contributions for excluded compensation should be prospectively applied. COMMENT: Charles Schlager, Jr., Esq., Hackensack, NJ, on behalf of the Professional Firefighters Association of New Jersey (IAFF), responded on March 29, 1999 to the proposed new rule. The commenter opposes the proposed repeal and new rule. He states that "we do not believe that there exists a 'significant misunderstanding' of what is considered 'creditable salary.' " He adds that "our position is that the Board and the Courts have established what type of remuneration may be included in compensation for pension purposes" and that "the Legislature has clearly delineated the definition of compensation." The commenter asserts that "the Legislature would not intend that an executive agency adopt so far-reaching a policy without express statutory authorization" and that the "Board's proposed rule change violates the expressed and implied legislative policies." The commenter notes that the proposed repeal and new rule "not only circumvented the legislative process, but operate to limit the collective bargaining process as provided under N.J.S.A. 34:13A-1 et seq.," that the rule will cause an "extreme hardship" upon the members of the PFRS and that it will have a "negative economic impact upon participating employers and members of the system." The commenter concludes that "while we believe that this issue is best left with the Legislature to revise, repeal or create, should the Board be opposed to such a course of action, then we would request that the Board modify, revise or amend this proposed new rule to allow for the grandfathering of all current contracts which contain contractual provisions which the Board is now seeking to eliminate, except those provisions which have been statutorily or legally excluded." RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks Mr. Schlager for his comments. The Board believes that the Legislature and the courts have already addressed the matter in a clear and emphatic manner. There was ambiguity and confusion because some fold-in provisions were approved and others were denied. There is currently a rule on includable compensation. It is within the authority of the Board to clarify the rule for the benefit of all the members and employers participating in the retirement system. COMMENT: Leslie Houston, from Beach Haven Park, NJ, responded on March
9, 1999 to this proposed new rule. The commenter, who is a member PBA
Local 175, states that she does not approve of this proposal and that
it would "severely and ambiguously restrict credible salary which
is currently used to calculate one's pension." She adds that
the Board would be granted "omniscient authority to determine what
constitutes extra compensation through contract benefits," and that
"voiding a PBA member of a benefit that is covered by a collective
bargaining agreement ... is wrong." She urges that the Board withdraw
the proposal. RESPONSE: The Police and Firemen's Retirement System Board of Trustees thanks Mr. Morley for his comments. The grandfather provision has been tightened in this reproposal. COMMENT: Charles
Schlager, Jr., Esq., Hackensack, NJ, responded on March 30, 1999 to this
proposed new rule. The commenter, who writes on behalf of the Professional
Firefighters Association of New Jersey-IAFF, Atlantic City IAFF Local
198 and Trenton PBA Local 11, opposes the proposed new rule and asserts
that "(1) the Board acted ultra vires to the State statutes in seeking
to change this rule, (2) that the Board's action greatly expanded the
determination reached in the Wilson case, (3) that the Board's action
will have a strong negative economic (impact) upon the covered members
and (4) that the Board's action violates the Doctrines of Laches and Estoppel."
The commenter
concludes that "while we believe that this issue is best left with
the Legislature to revise, repeal or create, should the Board be opposed
to such a course of action, then we would request that the Board modify,
revise or amend this proposed new rule to allow for the grandfathering
of all current contracts which contain contractual provisions which
the Board is now seeking to eliminate, except those provisions which have
been statutorily or legally excluded (e.g. lump sum payments, overtime,
bonuses, and/or employee option inclusions.)" 17:4-4.1 Creditable [salary] compensation [(a) Only a member's base salary shall be subject to pension contributions
and creditable for retirement and death [(b) The board shall reserve the right to question any salary to determine its creditability where it is evident from the record that a salary reported for benefits includes extra compensation.] [(c) Such extra compensation shall not be considered creditable for benefits and all contributions made thereon shall be returned.] [(d) Some of the forms of compensation that have been defined as extra compensation include overtime; bonuses; longevity lump sum payments; individual retroactive salary adjustments or individual adjustments to place a member at the maximum of his or her salary range in the final year of service; increments granted for retirement credit or in recognition of the member's forthcoming retirement or in recognition of the member's years of service in the community.] [(e) All claims involving an increase in compensation of more than 15 percent over that of the previous year, as reported to the retirement system, shall be investigated. Those cases where a violation of the statute is suspect shall be referred to the board.] (a) The compensation of a member subject to pension contributions and creditable for retirement and death benefits in the system shall be limited to base salary, and shall not include extra compensation. 1. "Base
salary" means the annual compensation of a member, in accordance
with established salary policies of the member's employer for all employees
in the same position, or all employees covered by the same collective
bargaining agreement, which is paid in regular, periodic installments
in accordance with the payroll cycle of the employer. i. Overtime; (b) The Board may
question the compensation of any member or retiree to determine its credibility
where there is evidence that compensation reported as base salary may
include extra compensation. 1. May require
that a notarized statement under oath be obtained from the member's
employer that the reported compensation was not granted primarily in
anticipation of retirement, and conforms with the statutes and rules
governing the retirement system; (f) Failure to
satisfactorily respond to a request by the Board for documents or information
related to an increase in compensation may result in the denial of credit
for the increase in compensation. 1. A denial of
credit for the extra compensation; (h) Employer contributions
shall not be revised or refunded because of a determination by the Board
that a denial of credit for increases in compensation is warranted under
this section. POLICE
AND FIREMEN'S RETIREMENT SYSTEM Adopted Repeal and New Rule: N.J.A.C. 17:4-4.1 32 N.J. Reg. 1246(a) Proposed: December 6, 1999 at 31 N.J.R. 3930(a) Adopted: February 28, 2000 Summary of Public Comments and Agency Responses
COMMENT: Mr. Ronald Evans and Msgr. Robert McDermott, representing Camden
Churches Organized for People, commented on November 3, 1999, to the proposed
new rule. The commenters stated that they were concerned regarding the
actions taken by the pension board and how these actions might affect
public safety in Camden. They noted their belief that many of Camden's
most senior officers would retire due to the proposed new rule, thereby
creating a public safety crisis in Camden. Utilizing uniform salaries enables the actuary of the fund to predict with greater precision the amount of monies necessary to fund benefits and to adjust contribution rates in order to maintain the stability and sufficiency of available fund assets. The soundness of the fund is directly related to the certainty and predictability of past transactions from which certain assumptions are derived. Not only can the fund not predict whether an employee will or will not choose to exercise the option to receive longevity payments in his salary shortly before retirement, but a pension calculated on these payments that have been unfunded for a minimum of twenty years can only threaten the actuarial soundness of the fund. Wilson, slip op. at 8-9.
COMMENT: Mr. Schlager's third point in his January 5, 2000 letter was
"that the Board's action will have a strong negative economic [impact]
upon the covered members." After much discussion within the Division and the Board of Trustees, as well as a review of the many comments received regarding the reproposed repeal and new rule, the Board determined that it would be an equitable solution to many of the comments if the grandfather clause in subsection (i) were extended to include contracts signed before January 1, 2000, the first day of the first month after the publication date of the reproposal. The last date to retire under the grandfather clause is extended through December 31, 2001, instead of December 31, 2000. By the time the adoption of this rule is published, members will have a very limited time to decide to retire. This will be a burden to members, as well as to employers who must ensure that they have proper staffing levels to effectively run their departments. The date by which contracts must have been signed on or before is extended from March 1, 1999 to January 1, 2000 because that proposal as written was not timely adopted, and the Board felt that the better course would be to use the first day of the first month after the publication date of the reproposal. Full text of the adoption follows: (a) The compensation of a member subject to pension contributions and creditable for retirement and death benefits in the system shall be limited to base salary, and shall not include extra compensation. 1. "Base
salary" means the annual compensation of a member, in accordance
with established salary policies of the member's employer for all employees
in the same position, or all employees covered by the same collective
bargaining agreement, which is paid in regular, periodic installments
in accordance with the payroll cycle of the employer. i. Overtime; (b) The Board
may question the compensation of any member or retiree to determine
its 1. May require
that a notarized statement under oath be obtained from the member's
employer that the reported compensation was not granted primarily
in anticipation of retirement, and conforms with the statutes and
rules governing the retirement system; (f) Failure to
satisfactorily respond to a request by the Board for documents or information 1. A denial
of credit for the extra compensation; (h) Employer
contributions shall not be revised or refunded because of a determination
by the Board that a denial of credit for increases in compensation is
warranted under this section. TEACHERS'
PENSION AND ANNUITY FUND Proposed Repeal: N.J.A.C. 17:3-6.19 31 N.J. Reg. 4234(a) The agency proposal follows: Summary N.J.A.C. 17:2-6.19
as currently written has more of a punitive than beneficial effect on
Teachers' Pension and Annuity Fund members who are unable to handle their
own affairs. The rule requires that anyone acting on behalf of a member,
other than a legal guardian, must elect the maximum allowance for the
member and name the member's estate as
beneficiary. The maximum allowance ceases at a retiree's death and does
not include a survivor's benefit or any employer contributions. It provides
the highest monthly benefit, but for those who have a short life expectancy,
or are in ill health, a high monthly benefit is usually not as important
as providing for those a retiree may leave behind. Full text of the proposed repeal follows: [17:3-6.19 Maximum allowance prescribed-(Reserved) Where someone, other than a legal guardian, acting in behalf of a member
makes application for a retirement allowance, such individual may not
elect other than the maximum allowance for the member and the member's
estate must be designated as the beneficiary for all death benefits payable
on the member's account.] Please send your comments to: Division of Pensions and Benefits STATE
POLICE RETIREMENT SYSTEM Proposed Amendments: N.J.A.C. 17:5-4.1 and 4.2 Cite as 32 N.J. Reg. 27(a) Summary The proposed amendments to N.J.A.C. 17:5-4.1 would eliminate the requirement that an active member also be on payroll to purchase service. This requirement has resulted in a number of people being placed on payroll for one pay period to be eligible to make a purchase. It makes more sense to allow the member to purchase time without having to return to payroll in order to do so. Payment for purchases by members not on active payroll would have to be by lump sum because they would not be on payrolls from which installment payments could be deducted. Proposed subsection (b) would be added which would state that the Board of Trustees may disallow the purchase of all or a portion of former service it deems dishonorable as provided under N.J.S.A. 43:1-3. The proposed amendments to N.J.A.C. 17:5-4.2 would change "his current salary" to "the member's current salary" and would provide that a portion of the service may be purchased. Clarification that a member may purchase all or a portion of such time would be added. References to the State Police Retirement and Benevolent Fund which ceased existence in 1965 would be deleted. A sentence regarding the value of former membership service not in the State Police Retirement System, that it shall be included in the computation of a retirement allowance on the basis of one percent of final compensation for each year of such service credit, would be added to clarify this section and is in accordance with N.J.S.A. 53:5A-6. "Without pay" would be added to clarify the types of leaves of absence paragraph (a)3 applies to State troopers must request a purchase of a leave of absence within one year of returning from the leave, and language regarding this limitation has been added. The two-month limitation of a leave for personal reasons would be changed to "less than three months" to correspond with N.J.S.A. 53:5A-6. Child care is proposed to be added to this section to clarify that it is classified for purchase by the Division as a leave for personal reasons. The Division may require proof that an illness existed for the length of a leave. This proposed amendment would establish this requirement. Full text of the proposal follows: 17:5-4.1 Eligibility for purchase (a) Only active [contributing] members of the system shall be eligible to make application for purchase of credit. Active members who are not currently contributing to the system must purchase their requested service in a lump sum. (b) The receipt of a public pension or retirement benefit is expressly
conditioned upon the rendering of honorable service by a public officer
or employee. Therefore, the Board of Trustees shall disallow the purchase
of all or a portion of former service it deems to be dishonorable in accordance
with N.J.S.A. 43:1-3. (a) The types of purchases indicated below will be calculated on the basis of the actuarial factor established for the member's age at the time of the purchase times [his] the member's current salary: 1. Former State Police Retirement System membership credit: Service covered by former membership in this system will be included in the computation of retirement benefits in the same manner and value as current service. All or a portion of the service from a former membership [must] may be included in the purchase of such service. 2. Former membership service established in another State-supported retirement system: Such service cannot be used to qualify [former members of the State Police Retirement and Benevolent Fund] for retirement under the minimum service requirements of 20 years at age 50 or "Special Retirement." All or a portion of the service from a former membership [must] may be included in the purchase of such service. This service shall be included in the computation of a retirement allowance on the basis of one percent of final compensation for each year of such service credit. 3. Leaves of absence without pay: A member must request to purchase a leave of absence without pay within one year following the member's return to service. A member may purchase: i. All or a portion of the period of the leave for personal reasons which [does not exceed two months] is less than three months. Child care is considered a leave for personal reasons. ii. All or a portion of the period of the leave up to two years for personal illness [or maternity]. The Division may require proof that the illness existed for the length of the leave. Please send your comments to: Division of Pensions and Benefits STATE
POLICE RETIREMENT SYSTEM Proposed Amendment: N.J.A.C. 17:5-5.5 Cite as 32 N.J. Reg. 28(a) The agency proposal follows: Summary Until recently, if a member retired with an outstanding loan balance, that balance had to either be paid in full at retirement, or the member's entire pension check was withheld until the loan was satisfied. The only way loan repayment at the same amount the member was paying as an active employee could be carried into retirement was if the member retired on a disability retirement allowance or retired on another type of benefit but was ill or disabled. Proof of the disability had to be provided before loan deductions could be carried into retirement. P.L. 1999, c.132 changed the repayment method of outstanding loans at retirement. The new law provides that a member who retires with an outstanding loan will repay the loan through deductions from the retirement benefits payable in the same monthly amount that was deducted from the member's compensation immediately before retirement until the balance of the loan together with the interest is repaid. If the retiree dies before the loan with interest is repaid, the remaining loan balance will be repaid from the proceeds of any other benefits payable on the account of the retiree either in the form of monthly payments due to the beneficiaries or in the form of a lump sum payment from the pension or group life insurance. The proposed amendment will reflect this statutory change. The proposed deletion of N.J.A.C. 17:5-5.5(b) and (c) will eliminate any redundancies from this rule because the proposed amendment will make the repayment option available to all retirees regardless of disability. The proposed amendment
will also provide at N.J.A.C. 17:5-5.5(a)2i that withholdings for State
of New Jersey income taxes are an authorized deduction that will be taken
prior to withholding for a loan. P.L. 1989, c.328 permitted withholdings
for State income taxes from retirement allowances. The Division began
implementing these voluntary State withholdings in 1989 and proposes to
update the rule to reflect this change. (a) Any member who has an outstanding loan balance at the time of retirement shall repay the loan balance, with interest, as follows: 1. In full as provided by N.J.S.A. 53:5A-29; [or] [1. In the manner prescribed in (a) above; or] Please send your comments to: Division of Pensions and Benefits. GENERAL
ADMINISTRATION Proposed Amendment: N.J.A.C. 17:1-4.36 Cite as 32 N.J.R. 170(a) Summary The proposed amendment
to N.J.A.C. 17:1-4.36 is needed to comply with Uniformed Services Employment
and Reemployment Rights Act of 1994 (USERRA), 38 U.S.C. §§ 4301
et seq. which provides that an employee who leaves a civilian employer,
and after serving in the uniformed services, returns to employment with
the employer, is entitled to restoration of certain pension, profit-sharing,
and similar benefits that would have accrued but for the employee's absence
due to qualified military service. (a) A member or former member, or a person required to be a member, of
a State-administered retirement system who leaves employment covered by
a State- administered retirement system to enter [military] the uniformed
services of the United States and returns to covered employment within
the time period and under the circumstances required for entitlement to
reemployment rights under [federal] Federal law (38 U.S.C. [sec. 2021]
§§ 4301 et seq.), may obtain service credit in the State-administered
retirement system [covering the employment after military service] as
provided in this section. i. The person
is not qualified to perform the duties of the position for which reemployment
is sought [or if
the]; 5. The person will not be entitled to service credit in a State- administered
retirement system if reemployment is validly denied. 9. The member may make contributions to the retirement system for all
of the period of [military] service in the uniformed services to obtain
credit in the pension system for inclusion of such service in the calculation
of benefits. The member must file a written request with the Division
so that a schedule of back deductions will be generated. The schedule
of back deductions shall be based upon the [person's current salary and
full percentage contribution rate. The contributions must be authorized
by the person within one year following the date of return to employment
or the date initial pension contributions are certified to begin, or the
expiration date indicated on the quotation letter, whichever is
later.] employee's rate of contribution in effect on the date the employee
returned to employment multiplied by the salary the employee would have
received but for the period of service; or, if the determination of such
salary is not reasonably certain, on the basis of the employee's average
rate of compensation during the 10 or 12-month period immediately preceding
such service for the period of time in which no credit was received in
the system for that service. Any payment to the plan described in this
paragraph shall begin as soon as practicable after the date of reemployment
and shall continue for the lesser of five years or three times the period
of the uniformed service. If the member does not request in writing back
deductions at the time of return to employment, the member may request
to receive credit for such service until the expiration of either five
years or three times the period of the uniformed service, whichever is
shorter. Repayment still must be made in the above referenced time frame. [i. The retirement system of which the person is a member, or was a member
in the case of a retired person; or] i. An employee
reemployed under this paragraph who is a member of the defined contribution
plan shall be entitled to the above accrued benefits only to the extent
that the person makes payments to the plan with respect to such employee
contributions. (1) The rate the employee would have received but for the period of service; or (2) If the determination of such rate is not reasonably certain, on the basis of the employee's average rate of compensation during the 10 or 12-month period immediately preceding such service. iii. Make-up contributions
shall begin on the date of reemployment and shall continue for five years
or three times the period of uniformed service, whichever is shorter. Please send your comments to: Division of Pensions and Benefits. JUDICIAL RETIREMENT
SYSTEM Adopted New Rules: N.J.A.C. 17:10-4.10 and 5.12 Cite as 32 N.J.R. 2602(a) Adopted July 17, 2000 The agency proposal follows: Summary P.L. 1997, c.25, N.J.S.A. 43:6A-34.3 permits members of the Judicial Retirement System to borrow from the retirement system if they have at least three years of service credit. Proposed new rule N.J.A.C. 17:10-4.10 would establish procedures for the application of this statute. Until recently, if a member retired with an outstanding loan balance, that balance had to either be paid in full at retirement, or the member's entire pension check was withheld until the loan was satisfied. The only way loan repayment at the same amount the member was paying as an active employee could be carried into retirement was if the member retired on a disability retirement allowance or retired on another type of benefit but was ill or disabled. Proof of the disability had to be provided before loan deductions could be carried into retirement. P.L. 1999, c.132, amending N.J.S.A. 43:6A-34.4, changed the repayment method of outstanding loans at retirement. The new law provides that a member who retires with an outstanding loan will repay the loan through deductions from the retirement benefits payable in the same monthly amount that was deducted from the member's compensation immediately before retirement until the balance of the loan together with the interest is repaid. If the retiree dies before the loan with interest is repaid, the remaining loan balance will be repaid from the proceeds of any other benefits payable on the account of the retiree either in the form of monthly payments due to the beneficiaries or in the form of a lump sum payment from the pension or group life insurance. Proposed new rule N.J.A.C. 17:10-5.12 would reflect this statutory change. Proposed new rule
N.J.A.C. 17:10-5.12(a)2i provides that withholding for authorized deductions
include Federal tax liens, health benefit premiums, and Federal and State
income tax withholding. State health benefit premiums, Federal tax liens
and withholding have been allowable deductions from retirement allowances
for many years. P.L. 1989, c.328 permits withholding for State income
taxes from retirement allowances and the Division began implementing voluntary
State withholding in 1989. Only active contributing members of the System may exercise the privilege
of obtaining a loan and the maximum loan shall be 50 percent of the accumulated
deductions posted to the member's account. (a) Any member who has an outstanding loan balance at the time of retirement shall repay the loan balance, with interest, as follows: 1. In full
as provided by N.J.S.A. 43:6A-34.4; i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding; or 3. By deductions from retirement benefit payments of the same monthly amount deducted from the member'scompensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by N.J.S.A. 43:6A-34.4. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement. (b) If a retirant dies before the loan balance, with interest, is repaid, the remaining balance shall be paid first from the pension system group life insurance proceeds, and then from the proceeds of any returned contributions payable on account of the retirant to the beneficiary or estate and then from the proceeds of any other benefits payable on account of the retirant in the form of monthly payments that are due to the beneficiaries or the estate. If multiple beneficiaries are to receive these benefits, each beneficiary shall share in repaying the remaining balance in the same proportion in which they are entitled to the benefits. Please send your comments to: Division of Pensions and Benefits. PUBLIC
EMPLOYEES' RETIREMENT SYSTEM Adopted New Rule: N.J.A.C. 17:2-2.8 Cite as 32 N.J.R. 1415(a) The agency proposal follows: Summary Although full-time employees hired provisionally or on a temporary basis
are required to enroll in the Public Employees' Retirement System (PERS)
after the completion of one year of service, employees serving on a temporary
or provisional basis in a Police and Firemen's Retirement System (PFRS)
covered position have not been enrolled in the PERS. Without pension membership,
there are no death benefits or disability benefit available to an employee.
Also, if an employee does become eligible for membership in the PFRS,
the employee must purchase the earlier service at PFRS rates that are
much higher than PERS contribution rates. 1. For employees
whose employers report on a monthly basis, the compulsory enrollment
date shall be the first of the month following the end of the one-year
(12-month) period. (b) Once appointed
to a permanent PFRS title, the employee shall be required to enroll in
the PFRS if all other eligibility requirements are met. The employee shall
have the option of interfund transferring the PERS service into the PFRS. 1. State and
county employees holding provisional or temporary PFRS titles who cannot
meet the maximum age requirement for membership in the PFRS (age 35)
shall remain in the PERS after attaining permanent appointments. (d) Any full-time
employee hired provisionally or on a temporary basis in an eligible PFRS
title prior to (the effective date of this rule) who will be eligible
for enrollment into the PFRS upon the attainment of permanent status and
who has worked for 12 or more months must be enrolled in the PERS with
an enrollment date of (the first of the month following the effective
date of this rule). Once enrolled, a member may purchase any provisional
or temporary service with the same employer which led to enrollment in
the PERS. PUBLIC
EMPLOYEES' RETIREMENT SYSTEM Cite as 32 N.J.R. 2257(a) [PERS] Cite as 32 N.J. Reg. 2110(a) [TPAF] Adopted Amendment N.J.A.C. 17:2-6.13 and 17:3-6.13 Adopted: May 8, 2000 by the Teachers' Pension and Annuity Fund Board of
Trustees. Adopted: June 19, 2000 by the Public Employees' Retirement System Board
of Trustees. Summary The proposed amendment
is necessary to comply with a recent decision of the New Jersey Superior
Court, Appellate Division. New Jersey Education Association v. Board of
Trustees, Public Employees' Retirement System and Board of Trustees, Teachers'
Pension and Annuity Fund, 327 N.J. Super. 326 (App. Div. 2000). In that
decision, the court determined that the rule as written exceeds the legislative
requirements and that "the Board's well-intended efforts to expand
the reach of the Statute are better addressed to the Legislature."
Id. at 333-334. The court ruled that to the extent that the rule requires
a physical examination for disabled retirees after five years or over
the normal retirement age of 60, it is invalid. Id. (a) All disability retirants under the normal retirement age of 60 may be required to undergo a medical examination each year for [at least] a maximum period of five years [or for good cause thereafter] by a physician designated by the System as of the anniversary date of their retirement, unless such examination requirement has been waived by the Board. [Good cause means the receipt by the Board of creditable information that a member who is receiving a disability retirement allowance is no longer disabled.] (b) (No change.) Cite as 32 N.J. Reg. 2110(a) Please send your comments to: Division of Pensions and Benefits. STATE
HEALTH BENEFITS PROGRAM Adopted New Rule: N.J.A.C. 17:9-6.10 31 N.J. Reg. 1048(a) The agency proposal follows: Summary The purpose of
this proposed new rule is to establish as a pilot program for five years
a retiree prescription drug card plan to provide for payment of eligible
prescription drug expenses of retirees and eligible dependents who participate
in the Traditional Plan or the State managed care plan (NJ PLUS) under
the State Health Benefits Program (SHBP). Eligible prescription drug expenses
for these retirees and eligible dependents and the co-payments required
under the card plan will not be eligible for submission and payment under
the major medical portion of the Traditional Plan and NJ PLUS for the
duration of the pilot program. At present, 78
percent of Traditional Plan participants do not reach their out-of-pocket
maximums for the year. These individuals, after satisfying the $100.00
major medical deductible for the year, pay coinsurance of 20 percent for
their prescriptions. For most Medicare eligible retirees, the combination
of $100.00 deductible and 20 percent coinsurance equates to a 29 percent
cost- sharing for prescription costs under the present arrangement.
The annual out-of-pocket expense of retirees and eligible dependents for
prescription drugs will be limited under the card plan. The initial limit
for calendar years 2000 and 2001 will be $300.00. Thereafter, the maximum
annual out-of-pocket expense will increase generally at the same rate as
prescription drug expenses paid by the plan per
member. For calendar years 2002 and 2003, the rate of increase in the maximum
out-of-pocket expense will be limited to 15 percent. If the actual rate
of increase in prescription drug expenses per member increases by 15 percent
or more for calendar years 2002 and 2003, the maximum out-of-pocket expense
for these years would be $345.00 and $397.00, respectively. Summary of Public Comments and Agency Responses: Of the more than 80,000 retired participants of the Traditional and NJ PLUS plans in the State Health Benefits Program who were notified of these proposed changes, the agency received 76 public comments on this proposal from the following people: 1. William Ansbro, Valrico, FL COMMENT: Many people commented that the proposed plan actually would increase their costs for prescription drugs. Mr. Maurice Frank comments that, "It becomes obvious to me that my costs are increasing and not decreasing." Mr. Sidney Bey adds that, "the new NJ prescription plan will not save me any money." Many commenters stated that the new plan would cost them more in prescription costs and that the only savings they could see were for the carrier and the drug companies. RESPONSE: Under the existing rules, 78 percent of Traditional Plan participants
do not reach their out-of-pocket maximums for the year. These individuals,
after satisfying the $100.00 major medical deductible for the year, pay
a net co-insurance of 20
percent for their prescriptions after reimbursement. For these retirees,
the combination of $100.00 major medical deductible and 20 percent co-insurance
equates to a more than 20 percent cost sharing for prescription costs.
These individuals will have a lower cost share under the new rule. Further,
the cost of all prescriptions must be deducted from each member's lifetime
$1,000 major medical maximum or the mental health maximum for conditions
that are not biologically based. While few retirees exceed these maximums
at present, these limitations will become more restrictive over time as
costs rise. By eliminating prescription drug coverage from the medical
plan and providing coverage through a separate plan, the major medical
plan limitations will not apply to drug costs, thus allowing retirees
to maximize their medical benefits. COMMENT: Robert Pursell, NJ Area Director of the CWA, comments that the
proposed pilot program is "promising in many regards and in the near
term will benefit the majority of retirees. The elimination of the need
to pay prescription drug costs and then wait for reimbursement is an administrative
benefit to the plan and to retirees." The commenter expresses his
concern that future increases in co-payments and the total out-of-pocket
expenses will be greater than increases in retiree income. He suggests
that increases to these expenses be limited to the cost of living formula
applied to public employee pensions (60 percent of the change in the cost
of living from retirement date to present). The NJEA also suggests this
formula. COMMENT: Mr. William Cost commented that "Our pharmacist is important
to us." Ms. Nancy Kolyer adds that she has "a very strong objection
to the insurance plan telling me what drugs--generic or original--I can
use and telling me where I have to buy them to receive the benefits for
which I pay." Ms. Mildred Neylon comments that, "I am upset
that I will no longer be able to patronize my local pharmacy." Frank
Pelly, R.PH, Director of Government Affairs of the NJ Pharmacists Association,
comments that his organization
opposes many of the provisions in the proposed new rule. He states that
the proposed new rule "effectively 'directs' retirees away from community
pharmacies into distant 'mail order' health care environments which provides
no direct contact with a NJ registered pharmacist." He adds that,
"Access to quality pharmaceutical care will be greatly compromised,
with retirees who often have extremely comprehensive prescription
requirements being without the direct professional advice and counsel
of a NJ registered pharmacist." COMMENT: Mr. Harvey Halberstadter comments "to now find that I can
only obtain a thirty-day supply of these medications from a local pharmacist
is creating a burden." Ms. Lorena J. Linhares adds that, "Remaining
on thirty-day prescriptions would
raise the cost immensely." Many commenters asked why they couldn't
continue to receive a 90-day supply from their pharmacist. COMMENT: Mr. Harvey Halberstadter urges the Commission to make arrangements
with other drug companies other than Merck Medco. Mr. Charles Hibbard
expressed concerns regarding the danger of overheating or freezing during
shipment of the mail
order prescriptions. Another commenter adds that requiring the physician
to fax the prescription to the mail order company is not realistic and
that the patient should be allowed to fax or mail the prescription as
AARP allows. Mr. Rolin Gaessle comments that, "our local druggist
checks any new prescription to see if it is compatible with the present
drugs we are on. Will the mail order company do this?" He also suggests
that a 90-day supply from the druggist would fix this problem. Mr. George
Schwartz comments that "this is a backdoor way to coerce people into
the netherland of mail order." He adds, "I do
not want a mail-order house handling my medications. Nor do I want to
deal with the delays inherent with mail, and the accompanying inability
to deal promptly with any problems that might arise." Merck Medco likely would undertake the same verification process if it
accepted faxed prescriptions directly from retirees. Requiring physicians
to fax prescriptions directly to Merck Medco eliminates the verification
step and any delays thereto attendant. At this time, the adopted pilot
program allows prescriptions to be either faxed by physicians or mailed
by patients to Merck Medco. The Commission invites retirees to write to
the Commission and indicate their interest in being able to fax their
prescriptions themselves. If retirees indicate widespread interest in
being able to fax their prescriptions themselves, the Commission will
revisit its position at a future Commission meeting. COMMENT: NJREA President Ruth Palmer comments that, "retirees will
no longer be able to submit prescription drug expenses to major medical
to satisfy deductibles and co-insurance requirements. This change will
increase a retiree's out-of-pocket non-prescription drug medical expenses
under major medical, potentially offsetting any savings under the new
prescription drug card." Mr. William Clark adds that, "nothing
indicates that the applicable bargaining units agreed to elimination of
prescription drugs from major medical benefits." COMMENT: Mr. Richard Summers asks, "what compensation does a couple
who previously coordinated benefits get relative to thenew prescription
plan?" He suggests allowing those who previously coordinated benefits
to pay the lowest co-payment available. Mr. Andrew Kistulentz comments
that "the terms and conditions regarding health benefits once described
to retirees should not be changed if the changes adversely affect them."
He concludes, "my wife and I would not mind the new system at all
if
you would let us coordinate the benefits we have earned." COMMENT: Ms. Eileen Phelan recommends that "retirees be given a choice
as to which type of prescription plan they want, either reimbursement
through major medical, or co-payments." Mr. Rolin Gaessle also recommends
that retirees be given a choice. COMMENT: Mr. David Hendrickson expresses his displeasure that these changes
were made after he had understood that he would get free coverage after
25 years of service. Ms. Eileen Phelan requests that no other changes
be made and that "nothing further
be done to chip away at the health benefits of New Jersey's retirees." Full text of the proposed new rule follows: 17:9-6.10 Retiree prescription drug card plan (a) The following terms, as used in this section, shall have the following meanings: "Brand
name" means the proprietary or trade name assigned to a drug
product by the manufacturer or distributor of the drug product. (b) As a pilot
program for five years (from (the effective date of this rule) to (five
years from the effective date of this rule)), payment for eligible prescription
drug expenses of retired members of the State Health Benefits Program
and their eligible dependents who participate in the Traditional Plan
or NJ PLUS shall be provided under the prescription
drug card plan. Payment for prescription drug expenses or the co-payments
required under the card plan shall not be made under the major medical
portion of the Traditional Plan or NJ PLUS. There shall be no annual
deductible amount that retired members or their eligible dependents
shall satisfy before eligibility for payment of prescription drug expenses
under the card plan.
(e) The supply of a drug product eligible for coverage under the card plan for each prescription drug expense shall be limited to 30 days if the prescription is filled at a retail pharmacy, and 90 days if the prescription is filled through the mail-order pharmacy.
(f) The co-payment amounts under (d) above shall be reviewed annually
and shall be increased by the rate of increase of the average wholesale
price for a one-day supply of prescription drug products covered under
the card plan for the immediately preceding fiscal year over the second
preceding fiscal year rounded to the nearest whole dollar. The basis for
determining an increase in the amounts of co-payments from year to year
from the initial amounts shall be the actual results of the calculations
to determine the increased amounts, and not the rounded amounts of co-payments
applicable for any year or years. The co-payments shall be reviewed initially
for calendar year 2002. Since there will not be a full fiscal year of
experience for fiscal year 2000 under the card plan, the experience for
fiscal year 2000 shall be annualized on an actuarial basis. The rate of
increase in the co-payment amounts for calendar years 2002 and 2003 shall
not exceed seven percent. 1. To limit
excessive annual increases which are significantly higher than the
trends for the increases over the preceding five years; Cite as 31 N.J.R. 1048(a)
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