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Pensions and Benefits
RULE CHANGES
2008
Proposed Rules Public Notices Adoptions

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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. N.J.A.C. refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

View the New Jersey Register and New Jersey Administrative Code online.

Proposed changes are either in bold print or are underlined. Deletions are bracketed [so].


Public Notices

There are no Public Notices for 2008 at this time.


Proposed Rules

Proposed Readoption: N.J.A.C. 17:1-1 through 15 (General Administration)

Proposed Readoption: N.J.A.C. 17:10 (Judicial Retirement System)

Proposed Amendment: N.J.A.C. 17:9-6.10 (State Health Benefits Commission)

Proposed Amendments N.J.A.C. 17:4-2.1, 2.2, and 2.6 and 5.3,  with proposed new rule N.J.A.C. 17:4-2.4 (PFRS)

Proposed Amendment N.J.A.C. 17:2-2.8 (PERS)


Adoptions

Adopted New Rule: N.J.A.C. 17:9-13 - CHAPTER 375 DEPENDENTS; Cite as 40 N.J.R. 2130(a) (SHBP) - April 21, 2008.

Adopted New Rule: N.J.A.C. 17:3 - NEW RULES TO REPLACE EXPIRED RULES THAT DEAL WITH THE ADMINISTRATION, ENROLLMENT, INSURANCE AND DEATH BENEFITS, MEMBERSHIP, PURCHASES, ELIGIBLE SERVICE, RETIREMENT, AND TRANSFER ASPECTS ASSOCIATED WITH THE TPAF; Cite as 40 N.J.R. 2122(a) (TPAF) - April 21, 2008.

Adopted New Rule: N.J.A.C. 17:9-5.3 - SHBP LOCAL EMPLOYER PAYMENT OF CHARGES; Cite as 40 N.J.R. 3747(B) (SHBP) - June 16, 2008.

Adopted New Rule: N.J.A.C. 17:1-16 - IMPLEMENTATION OF STATE EARLY RETIREMENT INCENTIVE PROGRAM; Cite as 40 N.J.R. 4625(a) - July 11, 2008.

Adopted Amendment: N.J.A.C. 17:9-6.10 - RETIREE PRESCRIPTION DRUG PROGRAM; Cite as 40 N.J.R. 6651(a) - November 17, 2008.

Adopted Amendment: N.J.A.C 17:4-2.1, 2.2, 2.6 and 5.3; Adopted New Rule: N.J.A.C 17:4-2.4 - TRAINING REQUIREMENTS FOR PFRS ELIGIBILITY AND ENROLLMENT; Cite as 40 N.J.R. 6991(b) (PFRS) - December 15, 2008  

Adopted Amendment: N.J.A.C 17:2-2.8 - ENROLLMENT ELIGIBILITY OF PROVISIONAL OR TEMPORARY EMPLOYEES OCCUPYING FULL-TIME POLICE AND FIRE TITLES; Cite as 40 N.J.R. 6991(a) (PERS) - December 15, 2008.

Readoption with Amendments: N.J.A.C 17:1-1 though 15 - GENERAL ADMINISTRATION; Cite as 41 N.J.R. 277(a) - December 10, 2008, Readoption; January 5, 2009, Amendments, Repeals, and New Rules. 

Readoption: N.J.A.C. 17:10 - JUDICIAL RETIREMENT SYSTEM; Cite as 41 N.J.R. 624(a) - December 17, 2008.

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PROPOSED RULES


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 4928(a)

Proposed Readoption with Amendments: N.J.A.C. 17:1-1 through 15

Proposed New Rules: N.J.A.C. 17:1-1.1A, 1.13, 2.17, 5.5, 5.6, 5.8, 6.3 and 15

Proposed Repeals and New Rules: N.J.A.C. 17:1-2.11, 7.1 and 14.6

General Administration

Authorized by: Frederick J. Beaver, Director, Division of Pensions and Benefits.

Authority: N.J.S.A. 52:18A-96 et seq. and 52:14-15.1a (P.L. 1996, c. 8).

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2008-294.

Submit comments by November 1, 2008 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295.

The agency proposal follows:

Summary

The Division is responsible for reviewing N.J.A.C. 17:1, General Administration. When the Division becomes aware of a change in the laws or of a court decision that possibly could affect the operations of the retirement systems, 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's staff to determine if the current rules are necessary and/or cost efficient. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66 (1978), the chapter was readopted in 1983. Pursuant to Executive Order No. 66, Chapter 1 expired on May 6, 1993 and was adopted as new rules effective August 2, 1993. Chapter 1 was readopted in 1998 and proposed repeal and new rules were adopted in 2003.

In early 2008, the Division began a thorough review of Chapter 1, which included input from all levels of Division personnel. After careful scrutiny of the current rules in N.J.A.C. 17:1, the Division proposes to amend several of the existing rules so that these rules could be promulgated to reflect the current operating procedures and policies within the State-administered retirement systems. Some minor changes are proposed throughout the rules, such as the deletion of the Division's full name to establish consistency and conformity in the language.

The rules proposed for readoption with amendments, new rules and repeals by the Division of Pensions and Benefits (Division) expire on January 31, 2009, pursuant to N.J.S.A. 52:14B-5.1c. The rules as proposed with amendments, new rules and repeals address all the administrative practices that generally apply to the retirement systems and benefit plans that are administered by the Division.

N.J.A.C. 17:1, Administrative Practices, addresses the responsibilities of the Division Director and the various administrative functions of the State pension funds and benefit programs.

N.J.A.C. 17:1-2, Accounting, addresses employer remittances, deductions and financial reporting.

N.J.A.C. 17:1-3, Enrollments, Membership, Transfers and Withdrawals, addresses the administrative practices of enrolling members, the transfer of member accounts when members transfer to a new employer location and the withdrawal of member accounts when there is a termination of all covered employment.

N.J.A.C. 17:1-4, Purchases and Eligible Service, addresses the eligibility of purchasing service credit.

N.J.A.C. 17:1-5, Insurance and Death Benefits, refers to group life insurance and pension benefits.

N.J.A.C. 17:1-6, Honorable Service, refers to the receipt of a public pension, which is expressly conditioned upon the rendering of honorable service by a public officer or employee.

N.J.A.C. 17:1-7, Retirements, addresses administrative practices pertaining to the processing of retirement applications, including computation of salary for benefit purposes, disability retirement processing, and employer verification of the termination of an employee's employment.

N.J.A.C. 17:1-8, Pension Adjustment Program, addresses employer payment for multiple enrollees, employer payments for delinquencies, return to employment, and the calculation of the cost-of living-adjustment.

N.J.A.C. 17:1-9, Unemployment Insurance, addresses the due dates for contributions and reports, employer responsibility, employer verification of claim payments, employee eligibility for coverage, termination of employment and designated contractor.

N.J.A.C. 17:1-10, Social Security, pertains to the social security referendum process whereby members of certain other public retirement system may be transferred to the PERS, pursuant to the provisions of P.L. 1956, c. 169 and P.L. 1980, c. 86, and details the Federal-State Agreement.

N.J.A.C. 17:1-11, Volunteer Emergency-Workers Survivors Pension, details the procedures for the administration of benefits payable to survivors of certain volunteer emergency workers who die in the performance of such duty (P.L. 2002, c. 134).

N.J.A.C. 17:1-12, Central Pension Fund, establishes procedures for the small number of individuals eligible for benefits under the Veteran's Retirement Act, N.J.S.A. 43:4-1 et seq., or the Heath Act, N.J.S.A. 43:5-1 et seq.

N.J.A.C. 17:1-13, New Jersey State Employees Tax Savings Program (Tax$ave), establishes procedures pertaining to a benefit program available under Section 125 of the Federal Internal Revenue Code, which allows eligible employees to set aside before-tax dollars to pay for certain medical, dental, and dependent care expenses.

N.J.A.C. 17:1-14, New Jersey State Employees Commuter Tax Saving Program (Commuter Tax$ ave Program) pertains to a benefit program authorized by P.L. 2001, c. 162, and available under Section 132(f) of the Federal Internal Revenue Code, which allows eligible employees to set aside before-tax dollars to pay for certain mass transit and commuter parking expenses.

N.J.A.C. 17:1-15 is reserved.

N.J.A.C. 17:1-16 pertains to the special adopted new rules filed with the Office of Administrative Law on July 11, 2008 and promulgated by the Director of the Division in compliance with the provisions of P.L. 2008, c. 21. These rules concern the implementation of the Early Retirement Incentive program offered to eligible employees of the Executive Branch and Judicial Branch of State government. In keeping with the provisions of P.L. 2008, c. 21, the special adopted new rules at N.J.A.C. 17:1-16 are scheduled to expire on March 21, 2009, 270 days after the date of enactment of the legislation; N.J.A.C. 17:1-16 is not a part of this readoption.

At N.J.A.C. 17:1-1.1, Description of the Division of Pensions and Benefits, the Division proposes to refer to the Division of Pensions and Benefits as the "Division" throughout the chapter. Subsection (c) is amended to include 10 separate pension systems as a result of the enactment of N.J.S.A. 43:15C-1 et seq., creating the Defined Contribution Retirement Program (DCRP). Subsection (d) is amended to include the School Employees' Health Benefits Program (SEHBP) created by the enactment of N.J.S.A. 52:14-17.46 et seq. The SEHBP also established the School Employees' Health Benefits Commission to oversee the administration of the plan. As a result of the enactment of these statutes, the Division proposes an amendment to recodify the paragraphs of subsection (f), so that retirement system boards and commissions are listed first, followed by the health benefits commissions, supplemental compensation programs and concluding with all remaining boards and commissions. The word "State" is added to Investment Council to provide further clarity. In addition, language was added in subsection (g) to clarify the role of the Director of the Division and to reflect the additional duties as Secretary to the new health benefits commission.

The Division proposes new N.J.A.C. 17:1-1.1A, Election of Representative to the State Investment Council, to establish the procedure for the Board of Trustees of the Public Employees' Retirement System (PERS), the Board of Trustees of the State Police Retirement System (SPRS), the Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) and the Board of Trustees of the Police and Firemen's Retirement System (PFRS) of New Jersey to elect either an active or retired member of the retirement system to the State Investment Council for a three-year term. N.J.S.A. 52:18A-83 was enacted, which supersedes N.J.S.A. 43:15A-32, 53:5A-31, 18A:66-61 and 43:16A-14. Prior to the change in the law, statutes existed, which set forth the requirements for the boards of trustees of the State-administered retirement systems of the PERS, SPRS, TPAF and PFRS to each elect a member from their respective boards, by a majority vote, to serve on the State Investment Council for a term of one year. The changes in the law increase the term of office from one year to three years and expand the population of candidates eligible to serve as representative to include all active and retired members of the system. These changes have required the Division to establish a process for the respective Boards to notify the increased pool of candidates of their eligibility and, thereafter, elect a representative. As the modifications to the law applied to the PERS, SPRS, TPAF and PFRS, this new section is added to ensure that all the Board of Trustees comply with the governing legislation.

N.J.A.C. 17:1-1.2, Records, is amended at subsection (a) to clarify the Division's procedure when requesting benefit program records. The request must be submitted to the Treasury Government Records Unit to ensure compliance with the Open Public Records Act. Subsection (b) is amended to include Social Security numbers and pension membership numbers as protected health information as defined by the Federal Health Insurance Portability and Accountability Act (HIPAA) of 1996. Also, reference to N.J.A.C. 17:44-2 has been removed and updated with N.J.S.A. 47:1A-10, which is the statutory requirement for records considered confidential. Subsection (c) is amended to clarify that the boards of trustee must render their initial determination first, before any medical reports are released to the member or authorized persons. This amendment will provide conformity and consistency with N.J.A.C. 17:2-1.6(d), 17:3-1.6(d) and 17:4-1.6(d). Subsection (d) is updated to include N.J.S.A. 47:1A-5, with regard to charges for copies of pension records. Subsection (e) references the Department of Treasury's compliance with the Open Public Records Act.

N.J.A.C. 17:1-1.3, Hearing request, is amended at subsection (a) to clarify that the applicant will receive written notice of any decision made by the Division, Board or Commission, and also includes the appeal process available. The parenthesis around (Commission) has been removed throughout this section. The Division proposes to recodify the paragraphs in subsection (d) as subsections, (e), (f), (g) and (h) and provide procedural clarity in these subsections by referencing the Division and Division Director for those programs that do not have the oversight of boards or commissions.

N.J.A.C. 17:1-1.5, Annual statements; retirement system, is amended at subsections (a) and (b) to list the various State-administered retirement systems statements mailing schedules. This proposed amendment will clarify the Division's mailing procedure since there are various mailing schedules. Subsection (d) has been added to clarify the employer's responsibility to direct all statements to the appropriate party when a disputed address is involved since the Division does not store employee addresses.

N.J.A.C. 17:1-1.6, Annual statements; supplemental annuity, is amended to "Quarterly statements; supplemental annuity," since the statements of members' accounts are mailed quarterly to participants of the Supplemental Annuity Collective Trust (SACT).

At N.J.A.C. 17:1-1.7, Endorsements, an amendment is proposed to clarify the role of the power of attorney regarding the endorsements of checks, making application for retirement and designate beneficiaries. Since there are various power of attorney forms, the Division requires that the power of attorney form must be specific to the authority granted by the power of attorney on behalf of the member. Subsection (b) is amended to delete reference to both the Department of Human Services, as well as reference to N.J.S.A. 30:4-67.1. Subsection (b) deals with the continued receipt of a pension when the member is confined to a State institution as a result of being declared mentally or physically incompetent and a legal guardian, conservator or committee is required. The statute cited refers to the deposit and maintenance of funds of inmates; use of pension payments, whereas the payment of a retirement check would cease if a retiree is confined to a penal institution and does not apply to the an incompetent. Further the use of the reference to Department of Human Services was not necessary as confinement to a State institution after being declared incompetent is sufficient.

At N.J.A.C. 17:1-1.8, Priorities, an amendment is proposed to recodify the priority of monthly deductions from the retirement allowance. Federal regulations require the Division to deduct Internal Revenue Service tax levy first. The loan deduction is moved in priority since Federal regulations require pension plans to treat outstanding loans as a distribution if not repaid on a timely basis. The Dental Plan deduction is added as a result of the establishment of the Retiree Dental Expense Plan under the provisions of N.J.S.A. 52:14-17.29(f), which became effective January 1, 2005.

N.J.A.C. 17:1-1.9, Bankruptcy; subsequent loans, is amended to remove text in subsection (b) since the reinstatement of loan deductions after a bankruptcy action is dismissed is detailed in subsection (c).

Proposed new rule N.J.A.C. 17:1-1.13, Suspension of pension checks, is added to further clarify the basis for the practice of suspending pension checks in cases where there are charges and the member is collecting a benefit. A Member collecting a retirement benefit will have his or her pension check suspended if he or she retires on a disability retirement and fails to appear for a required medical examination scheduled by the Division; becomes mentally or physically incompetent and does not file for proper legal representation; pending the outcome of administrative or criminal charges; fails to cash three consecutive months of pension checks; or in the event of incarceration.

N.J.A.C. 17:1-2.2, Remittance; limitation, is amended to remove the word transmittal from existing text since remittances represent pension contributions, contributory insurance, loan payments, arrears and back deduction payment submitted to the Division.

At N.J.A.C. 17:1-2.3, Due dates for transmittals and reports, the Division proposes to remove the word transmittals and replace it with remittances. Subsection (a) amends the transfer of funds to the seventh day of the month in order to post these monies earlier to the various systems. Subsections (b) and (c) are amended to clarify remittance schedules to investment providers for the county and State colleges and universities no later than five business days from the corresponding payroll date. Subsection (d) amends the quarterly reports, including remittance for the third month of the calendar quarter, for the Public Employees' Retirement System, Teachers' Pension and Annuity Fund, and the Police and Firemen's Retirement System are due in the Division by the seventh day of the month. Subsection (f) amends the monthly remittances for the State Health Benefits Program, which are due the 15th of the month as indicated on the invoice. Reporting agencies will be considered in default if premiums are not paid on or before the date.

At N.J.A.C. 17:1-2.4, Delinquent notices, the Division proposes to remove the word transmittal and replace with remittances to be consistent with the various retirement system rules.

At N.J.A.C. 17:1-2.5, Interest charges; delinquent transmittals; report of contributions, the heading is amended to replace the word transmittals with remittance. The Division shall impose a penalty when the remittances are submitted without the report of contributions to ensure timely receipt of these reports. No interest will be assessed for charges less than $ 10.00.

At N.J.A.C. 17:1-2.10, Minimum adjustments, the heading is amended to include "repayment schedules," to further clarify the content of the subsection. Subsection (a) is amended to specifically address the reconciliation of member accounts upon death, which was last increased in 1985 to $ 10.00. The increase to $ 50.00 as the threshold amount, before either refunds or additional contributions will be required concerning a member's loan and arrearages balances, reflects recognition of the increases in employee salaries that have occurred over the period and the administrative cost of making such minor adjustments.

Paragraph (d)2 is amended to clarify that regular interest applies in the event the retiree elects a repayment schedule and that such interest is defined in the respective retirement systems statutes. No interest is charged if the member makes payment in a single lump sum in a timely manner. The Division seeks to limit the maximum schedule of repayment that may be administratively determined by staff to five years and require retiree requests for repayment schedules in excess of five years to be referred to the respective Board or Commission for consideration. Further, as a condition of establishing a repayment schedule, the Division will automatically put a hold on the distribution of the member's Group Life Insurance until the obligation is satisfied. Prior to August 2003, the regulation limited repayment schedules determined by Division staff to a period not to exceed 12 months and required all other schedules to be referred to the Board of Trustees. In August 2003, the regulation was amended to permit repayment schedules to be determined by Division staff for a period of up to 10 years. The 10-year repayment schedule for retired members has proven to be excessive in many instances, and has limited the retirement systems' ability to recoup required payments. Such schedules should therefore be an exception, based upon dire financial need as determined by the Board or Commission, rather than the standard.

In subsections (e) and (f), the Division proposes to increase the minimum adjustment threshold for audit differences in the quarterly and annual reporting of members pension contributions or contributory life insurance premiums, which have not been increased for 25 years. The Division, therefore, proposes to increase these thresholds from $ 2.00 to $ 5.00 or less for quarterly reporting and from $ 8.00 to $ 20.00 for annual reporting.

N.J.A.C. 17:1-2.11, Reports of salary changes, is proposed for repeal and replaced with a new section, which informs an employer where to obtain the report from.

N.J.A.C. 17:1-2.13, Administrative expenses; proration among systems, "proration" is amended in the heading to "prorated."

The Division proposes new N.J.A.C. 17:1-2.17, Report of contributions reporting media, to include that the report of contributions will be prepared and submitted to the pension fund administrator through secure electronic data submission provided through the State of New Jersey.

At N.J.A.C. 17:1-3.1, Compulsory enrollments; failure to enroll, the Division proposes to recodify the subsections. The language in subsection (a) has been deleted since it is not clear that when a member is eligible to enroll in a retirement system an enrollment form must be completed by the employee. The text in subsection (a) is replaced with language from subsection (b) to clarify that if an employee fails to file an enrollment application even though the employee and employer have been advised of the compulsory nature of the enrollment, the certifying officer is obligated to complete the employee section of the enrollment application. The member's estate automatically becomes the beneficiary until the employee completes a Designation of Beneficiary form. Subsection (c) is deleted and subsections (d) and (e) are recodified as subsections (b) and (c), respectively.

At N.J.A.C. 17:1-3.3, Enrollment schedules, the Division proposes to amend text to clarify the Division's long-standing administrative practice that an employee appointed after the seventh day of the pay period will be enrolled the next pay period and after the 16th day of a month will be enrolled as of the first of the following month. This change is consistent with similar language found in PERS at N.J.A.C. 17:2-2.4(e) and TPAF at N.J.A.C. 17:3-2.8(d).

N.J.A.C. 17:1-3.9, Waiver of retirement benefits upon withdrawal, is amended to clarify that the member will be instructed by the Division how to obtain an estimate of retirement benefits.

N.J.A.C. 17:1-3.10, Peacetime military service; service credit, is amended in subsection (b) to remove the last clause and clarify that the member's peacetime military service only gives the rights for vesting, retirement and health benefits eligibility; it does not give members any pension service credit for benefit calculation purposes.

N.J.A.C. 17:1-4.2, Purchase terms; grace period, is amended to include the word "service" credit, since employees have the opportunity to purchase additional service and have the time credited to their member accounts.

At N.J.A.C. 17:1-4.3, Final compensation; salaries to be used for a period of purchased service, the heading is amended to add the word "credit."

N.J.A.C. 17:14.4, Purchase of service credit; continuation of death benefits coverage; maternity leaves of absence, is amended to include no period for unpaid maternity leave, even if granted by the public employer can be approved for the subsequent purchase of service credit. This is to ensure that if a member wishes to purchase more than three months of maternity leave, a physician's certification is submitted and the employer verifies that medical documentation is on file stating the member was disabled due to pregnancy. The employer must verify this information on the purchase application.

At N.J.A.C. 17:1-5.4, Return of pension contributions; death of member, the Division proposes to replace the heading with "Group life insurance and pension benefits," to better reflect the subject matter of this section. Subsections (a) and (b) are amended to clarify that both group life insurance and pension benefits are payable to the named beneficiary who must be at least 18 years old to collect the benefit.

The Division proposes new N.J.A.C. 17:1-5.5, Active members — group life insurance and pension benefits, to clearly state the Division's practice that if the member dies before repaying an outstanding obligation, what is owed will be deducted from the member's group life insurance proceeds first, and then from the return of pension contributions.

New N.J.A.C. 17:1-5.6, Retired members — group life insurance and pension benefits, clarifies the Division's practice that the survivor of a retired member may be entitled to receive a pension allowance the first of the month following the retiree's death and shall terminate the month in which the survivor no longer qualifies for such benefits. In the event that a retired member dies before repaying any outstanding obligations, the remaining balance will be deducted first, from the group life insurance proceeds and then from any pension benefits, such as the last check benefit.

Recodified N.J.A.C. 17:1-5.7, is amended to add the SEHBP, since its membership is comprised of former participants of the SHBP and employers adopt a resolution to include domestic partners in the health plan of the employee.

New N.J.A.C. 17:1-5.8, Civil unions, is added since the State of New Jersey recognizes civil union partners as having all the rights and privileges as married couples. The Internal Revenue Code, however, does not recognize a civil union partner in the same manner as a spouse or a dependent for tax purposes. Therefore, employers are required to report such benefits as taxable income to the employee or retiree.

N.J.A.C. 17:1-6.1, Honorable service, is amended at subsection (c) to delete the wording "the limited" to accurately reflect the Boards practice in the application of forfeiture matters and at paragraph (c)3 to include the SEHBP, since it is a new health benefits program and its membership is comprised of former SHBP participants.

At N.J.A.C. 17:1-6.2, Indictments, dismissals, litigation or appeals, the Division proposes to amend subsections (a), (b) and (c) to further clarify the Board of Trustees practice of reviewing cases that involve charges. Subsection (e) is amended to be consistent with N.J.A.C. 17:1-1.13.

The Division proposes new N.J.A.C. 17:1-6.3, Settlement agreements; employer responsibility for reimbursement to the pension fund or retirement system for associated costs, to clarify the employer's responsibility to provide notice to the Division of such settlements in a timely manner and the conditions under which additional costs will not be assessed to the employer as a result of the settlement agreement.

Existing N.J.A.C. 17:1-7.1, Retirement quotations, is repealed and replaced with a new section that removes the language "statement of benefits to quotation of retirement benefits." New subsections (a) and (b) are changed from the repealed language to clearly state certain information must be received by the Division in order for the member to receive a quotation of benefits that includes all retirement options and that the member will be informed of their right to withdraw, cancel or change the retirement application within 30 days of Board approval or retirement date, whichever date is later. New subsection (c) clarifies that the member will have 30 days in which to amend the retirement option selection.

N.J.A.C. 17:1-7.2, Retroactive salary increases, is amended to be consistent with PERS, TPAF, PFRS and SPRS, which details retroactive salary adjustments.

At N.J.A.C. 17:1-7.4, Biweekly salary computation; retirement and death benefits, final compensation or last year's salary the heading is amended to remove "final compensation or last year's salary," since final compensation can have different interpretations depending on the retirement system. In subsection (c) text is removed since it is repetitious and the statement is already referring to biweekly employees.

N.J.A.C. 17:1-7.7, Post-retirement employment; employer certification; is amended to add to the heading "break-in-service 10-month members" and includes a new subsection (b) to clarify the Division position on break-in-service for 10-month employees who retire effective July 1st. A break-in-service from employment must exist and the member cannot be employed in a 10-month position covered by the same pension system during the next month of eligible employment following retirement. The Division found that there were inconsistencies in the return-to-work practice for 10-month employees. The proposed new subsection will provide conformity with the post-retirement requirements of other July 1st retirements.

N.J.A.C. 17:1-7.9, Workers' compensation; reduction of retirement allowance, is amended at paragraph (a)2 to clarify that if a retiree is unable to make payment in one sum, repayment may be scheduled over a period not to exceed five years. The cap is necessary in order for the Division to collect the repayment in a timely manner. In addition, regular interest will be added to the repayment schedule as defined in State statutes.

N.J.A.C. 17:1-7.10, Ordinary disability applications; medical examinations, is amended to include new subsections (d) and (e). Prior to a member receiving the Board's determination for their disability application the member at times files a second Application for Retirement requesting a different type of benefit. Filing multiple applications may cause processing errors in a member's pension account and creates unnecessary work for the Division staff. This will allow the applicant to retain the retirement date designated on the original disability application provided the applicant files timely.

N.J.A.C. 17:1-9.1, Due dates for contributions and reports, is amended to clarify the due dates for contributions on behalf of the State Centralized Payroll Unit and other employing subgroups since the section already had existing language for employees that are not paid by the State Centralized Payroll Unit.

N.J.A.C. 17:1-12.5, Last check benefit, is amended to remove that the estate shall also receive a prorated portion of the retirement benefit equal to the number of days the pensioner lived during the month, since it is the Division's practice to pay an entire month of benefits to the pensioner's eligible beneficiaries.

At N.J.A.C. 17:1-13.2, Unreimbursed medical spending account, paragraph (a)3 is amended to clearly state the Division's practice that premium contributions for the State Health Benefits Program do not qualify as eligible medical expenses under the Unreimbursed Medical Spending Account (UMSA). Also, contributions paid by the employee's eligible dependents health care insurance outside the State Health Benefits Program does not qualify as eligible medical expenses.

At N.J.A.C. 17:1-13.5, Salary reduction elections, subsection (b) is amended to clarify the regulations associated with §125 of the Internal Revenue Code, 26 U.S.C. §125, that an employee shall not be permitted to make salary reduction elections once the enrollment period has ended unless the employee experiences a qualifying change in family circumstances. There is a 30-day grace period to make a salary reduction election following an employee's hire date and for employees who become eligible to participate in the plan following the end of the enrollment period. In subsection (c), the maximum salary reduction amount has been increased from $ 2,000 to $ 2,500 in each calendar year since the limit was last increased in 1996 when the plan was initiated and medical expenses have significantly increased over the years.

At N.J.A.C. 17:1-13.6, Claims for payment from plan accounts, subsection (b) is amended to clarify current Division practice that an employee participating in the Unreimbursed Medical Spending Account (UMSA) can file a claim for the total elected contribution whether or not the employee has had the total amount deducted from salary. Conversely, in the Dependent Care Spending Account (DCSA), the maximum amount of reimbursement available to the employee is the amount posted to the employee's account. Subsection (c) is amended to extend the date of claims submission to April 30th and includes that the plan has adopted a 2.5-month grace period rule for incurring qualifying expenses through March 15th of the following year in order to extend the period for participants to file their reimbursement claims and reduce the forfeiture rate.

N.J.A.C. 17:1-13.7, Forfeiture of account balances, is amended to extend the plan year to April 30th, in order to reduce the forfeiture rate.

N.J.A.C. 17:1-14.4, Reimbursement of qualified transportation fringe benefit, is amended at subsection (d) to clarify that election amounts can be carried over from month to month and applied toward future parking expenses.

N.J.A.C. 17:1-14.5, Claims for payment from plan accounts, is amended at subsection (b) to clarify that the total payments from a Commuter Tax$ ave Program account shall not exceed the prescribed Federal pre-tax monthly election limit.

N.J.A.C. 17:1-14.6, Forfeiture of account balances, is repealed and replaced with a new rule to reference Section 132 of the Federal Internal Revenue Code of 1986, 26 U.S.C. §132, which explains that refunds of unused election amounts to the employee are prohibited. The new rule provides further clarification on unused balance procedures for employees that participate in the Commuter Tax$ ave Program.

The Division proposes new Subchapter 15, The New Jersey School Employees' Health Benefits Program, (SEHBP) created by N.J.S.A. 52:14-17.46 et seq. The SEHBP is a separate health benefits program from the State Health Benefits Program (SHBP). N.J.A.C. 17:1-15.2 is included to clarify that the State Health Benefits Commission will act as the administrator for the SEHBP until such time as the SEHBP establishes its own Commission and rules are adopted.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The rules involve the Division, benefits the members, retirees, beneficiaries and participating employers of the various pension systems. These members rely on the efficient operation of the pension systems to provide them with monthly retirement benefits, with proper crediting of service, with death benefits and with the information they need regarding their individual accounts. They also rely upon the presence and predictability of the rules, which guide the administration of their benefits. The protections and guarantees that these rules afford its members mandate their continued existence.

Many of the proposed amendments are of a purely technical nature, such as providing proper procedures for member records considered confidential, name changes or changing beneficiary information. Other proposed amendments will have a social impact specifically to members, retirants, beneficiaries and former members of the various retirement systems but not to society as a whole. For example, many of the new rules encourage Internet usage and reporting, which provides members and employers with the most current information that is readily available.

For example, N.J.A.C. 17:1-1.2, Records, is amended to ensure that Social Security numbers, pension membership numbers, and medical information are considered protected health information and considered confidential under the Federal Health Insurance Portability and Accountability Act of 1996. This amendment adds Social Security numbers and pension membership numbers to further protect the confidentiality of certain member information since records of all employee benefit programs administered by the Division are public records.

In addition, the enactment of N.J.S.A. 52:18A-83 prompted the Division to propose new N.J.A.C. 17:1-1.1A, Election of Representative to the State Investment Council, which establishes the procedure for the Board of Trustees of the Public Employees Retirement System (PERS), the State Police Retirement System (SPRS), the Teachers' Pension and Annuity Fund (TPAF), and the Police and Firemen's Retirement System (PFRS) to elect either an active or retired member of the retirement system to the State Investment Council for a three-year period. This change in law increases the term of office on the State Investment Council from one year to three years and expands the population of candidates eligible to serve as a representative to include all active and retired members on the retirement systems. The longer term will provide for more continuity on the Council. The taxpaying public is affected by these rules since public monies are used to fund the benefits and therefore, also benefit from the proper and efficient administration of the pension systems that the rules require.

Economic Impact

In the past, the rules of the Treasury-General Administration provided for the efficient operation of the pension systems administered by the State of New Jersey. The efficient operation of the systems provided a benefit to members and retirees, as well as to public employers, by allowing for the timely delivery of retirement benefits.

The rules proposed for readoption with amendments, new rules and repeals will not present any economic effects on the public; they will continue existing, longstanding regulatory requirements. The rules will also continue to provide for the continued delivery of retirement benefits, as well as the proper accounting of members' service credit and contributions to the pension systems without change. Further, the rules proposed for readoption with amendments, repeals and new rules will now and in the future, enable the Division to continue to provide for the retirement benefits of the retirees in a manner that more than adequately, meets the statutory and contractual requirements. The proposed addition to N.J.A.C. 17:1-2.10, Minimum adjustments; repayment schedules, will have a positive economic impact on the Division, if the retiree is unable to make a payment in one lump sum, a repayment schedule over of period not to exceed five years can be instituted. Regular interest as defined in statute, shall apply to all such repayment schedules. The member has the flexibility to pay over time, if needed, and the Division will recoup the monies owed to the retirement systems.

Without the administrative rules to provide for the efficient operation of the pension systems, financial chaos may occur, thus adversely affecting the taxpayers whose employee contributions help to fund the systems.

The proposed readoption of the rules with amendments, new rules and repeals will not present any economic effects on the public in general. The Division will continue to monitor the impact of the rules through research and review of new legislation. The Division is not aware of any hardship or costs imposed by the rules on the members of the State-administered pension systems in New Jersey or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:18A-96 et seq. governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the rules proposed for readoption with amendments, new rules and repeals will not result in the generation or loss of jobs. The rules have been in effect for many years, and have served to efficiently and equitably guide the Division in the operation and administration of the retirement systems.

The Division invites any interested parties to submit any data or studies concerning the jobs impact of these rules with their written comments.

Agriculture Industry Impact

The rules proposed for readoption with amendments, new rules and repeals will not have an impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the rules proposed for readoption with amendments, new rules and repeals have no affect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affect members and retirees of the public pension systems in New Jersey.

Smart Growth Impact

The rules proposed for readoption with amendments, new rules and repeals will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption with amendments, new rules and repeals will not have any impact on housing affordability because they apply to the public retirement pension systems.

Smart Growth Development Impact

The rules proposed for readoption with amendments, new rules and repeals will not have any impact on the achievement of smart growth development because they apply to the public retirement pension systems.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:1.

Full text of the proposed amendments, new rules and repeals follows (additions indicated in boldface thus; deletions indicate in brackets [thus]):

SUBCHAPTER 1.  ADMINISTRATIVE PRACTICES

17:1-1.1 Description of the Division of Pensions and Benefits

(a) The Division [of Pensions and Benefits] is the successor to the former Bureau of Public Employees' Pensions created in June 1952. Under the general reorganization acts of 1948, the pension funds were located within the State Division of Budget and Accounting. In 1950 they were transferred to the Division of Investment under the statute creating that division.

(b) The Division [of Pensions and Benefits], under the Department of the Treasury, was created by [Chapter 70,] P.L. 1955 c. 70. All administrative functions of the State pension funds, except for the investment of the assets retained in the Division of Investment, were assigned to the Division [of Pensions and Benefits].

(c) The Division [of Pensions and Benefits] is responsible for one of the largest public employee benefits program in the nation. It administers a comprehensive benefit program that enables public employers throughout the State to attract and retain skilled and talented employees. These include State employees, teachers, police officers, fire fighters, correction officers, judges, and many other local employees whose jobs are fundamental to the safety and well being of all New Jersey residents. The Division administers [nine] 10 separate pension systems.

(d) The Division also administers the State Health Benefits Program (SHBP) that includes health plans, dental plans, and a prescription drug [card] plan. This program provides coverage for employees, retirees, and their dependents, of the State and participating local employers. The enactment of N.J.S.A. 52:14-17.46 et seq., creates the School Employees' Health Benefits Program, which will be administered by the Division.

(e) (No change.)

(f) The following Boards and Commissions provide oversight and direction to the benefits programs:

1.-6. (No change.)

7. Defined Contribution Retirement Program Commission;

[7.] 8. (No change in text.)

9. School Employees' Health Benefits Commission;

Recodify existing 8.-10. as 10.-12. (No change in text.)

[11.] 13. The State Investment Council.

(g) The Director is responsible for the coordination of the functions of the Division, the development of the Division budget and communication with other branches of State government, local government and the public. The Director serves as the Secretary to the Supplemental Annuity Collective Trust Council, the State Health Benefits Commission, the School Employees' Health Benefits Commission and the State House Commission in its capacity as the Board of Trustees for the Judicial Retirement System. The Director is [also] responsible [for legal and legislative matters] to oversee the Division's operations and the Board of Trustees administration in accordance with statute and rules. In addition, the Treasurer has delegated the responsibility of maintaining the Federal-State Agreement for Social Security to the Director [of the Division of Pensions and Benefits].

(h) The Division [of Pensions and Benefits] falls under the jurisdiction of the New Jersey Department of [the] Treasury. The Director [of the Division of Pensions and Benefits] reports directly to the State Treasurer. The Treasurer is an ex-officio member of all State pension boards and commissions.

(i) The administrative rules that apply generally to all of the retirement systems and benefit plans that the Division [of Pensions and Benefits] administers may be found in this chapter. The administrative rules of the various retirement systems and benefit plans may be found in N.J.A.C. 17:2 through N.J.A.C. 17:10.

17:1-1.1A   Election of representative to the State Investment Council

(a) Pursuant to N.J.S.A. 52:18A-83a.(1), the Board of Trustees of the Public Employees' Retirement System (PERS), the Board of Trustees of the State Police Retirement System (SPRS), the Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) and the Board of Trustees of the Police and Firemen's Retirement System (PFRS) of New Jersey shall elect one of the active members of its retirement system, or one of the retirees of its retirement system who is receiving a retirement allowance, to serve as a member of the State Investment Council at its regular meetings for a three-year term commencing on July 1.

(b) Pursuant to N.J.S.A. 52:18A-83b., an active or retired member of the PERS, SPRS, TPAF, and PFRS may apply to serve as a member of the State Investment Council provided that the applicant does not hold any office, position or employment in any political party and does not benefit directly or indirectly from any transaction made by the Director of the Division of Investment.

(c) The Division will be required to provide a timely general notice of vacancy of a State Investment Council position to the active and retired members of the PERS, SPRS, TPAF, and PFRS prior to the expiration of the term. Such notice shall provide information regarding the term of office, description and/or requirements for the position, and the application process.

1. The notice to active members of the PERS, SPRS, TPAF, and PFRS, will be prepared by the Secretary of the Board and forwarded to the certifying officers of the employing locations. It will be the responsibility of each certifying officer to post the notice in a public area at the workplace.

2. A timely notice to the retired members of the PERS, SPRS, TPAF, and PFRS will be prepared by the Secretary of the Board and published in the Division's semiannual newsletter to retired members, prior to the expiration of the term.

3. Such notice will also be posted on the Division's public website during the election period.

(d) Any active or retired member of the system who is interested in applying for the position of State Investment Council representative will be required to submit a letter of interest, which shall include a resume of the member's education and experience, directly to the attention of the Secretary of the Board at the Division of Pensions and Benefits within the requisite timeframe provided in the notice.

(e) As stipulated in N.J.S.A. 52:18A-83a.(1), the Board of Trustees of the PERS, SPRS, TPAF and PFRS will elect one of the active members of its retirement system, or one of the retirees of its retirement system who is receiving a retirement allowance, to serve as a member of the State Investment Council. However, depending on the number of responses submitted, the Board of Trustees may seek assistance from individuals outside the Division of Pensions and Benefits in the review and recommendation process, or may elect to form a subcommittee to assist the Board of Trustees in reviewing the candidates applications.

1. Any active or retired member elected by the Board of Trustees of the PERS, SPRS, TPAF and PFRS to serve as the State Investment Council representative shall be required to comply with the requirements provided in N.J.S.A. 52:18A-83. Any elected member who fails to comply with the requirements stipulated in the law will be automatically disqualified as a representative.

2. A vacancy in the membership of the council occurring other than by expiration of the term, shall be filled in the same manner as provided in the original appointment, but for the remaining term only.

17:1-1.2   Records

(a) The records of all employee benefit programs administered by the Division [of Pensions and Benefits] are public records and may be [inspected during regular business hours at the office of the respective bureau, and under supervision of the Bureau Chief or other representatives of the office.] requested through the Treasury Government Records Unit. Records shall be provided during regular business hours.

(b) Records considered confidential include protected health information (PHI) as defined by the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191, Social Security numbers, pension membership numbers, medical [reports] information submitted for any purpose, mailing addresses of active and retired members, individual files pertaining to beneficiary designation and any [other matters pertaining to individual accounts where no official purpose or reason is indicated for inspection] proprietary information provided to the Division from another source. Further records considered to be confidential may be found at [N.J.A.C. 17:44-2] N.J.S.A. 47:1A-10.

(c) All medical [testimony] records obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Boards of Trustees. [The] Upon request, 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 after the Board's initial decision is rendered. In no event shall the report be released to any individual not authorized by the member in writing to receive the report.

(d) Charges for copies of pension records [which] that have been deemed to be public information will be made in accordance with the provisions of N.J.S.A. 47:1A-[2]5.

(e) Requests for access to government records must be in accordance with the Department of Treasury's procedures as provided by [N.J.A.C. 17:44] the Open Public Records Act.

17:1-1.3   Hearing request

(a) The applicant will be given written notice of any decision by the Division, Board or Commission [shall cause to be given to the applicant written notice of its decision]. Said notice shall inform the applicant of [their right to request a hearing in the event the applicant disagrees with the decision of the agency and the manner in which such request must be made] the appeal process available in the event the applicant disagrees with the decision of the Division, Board or Commission, including the proper procedure for requesting a hearing.

(b)-(c) (No change.)

(d) The following statement shall be incorporated in every written notice setting forth the Division, Board or Commission's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative: ["(1)] If you disagree with the determination of the Board, [(]Commission[)] or Division, you may appeal by submitting a written statement to the Board, [(]Commission[)] or Division Director 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, [(]Commission['s)] or Division'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, [(]Commission[)] or Division shall be final.

[(2)] (e) The Board, [(]Commission[)] or Division Director shall determine whether to grant an administrative hearing based upon the standards for a contested case hearing set forth in 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].

[(3)] (f) Administrative hearings shall 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 et seq].

[(4)] (g) If the granted appeal involves solely a question of law, the Board, [(]Commission[)] or Division Director may retain the matter and issue a final 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, [(]Commission's[)] or Division Director's final determination may be appealed to the Superior Court, Appellate Division.

[(5)] (h) If the granted appeal involves a question of facts, the Board, [(]Commission[)] or Division Director shall submit the matter to the Office of Administrative Law.["]

17:1-1.4  Mail distribution

(a) All mail sent to the Division [of Pensions and Benefits] will be received, opened and sorted by the mail section, with the exception of registered or certified mail, which will be sent directly to the addressee.

(b) (No change.)

17:1-1.5  Annual statements; retirement system

(a) [Statements of members' accounts are mailed annually to employers for active members contributed to the Public Employees Retirement System, the Police and Firemen's Retirement System, the State Police Retirement System, the Alternate Benefits Program and the Teachers' Pension and Annuity Fund who are reported through the State's Centralized Payroll System during the second quarter of a calendar year.] Statements of members' accounts are mailed annually to employers after the fourth quarter of the calendar year is complete for the following active members:

1. Public Employees' Retirement System - State and local employers;

2. Teachers' Pension and Annuity Fund - State employers;

3. Police and Firemen's Retirement System - State and local employers;

4. State Police Retirement System; and

5. Alternate Benefit Program.

[(b) Statements of members' accounts are mailed annually to employers for active members who contributed through local employers to the Teachers' Pension and Annuity Fund, Judicial Retirement System and the Legislative members of the Public Employees' Retirement System during the last quarter of a calendar year.]

(b) Statements of members' accounts are mailed annually to employers after the employer reporting for the second quarter of the calendar year is complete for the following active members:

1. Legislative part of the Public Employees' Retirement System;

2. Prosecutor Part of the Public Employees' Retirement System;

3. Workers Compensation Judge part of the Public Employees' Retirement System;

4. Judicial Retirement System; and

5. Teachers' Pension and Annuity Fund - local employers.

(c) (No change.)

(d) It is the responsibility of the employer to direct all statements to the appropriate party when a disputed address is involved. Employers will mail statements for transferred employees to the new employer for distribution. Employers will mail statements to the employee's home address for any situation where the employee is not available for statement distribution at the employer's location.

17:1-1.6  [Annual] Quarterly statements; supplemental annuity

Statements of members' accounts are mailed quarterly to [employers for] participants of the tax sheltered and nontax sheltered Supplemental Annuity Collective Trust.

17:1-1.7  Endorsements

(a) (No change.)

(b) In cases where a member or beneficiary is mentally or physically incompetent, the appointment of a legal guardian, conservator or committee will be required. The Division must be supplied with a copy of the legal document and the guardian's signature must be registered with the Division on a signature card. In cases where an incompetent retired member or beneficiary is confined to a State institution in New Jersey [(under Department of Human Services)] in lieu of guardianship, his or her retirement allowance may be continued upon court order [(N.J.S.A. 30:4-67.1)] directing the retirement system to make payment to the chief administrative officer for the use and care of said member or beneficiary during the period of confinement.

(c) (No change.)

(d) A person holding a power of attorney will be permitted to endorse a check payable to such person as attorney for the retiree or beneficiary. [However, a] A power of attorney form [prescribed by the Division must be duly executed and filed with the Division before the attorney's signature will be accepted as a proper endorsement on] will specify the authority of the person to endorse a check issued to the retiree or beneficiary.

(e) (No change.)

(f) When an individual holding a power of attorney specifying the authority of the person to endorse a check and acting on behalf of a member makes application for a retirement allowance, the power of attorney may choose any option available and may designate the individual to receive a monthly retirement allowance under the options that provide for a survivor's benefit.

(g) An individual holding a power of attorney and acting on behalf of a member shall designate the member's estate as the beneficiary for all life insurance benefits and any other benefits payable, which are not covered by (f) above, on the member's account unless the power of attorney form specifically grants the individual the right to designate others as beneficiaries or specifically grants them the right to name themselves.

17:1-1.8   Priorities

(a) In the event the Division [of Pensions and Benefits] is required to establish priorities for the performance of a particular obligation, such priorities shall be made known to all members involved and shall be established in the following order:

1.-3. (No change.)

(b) The priority of deductions from the monthly retirement allowance shall be the following:

[1. State Health Benefits Program premium deductions;]

1. Internal Revenue Service tax levy;

2. (No change.)

[3. Internal Revenue Service levy;]

[4.] 3. Loan and various other deductions owed to the Division;

4. State Health Benefits Program and the School Employees' Health Benefits medical plan deductions;

5. State tax; [and]

6. Dental Plan deductions; and

[6.] 7. (No change in text.)

17:1-1.9   Bankruptcy; subsequent loans

(a) (No change.)

(b) A member or retired member's outstanding loan balance is not discharged by bankruptcy. [Although the pension loan deductions will be terminated, the outstanding loan balance and interest is still due and payable. A member or retired member may voluntarily request reinstatement of the pension loan deductions after the completion of the bankruptcy proceedings.]

(c) (No change.)

17:1-1.12   Domestic relations orders

(a) The Division [of Pensions and Benefits] will honor court orders for child support, alimony or equitable distribution. The matrimonial order must require the Division [of Pensions and Benefits] to withhold the specified amounts. The matrimonial order must also designate a specific dollar amount, a specific percentage of the gross monthly retirement benefit, or a percentage of the gross monthly retirement benefit the member will receive based on the specific number of years and months of service the member accrued while married.

(b)-(c) (No change.)

(d) The Division [of Pensions and Benefits] cannot guarantee the implementation of any irrevocable designation of death benefits or selection of retirement option. Such designation or selection remains the prerogative of the member.

17:1-1.13  Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances:

1. If a disability retirant fails to appear for a medical examination scheduled by the Division;

2. If a widow, widower, parent or guardian of minor child(ren) fails to file a certificate of eligibility, which is normally mailed to such beneficiaries on a periodic basis;

3. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this instance shall be suspended until a proper legal representative has been appointed;

4. If a retirant is receiving a retirement benefit, the Boards may suspend retirement benefits pending the outcome of charges including, but not limited to, the following:

i. An indictment;

ii. An information;

iii. An accusation;

iv. An administrative or disciplinary action;

v. An ethics violation; or

vi. A license or credential review;

5. If a retirant or beneficiary fails to cash three consecutive monthly pension checks the monthly benefit shall be suspended until a personally endorsed, notarized signature card has been received; or

6. In the event of incarceration of the retirant, pursuant to the provision of N.J.S.A. 43:1-2, the retirement benefits will be forfeited during the period of incarceration.

SUBCHAPTER 2.  ACCOUNTING

17:1-2.2   Remittance; limitation

The monthly [transmittal] remittances for pension contributions to the Division by employers shall be by electronic fund transfer (EFT). All other remittances to the Division shall be by check, bank draft or money order.

17:1-2.3   Due dates for [transmittals] remittances and reports

(a) Monthly remittances [and transmittal reports] for the Police and Firemen's Retirement System, Teachers' Pension and Annuity Fund and the Public Employees' Retirement System are [due in the Division of Pensions and Benefits] to be transmitted through the electronic funds transfer system by the [10th] seventh day of the month following the close of the preceding month for which contributions are required.

(b) The [monthly] biweekly report to the[carriers] approved investment providers of the Alternate Benefit Program shall be due from the Centralized Payroll Unit [on the 20th day of the month following the close of the preceding month] to the Division no later than the pay date for each biweekly payroll period for which deductions or reductions were required. Remittance of contributions and related reports will be transmitted to investment providers no later than five business days following the corresponding biweekly payroll date.

(c) [Monthly reports] Deductions and reductions for Alternate Benefit Program participants of county [colleges] and State [monthly locations are due in the Division of Pensions and Benefits the fifth day of the month following the close of the preceding month, with the exception that those institutions.] colleges and universities will be transmitted to approved investment providers no later than five business days following the corresponding payroll date. County and State colleges and universities, which are prepaying [both] the employer [and employee] contributions on behalf of the State of New Jersey and have agreed to be fully accountable and responsible for the timely submission of such contributions shall submit [the] a monthly [reports] report(s) to the Division [of Pensions] by the 15th day of the month following the close of the preceding month[.] detailing those prepayments in a format to be determined by the Director of the Division. County and State colleges and universities will be reimbursed for prepaid employer contributions in accordance with the prevailing statutes, within 15 business days of submitting all required reports in approved formats.

(d) Quarterly [transmittals and] reports, including the remittance for the third month of the calendar quarter, for the Public Employees' Retirement System, Teachers' Pension and Annuity Fund, and the Police and Firemen's Retirement System are due in the Division [of Pensions and Benefits] the [10th] seventh day of the month following the close of the preceding quarter.

(e) (No change.)

(f) Monthly remittances [and transmittals] for the State Health Benefits Program are due [the 15th day of each month] on the date indicated on the invoice. Reporting agencies will be considered in default if premiums are not paid [within 15 days following the due date for which premiums are required] on or before that date.

(g) (No change.)

17:1-2.4   Delinquent notices

(a) Reporting agencies, which do not file timely reports[, transmittals] or remittances will receive a delinquent notice.

(b) In the event the employer does not respond to the delinquent notice for the Report of Contributions, and if the report is not received in a timely manner to update the members of the local employer's report, the mayor, school superintendent or person of a similar authority will be sent a letter advising of the delinquency and the ramifications of such delinquency.

17:1-2.5   Interest charges; delinquent [transmittals] remittance; report of contributions

(a) If payment in full, representing the monthly [transmittal] remittance and report of contributions or charges, is not made within 15 days of the due dates for such [transmittals] remittance and reports, interest at the rate of six percent per annum for the Teachers' Pension and Annuity Fund and the Public Employees' Retirement System, and 10 percent per annum for the Police and Firemen's Retirement System shall commence to run against the total [transmittal] remittance of contributions [or charges] for the period on the first day after such 15th day.

(b) The penalty will also apply where the [moneys] monies have been forwarded but without the report of contributions necessary to distribute such [moneys] monies to the proper accounts. The penalty amount will be computed using the total contribution amount for pension fund members listed on the report of contributions.

(c) No interest charges will be billed for delinquent remittances or the report of contributions referred to in (a) above if the interest charge is less than $ 10.00.

17:1-2.8   Disbursement; limitations

All disbursements returned by the Federal post office as "undelivered" shall be credited to the appropriate account. Disbursements that are made by check shall be delivered by the Federal post office unless otherwise authorized by the Director of the Division [of Pensions and Benefits].

17:1-2.10   Minimum adjustments; repayment schedules

(a) In order to facilitate the reconciliation of members' accounts upon death, no refunds or additional contributions shall be made to a member's loan and arrearages balances if such adjustments involve amounts of [$ 10.00] $ 50.00 or less. Unresolved differences of [$ 10.00] $ 50.00 or less will be written off.

(b)-(c) (No change.)

(d) Rules concerning the unresolved differences in retirement accounts are as follows:

1. (No change.)

2. All money found to be due and payable subsequent to a member's retirement shall be repaid in one sum [or scheduled for repayment over a period not to exceed 10 years]. In the event the retiree is unable to make payment in one lump sum, repayment may be scheduled over a period not to exceed five years. Regular interest, as defined by N.J.S.A. 43:15A-6n, 18A:66-2m, 43:16A-1(9), 53:5A-3p and 43:6A-3n, shall apply to all such repayment schedules. Any other schedule of repayment shall be referred to the Board of Trustees for consideration. As a condition of establishing a repayment schedule, the Division will automatically put a hold on the distribution of the member's group life insurance until such time that the obligation is satisfied. Any remaining funds from the group life insurance will be distributed in accordance with the member's last Designation of Beneficiary on file.

(e) Audit differences of [$ 2.00] $ 5.00 or less in the reporting of members' pension contributions or contributory life insurance premiums during a quarter will not require a cash adjustment.

(f) Audit differences of [$ 8.00] $ 20.00 or less in the reporting of members' pension contributions or contributory life insurance premiums covering an annual period are not subject to cash adjustments.

[17:1-2.11   Annual reports of salary changes

(a) Employers are provided with one copy of the report of salary changes.

(b) The report of salary changes will be sent to reporting agencies of the Public Employees Retirement System except boards of education, and the Police and Firemen's Retirement System with their quarterly report for the fourth quarter. The reporting agencies must file the report of salary changes with the Division by February 15.

(c) The report of salary changes will be sent to boards of education and community colleges with their quarterly reports for the second quarter. The reporting districts must file the report of salary changes with the Division by August 15.

(d) A report of salary change may be filed with the Division during any quarter of the calendar year. Such report of salary change must be filed on or before the 15th day of the second month of the quarter to assure timely projection for the next quarterly report of contributions.]

17:1-2.11  Reports of salary changes

The report of salary changes is available upon request in a format to be determined by the Director of the Division.

17:1-2.12   Lost pension checks

(a) Upon receiving notification that a retiree or other payee has not received a particular check for whatever reason, the Division [of Pensions and Benefits] shall send the payee an affidavit of non-receipt for completion.

1.-3. (No change.)

(b) The Division [of Pensions and Benefits,] upon being notified that the retiree has not received a particular check, shall review its canceled check file.

1.-2. (No change.)

17:1-2.13   Administrative expenses; [proration] prorated among systems

(a) Not later than 60 days after receipt of the expenditures by account, the Division [of Pensions and Benefits] will prepare a complete fiscal statement indicating the administrative expenses incurred by the Division within its State appropriation for the previous fiscal year ending the prior June 30.

1. (No change.)

2. Supplemental statements will be prepared allocating specific costs attributable to each of the [Retirement Systems and] retirement systems, State Health Benefits Program, and the School Employees' Health Benefits Program within the operation of the respective bureaus; and

3. (No change.)

(b)-(c) (No change.)

17:1-2.16   Workers' compensation without pay: employer's obligation regarding employee contributions

(a) (No change.)

(b) An employer is not responsible for the payment of an employee's pension contributions while the employee is receiving a periodic award of benefits through workers' compensation [without pay] if a valid termination from employment has occurred. If an employer ceases payment of employee pension contributions due to a valid termination, as listed in (b)3 or 4 below, the employer shall notify the Division [of Pensions and Benefits] in writing of the reasons for the cessation of payments. A valid termination exists when:

1.-4. (No change.)

17:1-2.17  Report of contributions; reporting media

The report of contributions will be prepared and submitted to the pension fund administrator through secure electronic data submission provided through the State of New Jersey.

SUBCHAPTER 3.  ENROLLMENT, MEMBERSHIP, TRANSFERS AND WITHDRAWALS

17:1-3.1   Compulsory enrollments; failure to enroll

[(a) In most retirement systems, there are employees who are required to enroll as a member of the retirement system as a condition of employment.]

[(b)] (a) [In some cases, the] When an employee [may] fails to file an application for enrollment even though the employee and employer have been advised of the compulsory nature of enrollment[. In these cases], the certifying officer is obligated to complete the employee's section of the enrollment application, as well as such other information required on the enrollment application. Upon receipt of a properly completed enrollment application, the member's beneficiary [designation may be accepted provided the member has signed the enrollment application] shall automatically be their estate until the member files a Designation of Beneficiary form.

[(c) In the event of the member's death where no benefits are payable to a specific survivor, all benefits otherwise payable would be paid to the member's estate since the employee has not made the necessary beneficiary designation which is part of the enrollment application.]

[(d)] (b) For the purpose of establishing an employer's liability on delinquently filed enrollment applications, as well as the member's requirement to prove insurability, one year shall cover the 12-month period plus an additional two months to allow for administrative processing, elapsing between the employee's date of enrollment or transfer and the date the enrollment application or report of transfer is received by the Division [of Pensions and Benefits].

[(e)] (c) (No change in text.)

17:1-3.3   Enrollment schedules

(a) Employees appointed [on or] after the seventh day of the biweekly pay period will be enrolled the next pay period and after the [17th] 16th day of a month for members scheduled on a monthly basis will be enrolled as of the first of the following month.

(b) (No change.)

17:1-3.4   Proof of veteran's status

Members wishing to establish veteran status with the retirement system must submit copies of their discharge papers (DD 214) to the [NJ] New Jersey Department of Military and Veterans' Affairs. A member who fails to submit evidence of military discharge will be enrolled as a nonveteran and this nonveteran classification shall not be altered until such time as the member's military discharge papers are received by the Department of Military and Veterans' Affairs[, confirming] and eligibility for a veteran classification is confirmed.

17:1-3.9   Waiver of retirement benefits upon withdrawal

If a member is eligible to begin receiving a monthly retirement allowance (due to the member's age or years of creditable service), the Division shall inform the member [of] how to obtain the estimated amount of the retirement allowance and shall require the member to sign a waiver of such benefits, should the member still wish to withdraw.

17:1-3.10   Peacetime military service; service credit

(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 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 law (38 U.S.C. §§4301 et seq.), may obtain service credit in the State-administered retirement system as provided in this section.

(b) A member reemployed under this section shall be treated as not having incurred a break in service with the employer by reason of the member's period of service in the uniformed services only for the purposes of vesting or determining eligibility for retirement and health benefits[, even if the member does not make contributions to the retirement system for the period of service].

(c) The types of service or situations eligible for reemployment rights include regular active duty, initial active duty for training, active and inactive duty training for members of reserve components and National Guard units, and situations where an employee leaves employment for the uniformed services or for examination of fitness for the uniformed services and is not taken into the uniformed services.

1.-3. (No change.)

4. The person shall be denied reemployment rights if:

i.-iii. (No change.)

iv. The employment from which the person leaves to serve in the uniformed services is for a brief, [nonrecurrent] nonrecurring period (temporary employment) and there is no reasonable expectation that such employment will continue indefinitely; or

v. (No change.)

5.-9. (No change.)

10. The member is permitted to make additional elective deferrals to the Supplemental Annuity Collective Trust (SACT), the New Jersey Employees' Deferred Compensation Plan, Additional Contributions Tax Sheltered Programs (ACTS) and the Alternate Benefit Program in an amount not exceeding the maximum amount the employee would have been permitted to contribute during the period of military service if the employee had actually been employed by the employer during that period.

11. (No change.)

12. An employer who participates in the Alternate Benefit Program (ABP), reemploying a person under this section, with respect to the period served by a person in the uniformed services, upon reemployment of that person, shall be liable to the employee pension plan for funding any obligation of that plan to provide benefits under that plan, and shall allocate the amount of any employer contribution for that person in the same manner and extent that the allocation occurs for other employees during the same period of service. However, the employer is not required to make up the earnings that those contributions would have made had the person reemployed under this rule been employed continuously.

i.-iii. (No change.)

iv. Any employer who reemploys a person under this section shall, within 30 days after the date of reemployment, provide information in writing of such reemployment to the Division [of Pensions and Benefits].

17:1-3.11   Compensation limit for exclusion from membership after retirement

Beginning with the calendar year 2002, and for any calendar year thereafter, the Director of the Division [of Pensions and Benefits] may adjust the compensation limit for exclusion from membership after retirement in the Public Employees' Retirement System. The compensation limit shall be adjusted by increments of $ 1,000, when $ 15,000 increased by 3/5 times the change in the Consumer Price Index as defined in N.J.S.A. 43:3B-1f from the Index applicable to calendar year 2001 to the Index applicable to the calendar year immediately preceding the year of adjustment, rounded to the next highest 100 dollars, exceeds the previous compensation limit by $ 1,000.

17:1-4.1   Purchases; cancellation, interest on outstanding purchases or cash discount requested

(a)-(b) (No change.)

(c) A member who authorizes a purchase, which requires installment payments[,] but who has not had installment payments made toward that purchase for two years due to inactivity in the account, shall be informed by the Division that the remainder of the purchase will be canceled. The member shall receive a pro rata credit for the service purchased to the date that the installment payments ceased. The member may request to pay the cash discount value of the outstanding arrearage for the purchase in full within 60 days of the Division notice. Any subsequent requests to purchase the remaining service credit shall be based on the laws and rules in effect on the date that the subsequent request is received.

(d)-(e) (No change.)

17:1-4.2   Purchase terms; grace period

A member who receives a written optional purchase cost quotation is given a 90-day grace period to confirm that he or she wishes to make the purchase of service credit. If the confirmation of the purchase is not received from the member within 90 days, the cost of purchase must be recalculated to determine if any change in the cost is warranted as a result of change in age or salary.

17:1-4.3   Final compensation; salaries to be used for a period of purchased service credit

(a) [If a] A period of purchased New Jersey service may be included in the period for the calculation of final compensation[,actual]. Actual base salaries paid during such period will be certified and used in the computation.

(b) (No change.)

17:1-4.4   Purchase of service credit; continuation of death benefits coverage; maternity leaves of absence

[In the event of an unpaid leave of absence for maternity, no leave of absence period granted by any public employer] No period for unpaid maternity leave, even if granted by the public employer, can be approved for the subsequent purchase of service credit [for a period] in excess of three months unless the Division [of Pensions and Benefits] receives [a certification from a physician] verification that such member was disabled due to pregnancy and resulting disability for the period in excess of three months. During the first three months of an unpaid leave of absence for maternity, the member shall be presumed to be disabled from the performance of her job duties because of her pregnancy and [its] any resulting disabilities.

SUBCHAPTER 5.  INSURANCE AND DEATH BENEFITS

17:1-5.2   Optional settlements; group life insurance

As the statutes provide that death benefits under the group life insurance contracts may be paid under any optional settlement made available by the insurance company[, the]. The beneficiary will be informed of such opportunity [in the correspondence] when such optional settlements are possible. If the beneficiary requests advice concerning such settlements, the claim shall be forwarded to the carrier for contact with the beneficiary. The Division will be advised of the final settlement for the recording of the data with the retirement system.

17:1-5.4   [Return of pension contributions; death of member] Group life insurance and pension benefits

(a) A deceased member's [pension contributions] group life insurance and pension benefits shall be payable directly to a named beneficiary who is at least 18 years old.

(b) If a member designates a beneficiary who is not yet 18 years old to receive the [return of pension contributions] group life insurance and pension benefits, and no trustee or guardian is appointed, the Division [of Pensions and Benefits] will pay the benefit as soon as possible after the beneficiary's 18th birthday [as possible]. The beneficiary must notify the Division at the time of his or her 18th birthday for the benefit to be paid.

(c) (No change.)

17:1-5.5   Active members—group life insurance and pensions benefits

In the event an active member dies before repaying any outstanding obligations, the remaining balance will be deducted first from the group life insurance proceeds and then from the return of pension contributions. If multiple beneficiaries are to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which he or she is entitled to the benefits. Any remaining funds will be distributed in accordance with the member's last Designation of Beneficiary on file.

17:1-5.6   Retired members—group life insurance and pension benefits

(a) If the member was retired at the time of death, the benefits to eligible beneficiaries shall become effective on the first of the month following the member's death and shall terminate as of the month in which the beneficiary no longer qualifies for such benefits. A pension allowance shall be payable for the entire month in which the retirant or beneficiary dies.

(b) In the event a retired member dies before repaying any outstanding obligations, the remaining balance will be deducted first from the group life insurance proceeds and then from the proceeds of any pension benefit, such as a monthly allowance or last check benefit. If multiple beneficiaries are to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which he or she is entitled to the benefits. Any remaining funds will be distributed in accordance with the member's last Designation of Beneficiary on file.

17:1-[5.5]5.7  Domestic partners

(a) Resolutions by the employer to adopt the provisions of P.L. 2003, [c.246] c. 246, the Domestic Partnership Act, cannot take effect prior to the date of the resolution. If the employer decides to adopt the provisions of P.L. 2003, [c.246] c. 246, the employer must adopt the provisions for all its employees and retirees in all of the retirement systems in which it participates and not just members of a specific retirement system.

1. An employer may adopt the provision of P.L. 2003, [c.246] c. 246, for the State Health Benefits Program (SHBP) and School Employees Health Benefits Program (SEHBP) separately from the resolution for the retirement systems. Once a resolution is adopted, it may only be rescinded on a prospective basis. Anyone receiving a survivor's benefit, [or] SHBP or SEHBP coverage based on the old resolution shall continue to do so until such time as they no longer meet the definition of widow, widower, surviving spouse or dependent.

2. A retired employee of a public employer that has not elected to provide coverage for domestic partners or does not participate in the [State Health Benefits Program] SHBP or SEHBP cannot add a domestic partner to [State Health Benefits Program] SHBP or SEHBP coverage.

(b) Pursuant to P.L. 2003, [c.246] c. 246, the Domestic Partnership Act (N.J.S.A. 26:8A-1 et seq.), the [State Health Benefits Program] SHBP, SEHBP and State-administered retirement system provisions found in sections 41 through 56 of the Act only apply in the case of two persons who are of the same sex and have established a domestic partnership. Therefore:

1. (No change.)

2. The domestic partner of a participant in the [State Health Benefits Program] SHBP or SEHBP who is the opposite sex of the participant cannot enroll for [State Health Benefits Program] SHBP or SEHBP coverage; and

3. (No change.)

(c) Since the Federal tax code does not view a domestic partner in the same manner as a spouse, any benefit an employer provides its employees or retirees for a domestic partner will be taxable to the employee or retiree. The employer who adopts the domestic partner benefit for its active and retired employees should report the value of the benefit provided for the domestic partner on Form W-2 as income to the employee or retiree, and the value of the benefit will be subject to Federal income, Social Security, and Medicare taxes. The adopting employer shall also be responsible for the employer share of Social Security and Medicare taxes due on the domestic partner benefit, including the taxes due on any State paid benefits.

1. (No change.)

2. Anything that the employee or retiree pays for the domestic partner coverage through premium sharing arrangements will reduce the amount of the income reported to the Federal government for the domestic partner benefit. These premiums cannot be made on a pre-tax basis unless the domestic partner meets the Federal definition of dependent. If the domestic partner qualifies as a dependent of the covered member for Federal income tax purposes, the value of the domestic partner benefit will not be taxable to the employee or retiree, and any premium paid by the employee toward the domestic partner benefit can be deducted on a pre-tax basis through the State's Section 125 Tax$ ave Program. To be eligible for the tax exemption, the employee or retiree must file a certification of tax dependency with the Division [of Pensions and Benefits].

(d) (No change.)

17:1-5.8   Civil unions

(a) Civil union partners have all the rights and privileges as married couples. The Federal Internal Revenue Code (IRC) allows an employer to provide certain benefits to its employees on a tax-exempt basis. Those benefits can also be extended to spouses and dependents of an employee on the same tax-exempt basis. The IRC, however, does not recognize a civil union partner in the same manner as a spouse and does not automatically recognize a civil union partner as a dependent for tax purposes. Therefore, employers may have to treat civil union SHBP and SEHBP benefits as taxable on Form W-2 and withhold Federal income, Social Security and Medicare taxes on its value. The employer shall be responsible for the employer share of Social Security and Medicare taxes due on the civil union benefit, including the taxes due on any State paid benefits.

1. The income reported by the employer shall be the full cost of single coverage in the plan in which the civil union partner is enrolled.

2. Anything that the employee or retiree pays for the civil union coverage through premium sharing arrangements will reduce the amount of the income reported to the Federal government for the civil union benefit. These premiums cannot be made on a pre-tax basis unless the civil union partner meets the Federal definition of dependent. If the civil union partner qualifies as a dependent of the covered member for Federal income tax purposes, the value of the civil union benefit will not be taxable to the employee or retiree, and any premium paid by the employee toward the civil union partner can be deducted on a pre-tax basis through the State's Section 125 Tax$ ave Program. To be eligible for the tax exemption, the employee or retiree must file a certification of tax dependency with the Division.

17:1-6.1   Honorable service

(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. Pursuant to N.J.S.A. 43:1-3, the Boards of Trustees of the State-administered retirement systems are authorized to order the forfeiture of all or part of the pension or retirement benefit of a member of the fund or system for misconduct occurring during the member's public service, which render the member's service or part thereof, dishonorable.

(b) (No change.)

(c) In [the limited] circumstances where the termination of pension rights as of the date of the misconduct results in no reduction, or a minimal reduction of pension or retirement benefits, or in an excessive forfeiture, as compared to the nature and extent of the misconduct and the years of honorable service, the Board may, in its sole discretion, provide a more equitable relief. Alternate methods available to the Board when a forfeiture of service renders an unreasonable or unjust result include, but are not limited to:

1.-2. (No change.)

3. Forfeiture of right to participate in the retired [State Health Benefits Program] SHBP and SEHBP;

4.-7. (No change.)

17:1-6.2   Indictments, dismissals, litigation or appeals

(a) When a member is [indicted] subject to criminal charges, such an indictment, information or accusation or dismissed from public employment due to administrative charges, the matter shall be referred to the Board Secretary's office to determine the status of any claim, which may be filed by the member.

(b) No credit shall be granted for the period during which the member's salary has been terminated while under indictment, information, accusation or suspension, until the outcome of the proceedings determines the basis for the award of such credit, if any.

(c) All claims for retirement, death benefits and the return of contributions cannot be processed until the matter has been fully adjudicated and completely resolved to the satisfaction of the Board of Trustees, pursuant to N.J.A.C. 17:1-1.13(e). Resolution of [the indictment, dismissal or other] these charges must be verified by contact with the County Prosecutor's Office, the Attorney General's Office, the Department of Education, the Department of Personnel, the employer or other responsible agencies.

(d) (No change.)

(e) If [an indictment, regarding charges related to a member's public employment is] charges listed in N.J.A.C. 17:1-1.13(e) are received by the Boards or Division after the member's date of retirement, the Boards may suspend retirement benefits pending the outcome of [the indictment] such charges.

17:1-6.3   Settlement agreements; employer responsibility for reimbursement to the pension fund or retirement system for associated costs

(a) Pursuant to the provisions of P.L. 2007, c. 49 (N.J.S.A. 43:1-3.3), the following shall apply:

1. A State, county or local employer participating in a State pension fund or retirement system shall be responsible for informing the Division of any settlement agreement between the employer and an employee that provides for the employer not to pursue any civil or criminal charges or an action for misconduct against the employee in exchange for the employee's resignation in good standing. A copy of the settlement agreement must be provided to the Division by the certifying officer within 60 days of execution of such agreement. Such agreement must also be included with any employer certification of service and salary relative to an employee's claim for benefits from the pension fund or retirement system; and

2. Should the Division determine that the terms of the settlement agreement result in additional costs for the pension fund or retirement system, the State, county or local employer shall be responsible for the reimbursement of all such costs to the State pension fund or retirement system.

[17:1-7.1   Retirement quotations

(a) A member who applies for retirement will be sent a statement of the benefits the member can receive. If such an individual has named a beneficiary for retirement purposes all applicable options will be quoted to the member regardless of the option selection the member may have made on the retirement application.

(b) If no response is received from the member prior to the date the member's retirement application must be submitted to the Board for approval, the option selected by the member on the member's retirement application will be submitted to the Board for its approval.]

17:1-7.1   Retirement quotations

(a) Members who apply for retirement will receive a quotation of retirement benefits upon the completion of the retirement calculation. For members of retirement systems which provide for optional survivor benefits, the retirement quotations will include a description of the various options available. If the member named a spouse as the pension beneficiary on the application and provides the spouse's birth date, in addition to the maximum allowance, all survivor options will be included in the quotation.

(b) The quotation of retirement benefits shall inform the member of their right to withdraw, cancel, or change the application for retirement at any time before the later of 30 days after the retirement date or 30 days after the date the Board of Trustees approves the application.

(c) In the event the quotation of retirement benefits is not issued prior to the date of retirement or before the date of approval by the Board of Trustees, then the member will be provided with a 30-day period in which to amend the retirement option selection.

17:1-7.2   Retroactive salary increases

[In no event will individual] Except as in N.J.A.C. 17:2-4.5, 17:3-4.7, 17:4-4.8 and 17:5-3.6, retroactive salary adjustments that have been authorized after the member's effective date of retirement or date of death may be used as creditable salary for pension or insurance purposes even if the period covered by the salary adjustment extends to a period before the member's effective date of retirement or date of death.

17:1-7.3   Final compensation

(a) With respect to all claims for benefits, the Division [of Pensions and Benefits] shall investigate increases in compensation reported for credit, which exceed reasonably anticipated annual compensation increases for members of the retirement system based upon consideration of the Consumer Price Index for the time period of the increases, the table of assumed salary increases recommended by the actuary and adopted by the Board, and the annual percentage increases of salaries as indicated in data from the Public Employment Relations Commission, or through other reliable industry sources of information regarding average annual salary increases.

(b) (No change.)

17:1-7.4   Biweekly salary computation; retirement and death benefits [(final compensation or last year's salary)]

(a)-(b) (No change.)

(c) In order to compute the amounts under (a) and (b) above for biweekly employees [who are reported biweekly], the actuary will supply factors to convert biweekly salaries to compensate for biweekly payroll schedules. Application of the factors to the salaries reported for pension purposes will develop the wage base for the calculation of benefits.

(d)-(f) (No change.)

17:1-7.6   Medical examinations; out-of-State

(a) (No change.)

(b) In the event the Board or Commission contemplates the denial of a disability claim based on an out-of-State physician's medical report, the employee will be required to be examined by a physician selected by the Division [of Pensions and Benefits].

(c) (No change.)

17:1-7.7   Post-retirement employment; employer certification; break-in-service—10-month members

(a) Employers shall certify on the Certification of Service and Final Salary form that the retiring employee has terminated all service.

(b) Members employed on a 10-month schedule who retire as of July 1st and return to the same, or another 10-month position within the same pension system, prior to October 1st of the same year are not considered to have a bona fide retirement. Ten-month members who retire effective July 1st and return to 10-month employment the following September shall be deemed not to have a valid break-in-service for retirement purposes.

17:1-7.9   Workers' compensation; reduction of retirement allowance

(a) A member who retires on an accidental disability retirement under the provisions of the applicable statutes governing the various State-administered retirement systems and who receives periodic benefits under the workers' compensation law after the date of retirement shall be subject to a reduction in the pension portion of the member's retirement allowance in the amount of the periodic benefits received after the date of retirement.

1. (No change.)

2. If the retiree receives a retirement allowance without reduction and periodic benefits under the workers' compensation law for any time period after the date of retirement, the retiree shall repay to the retirement system the amount of the pension portion of the retirement allowance, which should have been subject to reduction under the applicable statute and this rule. [The repayment may be in the form of a lump sum payment or scheduled as deductions from the retiree's retirement allowances and pension adjustment benefits, except that, if the retiree does not respond by remitting payment in a lump sum within 60 days, the Division shall establish a repayment schedule.] If the retiree is unable to make payment in one sum, repayment may be scheduled over a period not to exceed five years. Regular interest, as defined by N.J.S.A. 43:15A-6n, 18A:66-2m, 43:16A-1(9), 53:5A-3p and 43:6A-3n, shall apply to all such repayment schedules. Any other schedule of repayment shall be referred to the Board of Trustees for consideration. In the event of the death of the retiree before full repayment of the amount required under this rule, the remaining balance shall be deducted from any death benefits payable on behalf of the retiree.

3. (No change.)

(b) (No change.)

17:1-7.10   Ordinary disability applications; medical examinations

(a) (No change.)

(b) If the medical information supplied by the applicant is sufficient for the Medical Review Board to make a medical recommendation, it shall return the case to the Disability Review Section with its recommendation. If the Medical Review Board deems that the medical information supplied by the applicant is not sufficient for it to make a medical recommendation, it shall advise the Disability Review Section to arrange to have the applicant examined by a physician or physicians under contract with the Division [of Pensions and Benefits] to perform disability examinations, or to obtain additional information needed to make its medical recommendation.

(c) The Board or Commission, which governs the pension fund or retirement system may request that an applicant be examined or reexamined by a physician or physicians under contract with the Division [of Pensions and Benefits,] or that additional information be obtained, if it deems that the medical information available is insufficient to make a decision on the eligibility of the applicant for ordinary disability retirement.

(d) A member filing for a disability retirement shall not file a separate application for any other type of retirement while the disability application is pending.

(e) If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant will be required to submit a separate application for retirement. If the applicant submits the separate application for retirement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.

17:1-7.11   Waiver

(a) Application for waiver in whole or part by a retiree or beneficiary who is eligible to receive the increased allowance shall be made at least 30 days prior to the desired effective date on a form required by the Division [of Pensions and Benefits] and shall be effective on the first day of a subsequent month.

(b) A waived benefit may be reinstated by application to the Division [of Pensions and Benefits] prior to the reinstatement date and shall be effective on the first of the month subsequent to the notice of cancellation of the waiver. There shall be no retroactive payments of any benefits waived thereto.

SUBCHAPTER 8.  PENSION ADJUSTMENT PROGRAM

17:1-8.2   Employer payments; delinquencies

(a) The Division [of Pensions and Benefits] will inform all retirees and beneficiaries of the reason for the suspension of payments.

(b) (No change.)

17:1-8.4   Employer payments

The employers shall review the detailed tabulations of retirees and beneficiaries provided with the invoice for employer liability submitted by the Division [of Pensions and Benefits] and shall report any corrections or revisions within 60 days of receipt of the invoice, otherwise invoices must be paid as submitted.

17:1-8.5   Calculation of cost-of-living adjustment (COLA) under P.L. 2002, [c.109] c. 109

(a) The calculation for the increased benefit under P.L. 2002, [c.109] c. 109 for all employees who retired prior to January 1, 2001, shall be done by the Division [of Pensions and Benefits] using the calendar year 2001 average Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items.

(b)-(c) (No change.)

(d) On or before November 15th of each year, the Division [of Pensions and Benefits] shall provide employers participating under the provisions of P.L. 2002, [c.109] c. 109 with a rate chart to be used to calculate the above increases.

SUBCHAPTER 9.   UNEMPLOYMENT INSURANCE

17:1-9.1   Due dates for contributions and reports

(a) State employing subgroups participating in the Unemployment Insurance Program whose employees are not paid by the State Centralized Payroll Unit shall file the required data and reports of unemployment insurance contributions with the Division [of Pensions and Benefits] by the 15th day following the end of each calendar quarter, together with the remittance for the deductions taken from their eligible employees' salaries or wages. State Centralized Payroll will remit weekly an Unemployment Tax Register report, which summarizes the Unemployment Compensation information for covered employees in each of the biweekly payroll units. The register is due within five days of the date the payroll is prepared.

(b) The Division shall prepare a consolidated quarterly report of Unemployment Insurance contributions on behalf of the State Centralized Payroll Unit and other State employing subgroups. The consolidated report shall be filed with the Department of Labor by the last day of the month following the end of each calendar quarter. In addition, the Division shall remit to the Department of Labor on a quarterly basis the amount of reimbursable unemployment claim charges as specified on NJ Form B-187Q.

17:1-9.6   Designated contractor

A contractor will be designated to develop and maintain a cost control program in accordance with the terms of the contract awarded by the State. The Division [of Pensions and Benefits] will coordinate the contractor's activities with respect to State employing units and review quarterly reports of claims activity prepared by the contractor.

SUBCHAPTER 10.  SOCIAL SECURITY

17:1-10.2   Federal-State agreement; modifications

All modifications of the Federal-State agreement are prepared by the Division [of Pensions and Benefits] and subject to review by the Attorney General's office.

SUBCHAPTER 12.  CENTRAL PENSION FUND

17:1-12.1   Application required

For retirement of State employees under the Veterans Retirement Act, N.J.S.A. 43:4-1 et seq., or the Heath Act, N.J.S.A. 43:5-1 et seq., an application on a form provided by the Division [of Pensions and Benefits] must be prepared by the employee, certified by the employing agency and filed with the Division.

17:1-12.2   Disability certification form

Where disability is the cause for the pension, a certification of the disability by a physician on a form provided by the Division [of Pensions and Benefits] must be filed with the Division.

17:1-12.3   Withholding forms

A W-4P, "Withholding Certificate for Pension or Annuity Payments," must be filed with the Division [of Pensions and Benefits].

17:1-12.4   Surrogate's certification

(a) When a pensioner dies and a residual benefit is payable, the claimant shall file an appropriate certification from the Surrogate's Office with the Division [of Pensions and Benefits].

(b)-(c) (No change.)

17:1-12.5   Last check benefit

After July 19, 2004, and pursuant to N.J.S.A. 43:3B-2A, a cost-of-living adjustment shall be payable to the estate of a pensioner who is receiving a benefit under the provisions of N.J.S.A. 43:4-1 et seq., 43:5-1 et seq., or 43:5A-1 et seq., for the entire month in which the pensioner dies. [The estate shall also receive a prorated portion of the retirement benefit equal to the number of days the pensioner lived during that month.]

SUBCHAPTER 13.  NEW JERSEY STATE EMPLOYEES TAX SAVINGS PROGRAM (TAX$ AVE)

17:1-13.2   Unreimbursed medical spending account

(a) Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create an unreimbursed medical spending account (UMSA) to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all medical and dental expenses not reimbursed, or only partially reimbursed, under the employee's health benefit plan or any other benefit plan, and considered by the Internal Revenue Service (IRS) to be a tax deductible medical expense. Also eligible for reimbursement are certain expenses for medical care, that is, costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, that the IRS determines may be reimbursed by an UMSA even though these expenses are not deductible for the purpose of itemizing medical expenses for Federal taxes.

1.-2. (No change.)

3. [Note that premium] Premium contributions required for any medical or dental coverage are paid through premium conversion and not from the unreimbursed medical spending account. Such premium contributions for the State Health Benefits Program coverage do not qualify as eligible medical expenses under the UMSA. Likewise, premium contributions paid by the employee's eligible dependents for health care insurance coverage outside the State Health Benefits Program do not qualify as eligible UMSA medical expenses.

17:1-13.5   Salary reduction elections

(a) (No change.)

(b) Salary-reduction elections shall be made during enrollment periods announced by the Division [of Pensions and Benefits] and shall be submitted to the plan administrator. An employee shall not be permitted to make salary-reduction elections once the enrollment period for the plan year has ended unless the employee experiences a qualifying change in family circumstances as recognized under §125 of the Internal Revenue Code, 26 U.S.C. §125. A new employee shall be permitted to make a salary-reduction election for a period of 30 days following the employee's hire date. An employee who becomes eligible to participate in the plan following the end of the enrollment period shall also have 30 days from the employee's eligibility date to make a salary-reduction election. Information about the plan administrator and election forms shall at all times be available from the Division [of Pensions and Benefits].

(c) In each calendar year, an employee establishing an unreimbursed medical spending account must elect a salary reduction amount of at least $ 100.00 but not more than [$ 2,000] $ 2,500 for this account.

(d)-(e) (No change.)

17:1-13.6   Claims for payment from plan accounts

(a) Claims for payment of expenses eligible for payment from plan accounts shall be submitted to the plan administrator. Information about the plan administrator and claim forms [shall at all times be] are available from the Division [of Pensions and Benefits].

(b) In each plan year, the total payments from a plan account shall not exceed the total salary reduction amount elected by the employee for that account for that plan year. Under the unreimbursed medical spending account (UMSA), the employee will be reimbursed for the maximum amount of the elected total contribution to the plan, whether or not the deductions from the employee's pay have totaled the amount of the filed claim. Conversely, under the Dependent Care Spending Account, the maximum amount of reimbursement available to the employee during the period of coverage shall be the amount posted to the employee's account at the time the employee files a reimbursement claim.

[(c) Participation in each plan account will terminate on December 31 of each year. The employee, however, may continue to submit claims for expenses incurred in that plan year through March 31 of the following year.]

(c) The program period is based on a calendar year from January 1 to December 31; however, the plans have adopted the 2 1/2 month grace period rule permitted under the Federal tax code that extends the period of time for incurring qualifying expenses through March 15 of the following year. The employee may continue to submit claims for expenses incurred in the plan year through April 30 of the following year.

(d) (No change.)

17:1-13.7   Forfeiture of account balances

In the event that the amount elected by an employee to fund a plan account in a given plan year exceeds the employee's total eligible claims for expenses incurred in that plan year, including the 2 1/2 month grace period immediately following the end of the calendar year (as submitted no later than [March 31] April 30 of the following calendar year), and eligible for payment from the plan account, the balance in the plan account shall be forfeited to the State.

SUBCHAPTER 14.  THE NEW JERSEY STATE EMPLOYEES COMMUTER TAX SAVINGS PROGRAM (COMMUTER TAX$ AVE PROGRAM)

17:1-14.1   Establishment of plan

State employees eligible to participate in the State Health Benefits Program, except those part-time employees participating due to the provisions of P.L. 2003, [c.172] c. 172 (N.J.S.A. 52:14-17.33a), are eligible to participate in the New Jersey State Employees Commuter Tax Savings Program, which shall be referred to as the Commuter Tax$ ave Program, set forth in this subchapter. The Division [of Pensions and Benefits] has been charged by the Treasurer with responsibility for administering the Commuter Tax$ ave Program. In each month, an employee, but not the employee's spouse or domestic partner, may participate in one or both of the plan options available; mass transit expenses and commuter parking expenses.

17:1-14.2   Enrollment in and deductions for the Commuter Tax$ave Program

(a) (No change.)

(b) Monthly deductions shall be taken by Centralized Payroll in the first pay period of the month prior to the benefit month. State [Colleges and Universities] colleges and universities may establish [when,] during the month prior to the benefit month, when deductions will be taken.

(c) (No change.)

17:1-14.4   Reimbursement of qualified transportation fringe benefit

(a)-(c) (No change.)

(d) Refunds of unused [parking] election amounts are not permitted as described in N.J.A.C. 17:1-14.6; however, unclaimed amounts can be [rolled over to a subsequent benefit month as described in N.J.A.C. 17:1-14.6] carried over month-to-month and applied toward future months' transit and parking expenses.

17:1-14.5   Claims for payment from plan accounts

(a) Claims for payment of expenses eligible for payment from the Commuter Tax$ ave Program account shall be submitted to the plan administrator with parking or park-and-ride receipts. Information about the plan administrator and claim forms shall at all times be available from the Division [of Pensions and Benefits].

(b) In each month, the total payments from a Commuter Tax$ ave Program account shall not exceed the [total salary reduction amount elected by the employee for that account for that month] prescribed Federal pre-tax monthly election limit.

(c)-(d) (No change.)

[17:1-14.6  Forfeiture of account balances

In the event that the amount elected by an employee to fund a Commuter Tax$ ave Program-Commuter Parking Reimbursement account in a given month exceeds the employee's total claims for Commuter Parking Reimbursement expenses incurred in that month and eligible for payment from the Commuter Tax$ ave Program-Commuter Parking Reimbursement account, or if the employee fails to file a request for Commuter Parking Reimbursement within 180 days of the date the expense is incurred, the balance in the Commuter Tax$ ave Program account for that month shall be forfeited to the State unless the employee requests a rollover of the unused amount to a future benefit month. The program's administrator shall send the employee two separate notices of the rollover option. Rollover notices will be sent in July and January of each calendar year. An employee will receive an initial notice when available funds are older than 180 days. For employees who fail to respond to the initial notice, second notice will be sent six months later. If the employee fails to exercise the rollover option within 30 days of the date of the second notice, the unused balance shall be forfeited to the State.]

17:1-14.6  Forfeiture of account balances

(a) In accordance with Section 132 of the Federal Internal Revenue Code of 1986, 26 U.S.C. §132, refunds of unused election amounts to the employee are prohibited. If an employee terminates from the Commuter Tax$ ave Program and has an unused account balance on the effective termination date, such unclaimed balance shall be forfeited to the State.

(b) In the event the amount elected by an employee to fund a Commuter Tax$ ave Program Commuter Parking Reimbursement account in a given month exceeds the employee's total claims for Commuter Parking Reimbursement expenses incurred in that month and eligible for payment from the Commuter Tax$ ave Program Commuter Parking Reimbursement account, the unused balance will roll forward and shall be available to cover qualifying expenses incurred in a future benefit month.

(c) Cash reimbursement for qualified parking expenses through the plan's CashBack program must be requested within 180 days after the expense has been incurred by the employee. If an employee incurs qualifying expenses to cover the employee's benefit election in a given month but the employee fails to file a claim for reimbursement within 180 days of the incurred expense, it shall no longer qualify as an eligible reimbursable expense from a Commuter Parking Reimbursement Account. However, the funds not claimed timely shall roll forward and may be used for reimbursement of future eligible parking expenses that are submitted within 180 days of the date incurred.

SUBCHAPTER 15.  THE NEW JERSEY SCHOOL EMPLOYEES' HEALTH BENEFITS PROGRAM

17:1-15.1  Establishment of the School Employees' Health Benefits Program (SEHBP)

Effective July 1, 2008, P.L. 2007, c. 103 established the SEHBP as a separate health program from State Health Benefits Program (SHBP). The State Health Benefits Commission (SHBC) is responsible for administering the SHBP by promulgating rules, contracting for services and benefits and providing a review process for members disputing eligibility or claims. N.J.S.A. 52:14-17.46.3 created a separate School Employees' Health Benefits Commission (SEHBC) designed as the agency responsible for the administration of the SEHBP.

17:1-15.2  Temporary administration of the SEHBP

Until such time as the SEHBC adopts its own rules, the SHBC will act as the administrator for the SEHBP and all rules applying to the SHBP will apply to the SEHBP. Except as provided by law, the two programs will be administered in the same manner.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 4942(a)

Proposed Readoption: N.J.A.C. 17:10

Judicial Retirement System

Authorized By: Judicial Retirement System, Peter Gorman, Acting Secretary, State House Commission.

Authority: N.J.S.A. 43:6A-29d.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2008-295.

Submit comments by November 1, 2008 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

When the Division of Pensions and Benefits becomes aware of a change in the laws or a court decision that possibly could affect the Judicial Retirement System (JRS), 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's staff to ascertain if the current rules are necessary and/or cost efficient. After careful scrutiny of the current rules in N.J.A.C. 17:10, the Division is satisfied that no changes are necessary or needed for the efficient operation of the System. Accordingly, the Division of Pensions and Benefits proposes to readopt the current rules within N.J.A.C. 17:10, which expire on December 24, 2008, pursuant to N.J.S.A. 52:14B-5.1c. The current rules deal with the administration, enrollment, membership, retirement and transfer aspects associated with the Judicial 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 System. The protections and guarantees that these rules afford its members mandate their continued existence.

The rules proposed for readoption reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the Judicial Retirement System. The chapter originally became effective November 29, 1973. Pursuant to Executive Order No. 66 (1978), the chapter was readopted in 1983 arid 1988. Pursuant to Executive Order No. 66 (1978), Chapter 10 expired on May 6, 1993 and was adopted as new rules effective August 2, 1993. Chapter 10 was readopted in 1998 and again in 2003. The current rules deal with the administration, enrollment, membership, retirement and transfer aspects, along with service purchase and insurance and death benefits associated with the Judicial Retirement System.

N.J.A.C. 17:10 in its entirety would remain unchanged.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules involving the Judicial Retirement System affect and work to the benefit of the members, retirees and beneficiaries of the JRS. The members, retirees and survivors of retirees rely on the efficient operation of the retirement system to provide them with monthly retirement benefits and with the information they need regarding their individual accounts. They rely upon the presence and predictability of the rules, which guide the administration of their benefits and the stability of the System. The protections and guarantees that these rules afford its members mandate their continued existence.

The taxpaying public is affected by these rules in the sense that public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the JRS, which the rules require.

Economic Impact

The rules proposed for readoption will not present any economic effects on the public; they will continue existing, long-standing, regulatory requirements. The rules proposed for readoption will serve to preserve the efficient administration and operation of Judicial Retirement System. Further, the rules proposed for readoption will enable the Division of Pensions and Benefits to continue to provide for benefits in a manner, which meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:10 have proven to be effective over time in the proper administration of the Judicial Retirement System. Without the administrative rules to provide for the efficient operation of the System, financial chaos may occur.

The Division of Pensions and Benefits will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules, which would impose any hardship or costs on the members of the Judicial Retirement System, or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption because N.J.S.A. 43:6A-29d governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the rules proposed for readoption will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the rules proposed for readoption with their written comments.

Agriculture Industry Impact

The rules proposed for readoption will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Judicial Retirement System only affect public employers and employees. Thus, the rules proposed for readoption do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The rules proposed for readoption will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption will not have any impact on housing affordability because they apply to public retirement pensions.

Smart Growth Development Impact

The rules proposed for readoption will not have any impact on the achievement of smart growth development because they apply to public retirement pensions.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:10.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 4678(a)

Proposed Amendments: N.J.A.C. 17:4-2.1, 2.2 and 2.6 and 5.3

Proposed New Rule: N.J.A.C. 17:4-2.4

Police and Firemen's Retirement System

Authorized By: Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary.

Authority: N.J.S.A. 43:16A-13(7).

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2008-293.

Submit comments by October 17, 2008 to:

Susanne Culliton
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-2.1, Eligible positions, N.J.A.C. 17:4-2.2, Compulsory enrollment, N.J.A.C. 17:4-2.6, Enrollment date and N.J.A.C. 17:4-5.3 Optional purchases of eligible service, and add a new rule at N.J.A.C. 17:4-2.4, Training requirements. For a position to be eligible for participation in PFRS it must meet the statutory definition of a "policeman" or "firefighter" as set forth in N.J.S.A. 43:16A-1. This statute requires that the employee hired into a police or fire position is a permanent, full-time employee of a law enforcement unit or a firefighting unit. In addition to other requirements, a police position must mandate that the candidate successfully complete the training requirements prescribed by N.J.S.A. 43:16A-1 and 52:17B-66 et seq. A firefighter position must mandate that the candidate successfully complete the training requirements prescribed by N.J.S.A. 43:16A-1 and N.J.A.C. 5:73-4.2, 4.3 and 4.4.

The Division of Pensions and Benefits (Division) found during a functional analysis of a prospective title under consideration, that employees are enrolled in PFRS, prior to the successful completion of the training requirements pursuant to N.J.S.A. 43:16A-1. This finding initiated a review of the enrollment practices for police and fire positions among both Civil Service and non-Civil Service employers. The Division found that there is not a uniform enrollment practice among the PFRS participating employers and situations have been identified wherein nonqualified employees are permitted entry into the PFRS.

This inconsistency has caused various issues. For example, employees injured during Police Training Commission (PTC) training should not be eligible for accidental disability retirement benefits; however, some employees may file for accidental disability retirement benefits if previously enrolled in the PFRS, while others are not permitted to file since they do not qualify for PFRS enrollment. The proposed amendments to N.J.A.C. 17:4-2.6 will standardize the enrollment date for all locations. The Police and Firemen's Retirement System Board of Trustees (Board) does not believe an employee is permanent until the required training has been satisfactorily completed; for a police position, PTC or comparable training and for a fire position, Fire Fighter I certification. Specifically, N.J.S.A. 52:17B-66 et seq. requires every municipality and county to authorize attendance at an approved school by persons holding a probationary appointment as a police officer. Further, no person shall accept a permanent appointment as a police officer until that person successfully completes PTC or comparable training. Similarly, N.J.A.C. 5:73-4.2, 4.3 and 4.4 are the requirements for firefighting training. Therefore, it is necessary to amend certain rules in N.J.A.C. 17:4 to ensure that the enrollment practices are in compliance with the statute and provide the Division with the authority to prohibit the existing practice of nonqualified employees getting enrolled in the PFRS.

In addition, the PFRS Board proposes to amend the requirements for the review process needed for the Division to complete a functional analysis of a prospective position pursuant to N.J.S.A. 43:16A-1.2. New N.J.A.C. 17:4-2.1(b)11, 12, 13 and 14 are added to define a "permanent police officer" and a "permanent firefighter" under both Civil and non-Civil Service jurisdictions. This amendment reflects the information historically sought by the Division in order to perform a title review under N.J.A.C. 17:4-1.2, as well as changes to the eligibility requirements reflected in this proposed regulation.

N.J.A.C. 17:4-2.1(k) is being deleted and replaced with a new subsection. Existing subsection (k) does not include a complete list of requirements for determining whether a position qualifies for inclusion in PFRS for a fire district for a non-Civil Service or a Civil Service employer. This is also necessary to advise the employer/employee of the appropriate documentation that must accompany a request for a review of a position.

Subsection (l) is amended to include the phrase "with an established firefighting unit with a State, county, regional services, or municipal firefighting department or unit" and to include employers that have adopted the provisions of Title 11A (Civil Service)." New paragraphs (l)1 through 9 replace and reorganize the existing paragraphs, without changing the substance of the requirements.

Subsection (m) is deleted as the requirements needed for a review of a fire position for a non-Civil Service or Civil Service employer was combined with the existing subsection (l).

Existing subsection (n) is amended to include the phrase "with a State, county, or municipal police department or unit" and to include employers that have adopted the provisions of Title 11A (Civil Service)." Existing paragraphs (n)1 through 4 are deleted and reorganized with seven new paragraphs that add to the requirements needed for a review of a police position and to advise the employer/employee of the appropriate documentation that must accompany a request for a review of a position. Paragraphs (n)1 through 4 have been reorganized to read more clearly and simply refer to the statutory reference to the requirements specifically mentioned in the PFRS enabling statute defining police officer ( N.J.S.A. 43:15A-1(2)(a)). The additional seven requirements represent a comprehensive list of documents and information that the Division has deemed necessary when reviewing a title as required by N.J.S.A. 43:16A-1.2, for inclusion in the PFRS.

N.J.A.C. 17:4-2.2, Compulsory enrollment, is amended to specifically address medical, training and age requirements, which are located at N.J.A.C. 17:4-2.3, 2.4 and 2.5.

New N.J.A.C. 17:4-2.4, Training requirements, is added to include uniform procedures for the training requirements for the enrollment of police and firefighters into the PFRS. The rule will further define the Police Training Commission (PTC) requirements for completing the basic training course for municipal police officers pursuant to N.J.S.A. 52:17B-66 et seq. In addition, police applicants may obtain exemptions from certain course work as mandated by the PTC. The PFRS statute N.J.S.A. 43:16A-1, allows the Board of Trustees to accept comparable training for those positions that are not under the jurisdiction of the PTC. This new rule will detail the documentation that is necessary for the Division to review with the assistance of the Attorney General's Office, PTC, the comparable training for authorized training credit that is equivalent to the requirements of municipal police officers so the application process is consistent regarding enrollment eligibility in PFRS.

Likewise, the firefighters must successfully complete the Firefighter 1 training prescribed under N.J.A.C. 5:73-4.2, 5.3 and 4.4. The review of comparable training credit must be reviewed through the New Jersey Department of Community Affairs, Division of Fire Safety - Office of Training and Certification to determine if the applicant meets the requirements for Firefighting 1 certification.

The Board will grandfather those members that are already enrolled in the PFRS by allowing 18 months from the effective date of the rule to attend the appropriate police or firefighter training classes. Allowing current members 18 months to successfully complete the required training is consistent with the time period allowed by the PTC to obtain the training as a new applicant (12 months with a possible six-month extension). The employer will be responsible to monitor the affected employees and notify the Division of any member not in compliance with this rule. The Board does not want to harm any member currently hired in a police or fire position that has not attended the necessary training for the position, but will only authorize an 18-month period for the member to obtain the appropriate certifications for the position before the Division deems that the member is no longer eligible for PFRS membership.

N.J.A.C. 17:4-2.6, Enrollment date, is amended to standardize the PFRS enrollment practice for both Civil Service and non-Civil Service positions. The Board wishes to permit individuals to enroll in the PFRS upon successful completion of the police or firefighting training requirements.

N.J.A.C. 17:4-2.6 has also been amended to outline the applicant's date of enrollment in PFRS regarding the following types of appointments: 1) a regular classified appointment from a Civil Service list to a PFRS position, 2) an unclassified or non-Civil Service appointment or 3) a regular budgeted position with an employer not covered by Civil Service from a list. These appointments shall be considered for PFRS enrollment upon successful completion of the police or firefighting training. The compulsory reporting date for employers who report on a monthly and bi-weekly basis has also been amended, to be fixed as the first day of the following month or bi-weekly pay period after successful completion of the police or firefighting training.

Finally, N.J.A.C. 17:4-2.6 is amended to clarify that enrollment in PFRS for Civil Service and non-Civil Service employees is contingent upon the employer certifying that each employee has successfully completed police or firefighting training.

Existing subsection (e) is deleted and a new subsection is added to clearly state the Division will not permit individuals hired into otherwise eligible PFRS-approved positions to enroll in any other State-administered retirement system during the period that they are completing the training requirements for a police or fire position.

N.J.A.C. 17:4-5.3, Optional purchases of eligible service, is amended to clarify an individual hired in an eligible police or firefighter position may purchase temporary service credit as a police officer or firefighter.

N.J.A.C. 17:4-5.3(a)3 is amended to clarify purchasing rules for police officers or firefighters. Special Police Officer service has never been eligible for credit and therefore cannot be purchased. In addition, N.J.A.C. 17:4-5.3(a)ii is added to clarify that Police academy or firefighting training cannot be purchased unless training was rendered while receiving compensation in an eligible New Jersey police or firefighter position.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The proposed amendments and proposed new rule will have a beneficial effect on members and on the PFRS. The proposed amendment to N.J.A.C. 17:4-2.1 clarifies those positions, which are eligible for participation in PFRS as set forth in N.J.S.A. 43:16A-1. The proposed amendment at N.J.A.C. 17:4-2.2 requires that an employee hired into a police or fire position is a permanent, full-time employee of a law enforcement unit or a firefighting unit. The enrollment date has been amended at N.J.A.C. 17:4-2.6, to standardize the PFRS enrollment practice for Civil and non-Civil Service positions. The new rule at N.J.A.C. 17:4-2.6 will ensure that both police officers and firefighters successfully complete the mandatory training requirements before entry into the PFRS. These amendments will ensure consistency and uniformity in the enrollment practice, identify nonqualified employees that have been permitted entry into the PFRS and ensure that the proper training requirements are completed by police and firefighters. The social benefits of each proposed amendment outweigh any negative effects that the amendment may impose on employers and employees. Further, the safety of the public would be more secure knowing that both police officers and firefighters have successfully completed the required training for their respective positions.

Economic Impact

The proposed amendments and new rule will have a positive economic impact on the PFRS, employers and members in that it will create a uniform enrollment practice that establishes when an employer can enroll employees into the PFRS. In order for a police officer and firefighter to enroll into the PFRS they must meet specific eligibility requirements for enrollment into the PFRS. Members will be enrolled upon successful completion of their police or firefighting training. The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendments and new rule will not result in the generation or loss of jobs. While there are some members of the PFRS that have not completed the training requirements, this rule specifically permits an 18-month period upon which those members may complete the training requirements. All future members will not be barred from accepting employment. However, it is necessary for them to complete the training requirements within a maximum of 18 months of accepting this position. These requirements are consistent with those set forth in the statutes governing municipal police and firefighters.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendments and new rule will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Police and Firemen's Retirement System only affect public employers, public employees and their dependents and beneficiaries. Thus, the proposed amendments and new rule do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendments and new rule will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The proposed amendments and new rule will not have any impact on housing affordability because they apply to public retirement pensions.

Smart Growth Development Impact

The proposed amendments and new rule will not have any impact on the achievement of smart growth development because they apply to public retirement pensions.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 2.  ENROLLMENT

17:4-2.1   Eligible positions

(a) (No change.)

(b) The following words and terms, as used in this subchapter and in N.J.S.A. 43:16A-1 et seq., shall have the following meanings:

1.-10. (No change.)

11. "Permanent police officer" under a Civil Service jurisdiction means a full-time police applicant who receives a certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and receives a regular appointment pursuant to N.J.A.C. 4A:4-5.1(a). For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal police officer approved by the New Jersey PTC.

12. "Permanent police officer" under a non-Civil Service jurisdiction means a full-time police applicant who receives certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and is employed in a regular budgeted position. For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal officer approved by the New Jersey PTC.

13. "Permanent firefighter" under a Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and receives a regular appointment in a Civil Service location pursuant to N.J.A.C. 4A:4-5.1(a).

14. "Permanent firefighter" under a non-Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and employed in a regular budgeted position.

Recodify existing 11.-14. as 15.-18. (No change in text.)

(c)-(j) (No change.)

[(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.]

(k) 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 the 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. The Board requires from fire districts for Civil Service and non-Civil Service employers, the following items:

1. A copy of the resolution established by the Board of Fire Commissioners, which provides the fire district with 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 under the provisions of N.J.S.A. 40A:14-81 et seq.;

2. A copy of the resolution, which establishes the position and sets forth the compensation and the duties associated with such position;

3. Verification that the resolution was published at least once in a substantial newspaper in the district;

4. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position;

5. Identification of the type of position (entry level, promotional, administrative/supervisory position over firefighters) and include a list of all job titles within the fire district;

6. The selection/promotional process for the candidate to this position;

7. An official job description for the position;

8. A copy of an organizational chart for the fire district, which identifies the positions and reporting relationships of the staff within the district. The chart must include names and pension member numbers;

9. A description of the training requirements including, but not limited to, the Fire Fighter I Certification issued by the Division of Fire Safety, Department of Community Affairs; and

10. The fire district must provide a list of any other employment requirements.

(l) To determine the PFRS eligibility for Civil Service and non-Civil Service fire positions for employers with an established firefighting unit [that have not adopted the provisions of Title 11A of the New Jersey Statutes (non-civil service) for membership in the PFRS] with a State, county, regional services, or municipal firefighting department or unit, the Board requires the following items:

[1. A description of the physical and mental requirements for the position;

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 firefighting unit, which includes names and positions;

4. A list of employees currently in the position, with present pension status and job title;

5. Proof of compliance with the provisions of N.J.S.A. 40A:14-81.1 and a copy of the resolution or ordinance which established the position;

6. Statutory reference, which provides the firefighting unit with the authority for the control and extinguishment of fires; and

7. An official job description which outlines the duties and responsibilities of the position.]

1. A copy of the ordinance or the legal authority, which provides the governing body of the State, county, regional services entity, or municipality to create and establish a paid or part-paid fire department and also provides the State, county, regional services entity or municipality with the powers, duties and functions relating to the prevention and extinguishment of fires and the regulation of fire hazards under the provisions of N.J.S.A. 43:16A-62, 40A:14-1 and 40A:14-7;

2. A copy of the ordinance or resolution, which establishes the position and sets forth the compensation and the duties associates with such position;

3. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position;

4. Identification of the type of position (entry level, promotional, administrative/supervisory position over firefighters). Also a list of all job titles within the fire department;

5. The selection/promotional process for the candidate to this position;

6. An official job description for the position;

7. A copy of an organizational chart for the fire department, which identifies the positions and reporting relationships of the staff within the fire department. The chart must include names and pension member numbers;

8. A description of the training requirements including, but not limited to, the Firefighter I certification issued by the Division of Fire Safety, Department of Community Affairs; and

9. The fire department must provide a list of any other employment requirements.

[(m) To determine the eligibility for fire positions for employers with an established firefighting unit that have adopted the provisions of Title 11A of the New Jersey Statutes (civil service), the Board requires the following items:

1. A description of the physical and mental requirements for the position;

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 firefighting unit, which includes names and positions;

4. A list of employees currently in the position, with present pension status and job title;

5. Statutory reference, which provides the firefighting unit with the authority for the control and extinguishment of fires; and

6. An official job description which outlines the duties and responsibilities of the position.]

[(n)] (m) To determine the PFRS eligibility for police positions for Civil Service and non-Civil Service employers [with] in an established law enforcement unit with a State, county, or municipal police department or unit, the Board requires the following items:

[1. Statutory reference which provides the law enforcement unit with the authority of detecting crime and enforcing the general criminal laws:

2. Statutory reference authorizing carrying a firearm in the performance of duty;

3. Statutory reference to the police training requirement or Police Commission Training (PCT); and

4. Statutory reference that the holder of the position has police powers.]

1. A copy of the ordinance, resolution or legal authority of the governing body of the State, county or municipality to create and establish a State, county or municipal police department, as required under the provisions of N.J.S.A. 43:16A-62, 40A:14-106 and 40A:14-118 et seq.;

2. Statutory reference that provides the law enforcement unit with the authority of detecting crime and enforcing the general criminal laws of the State;

3. Statutory reference authorizing a police officer to carry a firearm in the performance of his or her duty;

4. Statutory reference that identifies the police powers of the position;

5. Statutory reference to the police training requirement of the Police Training Commission (PTC) or proof of comparable training;

6. Identification of the type of position (entry level, promotional, administrative/supervisory position over police officers). Also include a list of all job titles within the police department;

7. The selection/promotional process for the candidate to this position;

8. An official job description for the position;

9. A copy of the ordinance or resolution that establishes the position and sets forth the compensation and the duties associated with such position;

10. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position; and

11. A copy of the organizational chart for the police department, which identifies the positions and reporting relationships of the staff within the police department. The chart must include names and pension member numbers.

17:4-2.2   Compulsory enrollment

[Membership] Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, membership in the Police and Firemen's Retirement System of New Jersey is mandatory, and a condition of employment for every "police officer" or "firefighter" under the provisions of N.J.S.A. 43:16A-1 et seq.

17:4-2.4   [(Reserved)] Training requirements

(a) As required under N.J.S.A. 43:16A-1(2)(a)(iii), permanent, full-time police officers are required to successfully complete the training requirement prescribed under N.J.S.A. 52:17B-66 et seq., (Police Training Commission (PTC)) or proof of comparable training requirements as determined by the Board of Trustees.

1. For positions under the statutory authority of the PTC, all police applicants must receive certification of successful completion of the basic training course for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training approved by the PTC pursuant to N.J.S.A. 52:17B-66 et seq.

2. For positions that are not under the statutory authority of the PTC, all police applicants are required to complete comparable training to that prescribed by the PTC for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training. The applicant or the employer must submit proof of the aforementioned training.

3. An applicant may be exempt from some parts of the basic training course if the applicant has successfully completed police training conducted by a Federal, State or county agency if the requirements are substantially equivalent to the requirements of a municipal police officer and approved by the PTC.

i. For those positions under the statutory authority of the PTC, the applicant must receive certification from the PTC regarding such exemption and successfully complete the remaining course work at an approved PTC school in New Jersey.

ii. For those positions not under the statutory authority of the PTC, in order for the Division of Pensions and Benefits to consider whether the applicant qualifies under the comparable police training rule, the applicant must submit the following documents to the Division of Pensions and Benefits for review of the authorized training credit:

(1) A letter of waiver request;

(2) A transcript of the training courses from the prior Federal, State or county agency, including the dates of completion for each course; and

(3) The course description of each and every police training course that the police applicant wishes to use for an exemption.

4. Comparable training for out-of-State police training courses cannot be more than three years from the date the police applicant graduated from the police academy.

5. Comparable training for in-State police training courses cannot be more than three years from the date the police applicant separated service with the former New Jersey employer to the date of the employment with the current New Jersey employer.

6. The applicant must successfully complete the remaining course work at either an approved PTC school in New Jersey or school offered comparable training to that prescribed by the PTC as set forth in (a)2 above. The applicant or the employer must submit evidence to the Division of Pensions and Benefits that such basic training course was satisfactorily completed.

7. Any current PFRS police members that have not successfully completed the PTC or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.

(b) As required under N.J.S.A. 43:16A-1(2b), permanent, full-time firefighters are required to successfully complete the Firefighter I certification prescribed under N.J.A.C. 5:73-4.2, 4.3 and 4.4, or determined by the Board of Trustees.

1. Since all firefighting applicants must comply with N.J.A.C. 5:73-4.2, 4.3 and 4.4, the PFRS Board has determined that comparable training pursuant to the New Jersey Department of Community Affairs, Division of Fire Safety - Office of Training and Certification guidelines will be the only authorized agency to determine if the firefighting applicant's training meets the requirements for the Firefighter 1 certification.

2. Any current PFRS firefighting members that have not successfully completed the firefighter 1 certification or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.

17:4-2.6   Enrollment date

(a) [An] Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee who is appointed to a [permanent position] regular classified appointment from a [civil service] Civil Service list to a PFRS position shall be considered [as having begun eligibility] for PFRS enrollment [on the date of regular appointment] upon successful completion of the police or firefighting training.

1. For employers who report on a monthly basis, the compulsory enrollment date shall be fixed as the first day of the following 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] after successful completion of the police or firefighting training.

2. For employers who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the following 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] after successful completion of the police or firefighting training.

(b) [An] Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee in the unclassified service shall be considered as beginning service on the date employment began. The compulsory enrollment date for employers who report on a monthly basis shall be fixed as the first of the following 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] after successful completion of the police or firefighting training. The compulsory enrollment date for employers who report on a biweekly basis shall be fixed as the first day of the following bi-weekly pay period after successful completion of the police or firefighting training.

(c) [For local] Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee who is appointed in a regular budgeted position with an employer[s] not covered by [civil service, a regular appointment shall constitute the date the employee originally accepted employment in a regular budgeted position] Civil Service shall be considered for PFRS enrollment upon successful completion of the police or firefighting training.

1. For [local] employers not covered by [civil service] Civil Service who report on a monthly basis, the compulsory enrollment date shall be fixed as the first day of the following 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] after successful completion of the police or firefighting training.

2. For [local] employers not covered by [civil service] Civil Service who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the following 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] after successful completion of the police or firefighting training.

[(d) An employee 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 the employer for the one-year period following the employee's date of hire, but if the employment continues into a second year, the employee will be required to enroll immediately in the Public Employees' Retirement System pursuant to the provisions of N.J.A.C. 17:2-2.8.

(e) An employee cannot receive or purchase credit in the Retirement System for the initial pay period or month of employment if that employment began after the seventh day of the pay period or after the 16th day of the month.]

(d) Employees (both Civil Service and non-Civil Service locations) who are hired into approved PFRS titles and are otherwise eligible, will not be permitted enrollment in PFRS, until the employer certifies that the employees have successfully completed the police or firefighting training.

(e) In the interim, individuals hired in eligible police or fire positions will not be permitted to participate in any other State-administered retirement system based upon the same police or fire position.

SUBCHAPTER 5.  PURCHASES AND ELIGIBLE SERVICE

17:4-5.3   Optional purchases of eligible 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 share-cost purchase will be calculated on the basis or the actuarial purchase 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.-2. (No change.)

3. Temporary Service:

[3.] i. [Continuous temporary service as a police officer or firefighter immediately preceding enrollment.] "Special Police Officer" service [and time attending the Police Academy or Firefighter training] cannot be purchased; and

ii. Police academy or firefighting training cannot be purchased unless the training was rendered while serving and receiving compensation in an eligible New Jersey police or firefighting position;

4. Leaves of absence without pay when:

i. The period of the leave is for personal reasons, which does not exceed 93 days. Childcare is considered leave for personal reasons[.]; and

ii. The period of the leave is up to two years for personal illness. The Division may require proof from the employer that the illness existed for the length of the leave; and

5. (No change.)

(b)-(c) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 4677(a)

Proposed Amendment: N.J.A.C. 17:2-2.8

Public Employees' Retirement System

Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Authority: N.J.S.A. 43:15A-17.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2008-292.

Submit comments by October 17, 2008 to:

Susanne Culliton
Division of Pensions and Benefits
P.O. Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Public Employees' Retirement System (PERS) proposes to delete N.J.A.C. 17:2-2.8(d), Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles. The administrative regulation needs to be deleted because it is incorrect. A temporary or provisional employee who holds a Police and Firemen's Retirement System (PERS) position is not allowed to enroll into the PERS while awaiting permanent appointment to his or her position. In deleting subsection (d) of N.J.A.C. 17:2-2.8, the Board is able to clarify the legislative intent regarding the enrollment eligibility of a provisional or temporary employee. The Board relies on enrollment and membership statutes N.J.S.A. 43:15A-7 and 43:15A-75, which govern PERS positions and case law in explaining the necessity of deleting N.J.A.C. 17:2-2.8(d).

Briefly, by way of background, in 1985, the Legislature amended N.J.S.A. 43:15A-75, requiring mandatory enrollment in PERS for those employees who were not eligible to become a member of another retirement system. Also, the Legislature in 1985 amended PERS membership statute, N.J.S.A. 43:15A-7, to mandate enrollment in PERS for temporary or provisional employees in PERS covered positions that had at least one year of continuous service in a position that did not qualify in any other system. Both these amendments were made in accordance with PERS enrollment statutes and were not meant to apply to members otherwise eligible for enrollment pursuant to the law governing PFRS qualifications and requirements for membership.

Indeed, the requirements for PFRS are different from the membership and enrollment requirements of the PERS. The Legislative amendments in 1985 reiterate this when they speak to the mandatory enrollment for temporary or provisional employees in PERS covered positions. N.J.S.A. 43:16A-1.2 mandates that a person employed in a position covered by PFRS, and who is eligible for membership in PFRS, is ineligible for membership in another State administered or county or municipal retirement system. Therefore, an employee hired provisionally or on a temporary basis in an eligible PFRS title prior to 1985 would not be subject to membership and enrollment eligibility for PERS.

Recently, the Appellate Division, in an unreported case--In re Certain Employees of the Gloucester County Sheriff's Department vs. The Board of Trustees of the Public Employees' Retirement System, No. A2154-04T1 (App. Div. 2006), supported this interpretation when it upheld the PFRS denial of 28 officers and members of the PFRS to receive retroactive enrollment in PERS for the gap time served as temporary or provisional employees before obtaining permanent appointment to their PFRS position.

Subsection (d) has been deleted so that the Board can properly clarify the legislative intent regarding PFRS eligibility while in a status of provisional or temporary employment. Further, N.J.A.C. 17:2-2.8(d) is being deleted so that it is not in conflict with both N.J.S.A. 43:15A-7 and 43:15A.-75.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirements pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The proposed deletion will have a beneficial effect on members and on the PERS. The deletion will ensure consistency and uniformity in the current enrollment practices. The proposed amendment of N.J.A.C. 17:2-2.8(d) contains a deletion which permits proper clarification of the legislative intent regarding N.J.S.A. 43:15A-7 and 43:15A.-75, which is not to allow a temporary or provisional employee holding a PFRS position enrollment in PERS while awaiting permanent appointment to their position. Instead, those individuals in PFRS covered titles are earmarked for permanent membership in PFRS once they meet all of the criteria for enrollment. In particular, the Board clarifies that an employee holding a PFRS title is PFRS eligible while in a provisional or temporary employment status and cannot qualify for PERS membership.

The social benefits of this proposed deletion outweigh any negative effects that the amendment may impose on employers and employees. Providing proper interpretation of enrollment eligibilities will give PERS members a better understanding of their status regarding enrollment. The Division's current proposed amendment to N.J.A.C. 17:4-2.6 (published elsewhere in this issue of the New Jersey Register) provides further clarity regarding PFRS enrollment by standardizing the PFRS enrollment practice for both Civil Service and non-Civil Service positions.

Economic Impact

The proposed deletion will have a positive economic impact on the PERS, employers and members, in that it clarifies that an individual holding a PFRS title during temporary or provisional employment is PFRS eligible and thus would not be eligible for enrollment in another pension system. When reading both N.J.S.A. 43:15A-7 and 43:15A-75 together the Board has resolved doubts and uncertainties regarding the Legislature's intent involving eligibility for the PERS. By holding a PFRS title, one cannot qualify for PERS membership. The Division of Pensions and Benefits will continue to monitor the impact of the proposed deletion.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-7 and 43:15A-75 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Public Employees' Retirement System only affect public employers, public employees and their dependents and beneficiaries. Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The proposed amendment will not have any impact on housing affordability because they apply to public retirement pensions.

Smart Growth Development Impact

The proposed amendment will not have any impact on the achievement of smart growth development because they apply to public retirement pensions.

Full text of the proposed amendment follows (deletion indicated in brackets [thus]):

17:2-2.8   Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles

(a)-(c) (No change.)

[(d) Any full-time employee hired provisionally or on a temporary basis in an eligible PFRS title prior to April 17, 2000 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 May 1, 2000. Once enrolled, a member may purchase any provisional or temporary service with the same employer which led to enrollment in the PERS.]


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION

40 N.J.R. 104 (a)

Proposed Amendment: N.J.A.C. 17:9-6.10

State Health Benefits Program

Retiree Prescription Drug Plan

Authorized By: State Health Benefits Commission, Frederick J. Beaver, Secretary.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Authority: N.J.S.A. 52:14-17.27.

Proposal Number: PRN 2008-15.

Submit comments by March 7, 2008 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, New Jersey 08625

The agency proposal follows:

Summary

In January 2000, the State Health Benefits Commission (Commission) initiated a five-year pilot program establishing a retiree prescription drug plan for Traditional Plan and NJ PLUS retirees. The pilot program was codified through the adoption of N.J.A.C. 17:9-6.10, effective March 20, 2000. The original pilot program was scheduled to expire in March of 2005; however, subsequent amendments to N.J.A.C. 17:9-6.10 extended this program until December 31, 2007. In order to avoid the interruption of prescription drug coverage for eligible retirees and their dependents, and in recognition of recent legislation, which significantly impacts the State Health Benefits Program (SHBP), the Commission proposes to remove the provisional aspects of the program and fully incorporate it within the State Health Benefits Program.

Pursuant to the provisions of P.L. 2007, c. 103 the Traditional Plan and NJ PLUS are to be eliminated and replaced with preferred provider organization plan designs. The vendor(s) for the new plans will be chosen through the public bid process now being conducted by the Commission for the new medical plan designs and for the health maintenance organizations (HMOs) that will be offered under the SHBP. Further, the legislation establishes a separate School Employees Health Benefits Program (SEHBP) for employees and retirees of local education employers. Chapter 103 details the benefits to be provided by the SEHBP, and incorporates much of the program design of the regulation governing the Retiree Prescription Drug Plan within the statute governing the SEHBP.

In recognition of the fact that this long-running pilot program has come to be considered an integral part of the benefits available to retirees covered under the SHBP, and is now detailed within the statute with regards to the SEHBP, the Commission proposes to delete the provisional or "pilot" aspect from N.J.A.C. 17:9-610(b) and remove the reference to an ending period for the program. The Commission also proposes to delete the second sentence found at N.J.A.C. 17:9-6.10(b), which prohibits payment for prescription drug expenses and reimbursement of member prescription drug co-payments under the major medical portion of the Traditional Plan or NJ PLUS, since the major medical portion of the Traditional Plan and NJ PLUS is now to be eliminated under the provisions of P.L. 2007, c. 103. The Commission proposes to eliminate the reference to the major medical portion of the Traditional Plan and NJ PLUS at N.J.A.C. 17:9-6.10(c) for the same reason. The Commission proposes to clarify that reimbursement for the co-payments required under the prescription drug plan may not be made under the medical portion of any SHBP plan at N.J.A.C. 17:9-6.10(b).

The Commission proposes to add language to the definition of "prescription drug plan" found at N.J.A.C. 17:9-6.10(a) to extend the prescription drug plan to all retirees and their dependents that enroll in the SHBP, rather than limiting enrollment only to participants of the Traditional Plan and NJ PLUS, or the new plans that will replace these plans. This is in keeping with the provisions of the Request for Proposal that was recently released by the Commission as required by the provisions of P.L. 2007, c. 103. This change will impact the HMOs that contract with the Commission and the retirees who have elected to enroll in these HMOs. The Commission notes that the current HMO prescription drug card plans for retirees will not meet the requirements for the retiree prescription drug coverage for the new SEHBP as it is detailed under the provisions of P.L. 2007, c. 103.

The Commission also proposes to add "pharmacy benefit manager" to the definition of "Provider" found at N.J.A.C. 17:9-6.10(a). While the Commission currently provides prescription drug coverage to retirees through their respective medical plans, many of which subcontract with pharmacy benefit managers to provide such coverage, the Commission may contract directly with a pharmacy benefit manager or pharmacy benefit managers for such services in the future and therefore proposes to add this term to the definition of provider for clarification purposes.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendments to N.J.A.C. 17:9-6.10 would have a beneficial social impact on retirees and their dependents in the Traditional and NJ PLUS plans by continuing the plan and ensuring that individuals covered by the State managed care plans that will replace the Traditional Plan and NJ PLUS will have access to this coverage. The plan is highly utilized and makes prescription drugs both affordable and accessible.

Currently, approximately 86 percent of the nearly 131,000 retirees enrolled in the SHBP are covered under the Traditional Plan and NJ PLUS and are therefore covered under this Retiree Prescription Drug Plan. The other 14 percent of retirees are enrolled in HMOs. The expansion of the plan to encompass retirees and their dependents that are enrolled in the HMOs will ensure uniformity of prescription drug coverage across all medical plans available to retired SHBP participants. It should also help reduce anti-selection issues that may affect the choice of health plan based upon its prescription drug plan design and lessen the confusion that often surrounds the choice of medical plan coverage for retirees.

The taxpaying public is affected by these proposed amendments in the sense that public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the SHBP, which the rules require.

Economic Impact

The proposed plan would be an economic benefit to participants who would continue to be able to obtain prescription drugs by payment of co-payments and access to a cost-effective mail-order program. Should this program be allowed to expire, retirees covered by the program would be forced to (1) switch enrollment to one of the HMOs offered by the SHBP (if eligible) to obtain access to a prescription drug plan, (2) pay the entire cost of any prescription drug they obtain at the retail pharmacy and thereafter apply for any reimbursement that might be available from the SHBP medical plan, or (3) utilize some other prescription drug plan (for example, a spouse's prescription drug plan) if such coverage is available to them.

By expanding this plan to include retired participants enrolled in the HMOs and standardizing the design across medical plans, the Commission may realize greater savings should it seek the services of a pharmacy benefits manager through a public bid.

Further, retired participants enrolled in HMOs who have higher than average utilization of prescription drugs will now have some level of protection against out-of-pocket costs associated with their co-payments, since these will now be subject to an annual out-of-pocket expense limit. The prescription drug plans currently available to HMO participants require the payment of co-payments indefinitely, regardless of the amount of out-of-pocket expenditure of the participant.

Federal Standards Statement

A Federal standards analysis is not required because the rulemaking requirements for the State Health Benefits Program are governed by State law, specifically N.J.S.A. 52:14-17.27, and are not subject to any Federal requirements or standards.

Jobs Impact

The proposed amendments will not result in the creation of new jobs or loss of existing jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendments with their written comments.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required for the proposed amendments because they do not impose reporting, recordkeeping or other compliance requirements upon small businesses as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. The rules of the State Health Benefits Commission only affect public employers, employees and retirees.

Smart Growth Impact

The proposed amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:9-6.10 Retiree prescription drug plan

(a) The following terms, as used in this section, shall have the following meanings:

. . .

"Prescription drug plan" means the plan for providing 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 the State managed care plan (NJ PLUS) as prescribed by this section. Upon the effective date of the contracts to implement the successor or replacement plans for the Traditional Plan and NJ PLUS pursuant to the provisions of P.L. 2007, c. 103, "prescription drug plan" shall mean the plan or plans providing payment for eligible prescription drug expenses for all State Health Benefit Program retirees and their eligible dependents.

"Provider" means an insurance company, hospital, medical, or health service corporation, pharmacy benefit manager, or health maintenance organization under agreement or contract with the Commission to administer the prescription drug plan.

. . .

(b) [As a pilot program from March 20, 2000 to December 31, 2007, 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 plan. Payment for prescription drug expenses or the co-payments required under the prescription drug plan shall not be made under the major medical portion of the Traditional Plan or NJ PLUS.] Reimbursement for the co-payments required under the prescription drug plan shall not be made under the medical portion of any SHBP plan. 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 prescription drug plan.

(c) Eligibility of prescription drug expenses for coverage under the prescription drug plan shall be determined on the same basis as reasonable and necessary medical expenses under the [major medical portion of the Traditional Plan and NJ PLUS] State Health Benefits Program.

(d)-(l) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 4942(a)

Proposed Readoption: N.J.A.C. 17:10

Judicial Retirement System

Authorized By: Judicial Retirement System, Peter Gorman, Acting Secretary, State House Commission.

Authority: N.J.S.A. 43:6A-29d.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2008-295.

Submit comments by November 1, 2008 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

When the Division of Pensions and Benefits becomes aware of a change in the laws or a court decision that possibly could affect the Judicial Retirement System (JRS), 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's staff to ascertain if the current rules are necessary and/or cost efficient. After careful scrutiny of the current rules in N.J.A.C. 17:10, the Division is satisfied that no changes are necessary or needed for the efficient operation of the System. Accordingly, the Division of Pensions and Benefits proposes to readopt the current rules within N.J.A.C. 17:10, which expire on December 24, 2008, pursuant to N.J.S.A. 52:14B-5.1c. The current rules deal with the administration, enrollment, membership, retirement and transfer aspects associated with the Judicial 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 System. The protections and guarantees that these rules afford its members mandate their continued existence.

The rules proposed for readoption reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the Judicial Retirement System. The chapter originally became effective November 29, 1973. Pursuant to Executive Order No. 66 (1978), the chapter was readopted in 1983 arid 1988. Pursuant to Executive Order No. 66 (1978), Chapter 10 expired on May 6, 1993 and was adopted as new rules effective August 2, 1993. Chapter 10 was readopted in 1998 and again in 2003. The current rules deal with the administration, enrollment, membership, retirement and transfer aspects, along with service purchase and insurance and death benefits associated with the Judicial Retirement System.

N.J.A.C. 17:10 in its entirety would remain unchanged.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules involving the Judicial Retirement System affect and work to the benefit of the members, retirees and beneficiaries of the JRS. The members, retirees and survivors of retirees rely on the efficient operation of the retirement system to provide them with monthly retirement benefits and with the information they need regarding their individual accounts. They rely upon the presence and predictability of the rules, which guide the administration of their benefits and the stability of the System. The protections and guarantees that these rules afford its members mandate their continued existence.

The taxpaying public is affected by these rules in the sense that public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the JRS, which the rules require.

Economic Impact

The rules proposed for readoption will not present any economic effects on the public; they will continue existing, long-standing, regulatory requirements. The rules proposed for readoption will serve to preserve the efficient administration and operation of Judicial Retirement System. Further, the rules proposed for readoption will enable the Division of Pensions and Benefits to continue to provide for benefits in a manner, which meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:10 have proven to be effective over time in the proper administration of the Judicial Retirement System. Without the administrative rules to provide for the efficient operation of the System, financial chaos may occur.

The Division of Pensions and Benefits will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules, which would impose any hardship or costs on the members of the Judicial Retirement System, or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption because N.J.S.A. 43:6A-29d governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the rules proposed for readoption will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the rules proposed for readoption with their written comments.

Agriculture Industry Impact

The rules proposed for readoption will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Judicial Retirement System only affect public employers and employees. Thus, the rules proposed for readoption do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The rules proposed for readoption will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption will not have any impact on housing affordability because they apply to public retirement pensions.

Smart Growth Development Impact

The rules proposed for readoption will not have any impact on the achievement of smart growth development because they apply to public retirement pensions.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:10.


ADOPTIONS


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION

40 N.J.R. 6651(a)

Adopted Amendment: N.J.A.C. 17:9-6.10

State Health Benefits Program

Retiree Prescription Drug Plan

Proposed: January 7, 2008 at 40 N.J.R. 104(a).

Adopted: October 8, 2008 by the State Health Benefits Commission, Frederick J. Beaver, Secretary.

Filed: October 17, 2008 as R.2008 d.347, without change.

Authority: N.J.S.A. 52:14-17.27.

Effective Date: November 17, 2008.

Expiration Date: April 7, 2009.

Summary of Public Comments and Agency Responses:

The Division of Pensions and Benefits received five comments from the following individuals and entities:

1. Charles Wowkanech, President, and Laurel Brennan, Secretary/Treasurer, New Jersey State AFL-CIO

2. James Jameson, Associate Director Research and Economic Services, New Jersey Education Association

3. Jeffrey Smith, President, New Jersey Superior Officers Association

4. Robert Pursell, Communication Workers of America New Jersey Area Director

5. Jean (submitted comment via email with first name only)

The timely submitted comments and responses are summarized below:

1. COMMENT: Commenters 1 and 4 state that the increases in co-payments should not be permitted because it will shift the cost of health care coverage to many retired public employees living on fixed incomes. Both commenters assert that their outside consultants estimate that by the end of the current collective bargaining contract, the increase for prescription coverage will be approximately $ 200.00, which they claim is an 80 percent increase in co-pay expenses.

RESPONSE: The Division thanks the two commenters for their comments. It is important to note that the section of the rules that deals with the formulary for the escalator, which is applied to the co-payments and maximum out-of-pocket (OOP) for each year, has not been amended by this rulemaking. The State Health Benefits Commission (Commission) respectfully refers the commenters to the current text of the rules at N.J.A.C. 17:9-6.10(e) and (f). It states that co-payments shall be reviewed by the actuaries each year to ensure the copayment schedules are properly regulated for retirees. This process has been in existence for the Traditional Plan and NJ PLUS (now NJ DIRECT 10 and 15) since the adoption of this rule in March, 2000. The State Health Benefits Commission is required to manage the entire health benefits system. As such, it has reviewed significant data provided by the actuary regarding the HMOs and the anticipated savings for Plan Year 2009 and beyond from the changes in the HMO co-pays and the OOP maximum. They stated: "The increase in HMO co-pays is projected to decrease retiree HMO prescription drug costs 2%, and the introduction of the OOP maximum is projected to increase Retiree HMO prescription drug costs 1%, so the net savings is 1% of Retiree HMO prescription drug costs. Plan Year 2009 net savings is projected as $ 0.3 million for the State and $ 0.1 million for local government. A longer term benefit of this change is that [is] sic it should help with the apparent HMO anti-selection that is occurring among retirees due to the lower drug co-pays available through the HMO. This anti-selection is demonstrated via the "migration factors" calculated for the renewal . . . as well as the projected 2009 costs which are 25% higher for HMO retirees as compared to the NJ DIRECT retirees."

Regarding the adopted amendment, regarding retirees' prescription drug coverage, the Commission is mindful that there are several retirees that are living on a fixed income who would benefit from the proposed amendment to continue coverage beyond the pilot program. The Commission is striving to seek a more equitable approach to retiree prescription drugs. By applying the escalator set forth at N.J.A.C. 17:9-6.10(f) to the current rates for HMOs and PPOs, the Commission hopes to further its goal of uniformity. The Commission is not proposing to increase the co-payments of the HMO to an amount equal to the NJ DIRECT plans, but rather to increase them using the same percentage rate applied to the current co-payments, by applying the escalator recommended by the actuary on a consistent and reliable basis across all the plans.

The Commission is unaware of the manner in which the commenter arrived at $ 200.00 and as such it is impossible to respond to this part of the comment.

2. COMMENT: Commenters 1, 3 and 4 have opposed the proposed amendment to N.J.A.C. 17:9-6.10, as they argue that the changes made to the prescription coverage are contrary to their respective collective bargaining agreements, or in the case of Commenter 3, that no collective bargaining agreement has yet been settled upon. The same commenters also contend that the increase copayments are a violation of the current union contract, which was ratified last year after a lengthy collective bargaining process.

RESPONSE: The Division thanks the commenters for their comments. Commenter 3 correctly stated that the purpose of this amendment is to "make the retiree prescription drug program permanent, and to expand it to all retirees rather than just those retirees in the Traditional Plan and/or NJ PLUS" (now NJ DIRECT 10 and 15). It is important to note that all retirees are either in the retired PPO group or retired HMO group. They were all moved into the PPO or HMO at the commencement of the contract period, or April 1, 2008. Additionally, the unions have not bargained prescription drug coverage costs for the retiree population. In times of rising health care costs the Commission continues to review and assess the annual escalator of the State Health Benefits Program (SHBP), which gradually imposes increased co-payments formerly to only the Traditional Plan and NJ PLUS. The pilot program has been in place since March, 2000. These rules also require that the escalator be applied to the co-payments for prescription drug coverage. In this amendment, the Commission proposed that the escalator be applied to all retiree prescription drug plans in an effort to attain equity among retirees. Thus, the changes in this rule are simply to apply this escalator more uniformly across the health plans and to permit the out-of-pocket maximum to apply to all members of the various health plans as well. This is not is violation of any collective bargaining agreement.

3. COMMENT: Commenter 2, the New Jersey Education Association, contends that the proposed amendment will have a significant impact on the State's retirees enrolled in an HMO and its comments are based upon the assumption that the prescription drug card has been eliminated. Additionally, Commenters 2 and 5 contend that eliminating the HMO prescription card will affect close to 15,000 retirees by placing an undue burden on those retirees receiving prescription drug coverage. Both commenters further added that the current HMO prescription drug plan which allows for payment of co-payments indefinitely regardless of the out-of-pocket expenditures of the participant may be jeopardized once the HMO card is eliminated because HMO retirees will be subject to higher co-payments based on an annual escalator.

RESPONSE: The Division thanks the commenters for their comments. Further, the Commission wants to ensure that the current HMO retiree prescription drug plan is not being eliminated and will be consistent with the prescription drug coverage established for the new School Employees' Health Benefits Program Act (SEHBP) under P.L. 2007, c. 103. Specifically, Chapter 103 states that, A co-payment shall be required for each prescription drug expense until a retiree or eligible dependent satisfies the maximum annual out-of-pocket expense for a calendar year prescribed in subsection f. of this section. The amounts of the co-payments shall be the same as those in effect as of July 1, 2007 for retiree prescription drug coverage under the State Health Benefits Program.(emphasis added)

Currently an HMO member does not have a maximum prescription out-of- pocket limit. However, the proposed amendment to N.J.A.C. 17:9-6.10 would subject the HMO retiree to an annual out-of-pocket expense limit in addition to the increased copayments. Likewise, employees and retirees participating within the newly established SEHBP for prescription drug coverage are also subject to an out-of-pocket expense limit per calendar year as proposed under N.J.A.C. 17:9-6.10 and required in P.L. 2007 c. 103. In order to ensure uniformity among all plans, the current HMO prescription coverage needs to be amended in order to align these benefits more closely with the benefits offered under the PPO. As set forth above, the prescription drug card program for HMOs will not be eliminated. Nor will the co-payments for the HMO prescription drugs be raised to the same amount as those charged for the PPO. Rather, the escalator set forth in subsection (f) of this rule, which has not been amended, will be applied to all current rates. It is important to note that the co-payments for the HMOs will continue to be less than the PPO plans (NJ DIRECT 10 and 15). The escalator, which is set forth in subsection (f) of this rule, is applied to the current rates for each of the plans. Additionally, the cap will be consistent and applied consistently throughout the entire program, thus satisfying the Commission mandate in N.J.S.A. 52:14-17.29 to avoid inequity in the program. Thus, each of the members of the State Health Benefits Program will have the same maximum out-of-pocket applied.

4. COMMENT: Commenter 5 has made a recommendation that the New Jersey State Health Benefits Commission: 1) extend the Pilot Program again or 2) adopt the plan and remove its pilot status.

RESPONSE: The Commission thanks the commenter for her comments. The Commission is bound by its own rules and any statutory changes that are made by the Legislature. The escalator has long been in place and is now applied across the plans to ensure a more uniform cost to the members of the State Health Benefits Program. This rule proposes to remove the pilot program and adopt the plan permanently. The plan has been in existence for almost nine years and has been beneficial for both plan sponsors and retired members. Clearly, the pilot period is past. The Commission does not want this card plan to be in danger of expiring and does not wish to rely on annual extensions of the plan to maintain the benefit. Further, recent statutory changes required the card plan to be fully incorporated as part of SEHBP.

5. COMMENT: Commenters 2 and 4 have raised concerns that the increase copayment in the HMO prescription card program will result in migration to the NJ DIRECT plans, which will cause additional premium costs to the State. Also, the commenters question the legality of the Commission's proposal to apply the annual escalator to all the health plans for retiree prescription drug coverage, specifically questioning whether P.L. 2007 c. 103 permits this increase in co-payments. Additionally, Commenter 4 states that Aon "estimates reveal that approximately 45% of the potential savings from discontinuing the prescription drug plan administered by the HMOs will, on average, be lost if a retiree switches from an HMO to NJ DIRECT."

RESPONSE: The Division thanks the commenters for their comments. The comments made are inaccurate. NJ DIRECT per member prescription drug costs are not more costly than those of the HMOs as set forth in the chart below:

INCURRED PRESCRIPTION DRUG CLAIMS (PY 4/1/08-12/31/08)

 

 

 

 

 

 

 

Total

NJD10

NJD15

Aetna

CIGNA

 

-----

-----

-----

-----

-----

 

 

 

 

 

 

Retirees

55,221

28,462

16,219

8,652

1,888

RX incurred
costs

$ 132,000,000

$ 66,100,000

$ 39,100,000

$ 21,600,000

$ 5,200,000

 

 

 

 

 

           

Cost/mbr

$ 2,390

$ 2,322

$ 2,411

$ 2,497

$ 2,754

 

 

 

 

 

 

The following comments were set forth in the actuary's report relative to this issue:

— For retirees, the difference in prescription drug co-pays made the HMOs a richer benefit design than the Horizon plans, so retirees with high prescription drug card costs would be more likely to consider a switch to HMOs.

— Horizon has implemented a number of new care-management initiatives over the past couple of years that has helped control their claim costs. Many of these initiatives were already present in the HMO benefits, but adding them to Horizon plans helped reduce Horizon trends.

— The new benefit landscape, effective April 12, 2008, had a larger impact on Horizon than on the HMOs because the change from the Traditional Plan to NJ DIRECT results in large savings due to increased in-network utilization and care management.

Each year that retiree HMO prescription drug co-payments remained at fixed levels the cost share relationship was eroded. This meant that every year program sponsor(s) paid a larger percentage of the overall cost of providing HMO retiree prescription drug benefits, while the retirees' percentage payment of that cost decreased. Over time, the HMO prescription drug benefit, therefore, became richer than the retiree prescription drug benefits available in the other State Health Benefits Program plans. By applying an annual escalator to the HMO prescription drug co-payments and, in the future, to the annual out-of-pocket expense associated with these co-payments, the retirees' cost-share, as a percentage of total prescription drug cost, should remain relatively constant over time, while still protecting retirees with the highest prescription drug utilization from catastrophic expenses. Such changes should also help to encourage retirees to take advantage of more cost-effective purchasing options, such as mail-order and the increased use of generic alternatives, where appropriate.

Federal Standards Statement

A Federal standards analysis is not required because the rulemaking requirements for the State Health Benefits Program are governed by State law, specifically N.J.S.A. 52:14-17.27, and are not subject to any Federal requirements or standards.

Full text of the adoption follows:

17:9-6.10   Retiree prescription drug plan

(a) The following terms, as used in this section, shall have the following meanings:

. . .

"Prescription drug plan" means the plan for providing 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 the State managed care plan (NJ PLUS) as prescribed by this section. Upon the effective date of the contracts to implement the successor or replacement plans for the Traditional Plan and NJ PLUS pursuant to the provisions of P.L. 2007, c. 103, "prescription drug plan" shall mean the plan or plans providing payment for eligible prescription drug expenses for all State Health Benefit Program retirees and their eligible dependents.

"Provider" means an insurance company, hospital, medical, or health service corporation, pharmacy benefit manager, or health maintenance organization under agreement or contract with the Commission to administer the prescription drug plan.

. . .

(b) Reimbursement for the co-payments required under the prescription drug plan shall not be made under the medical portion of any SHBP plan. 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 prescription drug plan.

(c) Eligibility of prescription drug expenses for coverage under the prescription drug plan shall be determined on the same basis as reasonable and necessary medical expenses under the State Health Benefits Program.

(d)-(l) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION

40 N.J.R. 2130(a)

Adopted New Rules: N.J.A.C. 17:9-13

State Health Benefits Program

Proposed: May 7, 2007 at 39 N.J.R. 1645(a).

Adopted: March 19, 2008 by the State Health Benefits Commission, Frederick J. Beaver, Secretary.

Filed: March 26, 2008 as R.2008 d.99, without change.

Authority: N.J.S.A. 52:14-17.27.

Effective Date: April 21, 2008.

Expiration Date: October 9, 2008.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required because the rulemaking requirements for the SHBP are governed by State law, specifically N.J.S.A. 52:14-17.27. The only Federal law referenced by the adopted new rules is the Consolidated Omnibus Budget Reconciliation Act, P.L. 99-272 (COBRA), which provides for continuation of employer group health insurance when that insurance would otherwise end. However, the new rules permit continuation of coverage for certain individuals, as permitted under COBRA. Therefore, no Federal requirements or standards are exceeded.

Full text of the adopted new rules follows:

SUBCHAPTER 13. CHAPTER 375 DEPENDENTS

17:9-13.1 Eligibility criteria

(a) In order for a dependent to qualify for and remain eligible for State Health Benefits Program coverage after age 23 as a Chapter 375 dependent, the dependent must be a covered person's child by blood or law who:

1. Is less than 30 years of age;

2. Is unmarried;

3. Has no dependent of his or her own;

4. Is a New Jersey resident or enrolled as a full-time student at an accredited public or private institution of higher education; and

5. Is not actually provided coverage as a named subscriber, insured, enrollee, or covered person under any other group or individual health benefits plan, group health plan, church plan, or health benefits plan, or entitled to benefits under either Title XVIII of the Social Security Act, Pub.L. 89-97 (42 U.S.C. §§1395 et seq.).

17:9-13.2 Enrollment

(a) Enrollment of a Chapter 375 eligible dependent is voluntary. A separate election will be required for enrollment, change in or a voluntary termination of coverage for a Chapter 375 eligible dependent. If an employee or retiree (subscriber) does not elect coverage for a Chapter 375 eligible dependent by December 31, 2007, the subscriber may thereafter enroll the dependent as follows:

1. Submission of an enrollment application to the Division no later than 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1. Coverage will be effective the first coverage period of the month, 60 days after the dependent meets all eligibility criteria.

2. In the event a subscriber does not submit an enrollment application to the Division within 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1, the subscriber can only enroll the dependent during the annual October open enrollment period. If the dependent meets all eligibility criteria, coverage will be effective the first coverage period in January, following the open enrollment period.

(b) A subscriber who elects to enroll a dependent as a Chapter 375 dependent must report the dependent's qualifying status on the enrollment form and such signed enrollment form shall constitute the subscriber's certification that such dependent is the subscriber's child by blood or law and that such dependent satisfies, or will satisfy at the time of coverage, all eligibility criteria under N.J.A.C. 17:9-13.1. The subscriber is under a continuing obligation to immediately report any change in the dependent's qualifying status to the Division.

17:9-13.3 Coverage available

(a) An enrolled Chapter 375 dependent shall be provided coverage in the same medical plan in which the subscriber is enrolled. In the event the subscriber participates in a State Health Benefits Program (SHBP) prescription drug plan, the Chapter 375 dependent shall also qualify for participation in the same SHBP prescription drug plan.

(b) A Chapter 375 dependent is not eligible to receive dental or vision benefits.

17:9-13.4 Premium rates and payment for coverage

The Commission shall determine premium rates for enrolled Chapter 375 dependents, initially on the basis of the anticipated experience of the group and annually thereafter on the basis of the actual experience of the group. The subscriber is responsible for the cost of the State Health Benefits Program coverage for each enrolled Chapter 375 dependent.

17:9-13.5 Termination of coverage

(a) State Health Benefits Program (SHBP) coverage for a Chapter 375 dependent shall terminate in the event:

1. The Chapter 375 dependent no longer meets all of the criteria for eligibility at N.J.A.C. 17:9-13.1;

2. The employee's or retiree's death or other termination of the employee's or retiree's coverage;

3. The Chapter 375 dependent enters the Armed Forces;

4. The employee or retiree fails to make required premium payments for the Chapter 375 dependent; or

5. The Chapter 375 dependent dies.

(b) For any event described in (a)1 through 3 above, SHBP coverage for the Chapter 375 dependent shall terminate on the first day of the month following the event. With respect to (a)4 above, SHBP coverage for the Chapter 375 dependent shall terminate on the last day of the month for which a premium payment was made. With respect to (a)5 above, SHBP coverage shall terminate immediately following the Chapter 375 dependent's death.

(c) Termination of SHBP coverage for a Chapter 375 dependent is not a qualifying event for the continuation of SHBP coverage under the Consolidated Omnibus Budget Reconciliation Act, P.L. 99-272 (COBRA).

17:9-13.6 Notice of Termination of coverage for nonpayment of premiums

(a) If a subscriber fails to make a required premium payment for a Chapter 375 dependent by the end of the month in which premium payment is due, the Division shall notify the subscriber of the overdue amount on the next billing statement. Such notice shall advise the subscriber that the Chapter 375 dependent's right to continue coverage will be terminated if payment of the overdue premium payment and the current premium payment due is not remitted to the Division within 30 days. If payment is not remitted within 30 days, the Division shall terminate the Chapter 375 dependent's coverage effective the last day of the month for which premiums were paid.

(b) A Chapter 375 dependent terminated for nonpayment of premiums is not eligible to re-enroll as a Chapter 375 dependent until the next regular open enrollment, provided the dependent still meets all Chapter 375 dependent eligibility criteria.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 2122(a)

Adopted New Rules: N.J.A.C. 17:3

Teachers' Pension and Annuity Fund

Proposed: December 3, 2007 at 39 N.J.R. 5058(b).

Adopted: March 6, 2008 by the Teachers' Pension and Annuity Fund, Mary Ellen Rathbun, Secretary.

Filed: March 20, 2008 as R.2008 d.94, with substantive changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 18A:66-56.

Effective Date: April 21, 2008.

Expiration Date: April 21, 2013.

Summary of Public Comments and Agency Responses:

The Division of Pensions and Benefits (Division) received comments from the persons and entities listed below. The numbers in parentheses following each comment correspond to the commenter's listed below.

1. James Jameson, NJEA Research, New Jersey Education Association

2. Richard G. Bozza, Ed.D, New Jersey Association of School Administrators

3. Joanne D. Bartoletti, Executive Director, and Richard J. Klockner, Director of Retirement Services, New Jersey Principals and Supervisors Association

1. COMMENT: Referring to proposed N.J.A.C. 17:3-1.3(a), Commenter 1 and 3 suggest that the representative of the State Investment Council should be an active member of the Board of Trustees (Board) of the Teachers' Pension and Annuity Fund (TPAF). They expressed their concerns that the representative be an individual who is present at all regular meetings of the Board to both report about the activities of the Investment Council and to respond to questions of the individual Board members. Further, they expressed their desire to establish a mechanism to replace any representative of the Investment Council prior to the expiration of the term should that Board member cease to be a TPAF Board member.

RESPONSE: The Board disagrees with the commenters' suggestions that the Investment Council representative must be a current sitting member of the Board, as it is inconsistent with the governing legislation. N.J.S.A. 52:18A-83, (P.L. 2007 c. 103) requires that the representative be an active or retired member of the TPAF and not necessarily a present or former trustee. Additionally, N.J.S.A. 52:18A-83, specifically requires a three-year term rather than a one-year term for the representative. As such, narrowing the timeframe or the eligible pool of candidates to serve in this capacity is well beyond the scope of this new law. Clearly, the Legislature recognized that individuals may be vacating a seat on the Board yet continue to act as an investment council representative.

2. COMMENT: Referring to proposed N.J.A.C. 17:3-1.6(e), Commenter 1 expressed opposition that the annual report of the fund's actuary should not be released until it is approved by the Board. They stated that the audit should be a public document and members and beneficiaries should be allowed to speak at the Board meeting with the actuary present to answer questions directly.

RESPONSE: The Board disagrees with the commenter's assertions. The statute does not provide for any public forum to review and investigate the findings of the actuary. The Board desires to be consistent with the other State-administered retirement systems and each of them has a similar regulation regarding the actuarial reports. Additionally, the statutory framework requires this procedure. The actuary is retained by the Actuary Selection Committee pursuant to N.J.S.A. 18A:66-57. Further, pursuant to N.J.S.A. 18A:66-58, 58.1, and 59, the actuary is charged with the responsibility of recommending such data as shall be necessary for actuarial valuation of the fund. The statute authorizes the actuary to perform a three-year investigation into the mortality, service and compensation or salary experience of the member and provide information to the Board. Once these experience studies are presented to the Board, it is statutorily authorized to adopt the tables as deemed necessary and certify the rates of contribution, which shall be made by the State to the contingent reserve fund. Likewise, the actuary is statutorily charged with the responsibility to annually publish a report showing a valuation of the assets and liabilities of the fund. Once the information is provided to the Board and the Board adopts any tables, certifies the rates and reviews the assets and liabilities, the Board is required to submit the report to the Governor and furnish a copy to every employer. These reports are based upon the experience of the fund and provided for the Board's review and adoption.

3. COMMENT: Regarding proposed N.J.A.C. 17:3-1A.1, Commenter 2 states that the definition of "base salary" only covers employees covered by a collective bargaining agreement and suggests that it does not include employees covered by individual contracts.

RESPONSE: The Board respectfully disagrees with this assertion. The proposed definition of base salary states that the base salary is annual compensation of a member, in accordance with contracts, ordinances, resolutions, or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collected bargaining agreement. In summary, members employed under individual contracts are covered by the definition of base salary.

4. COMMENT: Regarding proposed N.J.A.C. 17:3-1A.1, all three commenters state their opposition to the definition of "extra compensation." The commenter's specifically focus on the language, which states "salary adjustments which are granted primarily in anticipation of a member's retirement or additional remuneration for performing duties that are not integral to the effective functioning of the regular school curriculum." The comments include an assertion that this definition goes above what is called for in N.J.S.A. 18A:66-2 and that the TPAF members are not provided with a clear definition of what is considered integral.

RESPONSE: The Board disagrees with the commenter's assertions. The proposal contains a definition of extra compensation ( N.J.A.C. 17:3-1A.1), as well as specific examples set forth under the section dealing with creditable compensation (see N.J.A.C. 17:3-4.1)

The term "extra compensation" is now defined in Subchapter 1A, Definitions, which includes definitions generally used in the rules. The definition of extra compensation was set forth by the Appellate Division in two separate matters construing creditable compensation. See Siri v. Bd. of Trustees of the Teachers' Pension and Annuity Fund, 262 N.J. Super. 147, 151-52 (App. Div. 1993) and Chomicki v. Bd. of Trustees of the Teachers, Pension & Annuity Fund, (A-4731-05T1 decided April 10, 2007) (unpublished).

Further, N.J.A.C. 17:3-4.1, Creditable compensation, specifically sets forth various forms of extra compensation, which shall not be included as creditable compensation. The term base salary is used in the statute in an effort to provide retirement benefits to teachers based upon service rendered as a teacher. Various forms of extra compensation have been included in salary reported to the Division, which is payment for service beyond those duties compensated by base salary. The specific examples of extra compensation that are set forth as N.J.A.C. 17:3-4.1(a)1i through xix are not new examples and have previously been in the Administrative Code. Most of these specific examples have sprung from matters that were previously considered by the Board. Lastly, the language used in subsections (i) and (j) dealing with sixth period and stipends offers language used by the Appellate Division in Siri and Chomicki in an effort to clarify and remain consistent.

5. COMMENT: Regarding proposed N.J.A.C. 17:3-1A.1, Commenters 1 and 3 indicated that the definition of "work year" does not accurately represent the work year for all members of TPAF. Further, Commenter 1 expressed a desire to create a new category for an 11-month work year, since some districts require that employees work prior to September and after June.

RESPONSE: The Board thanks the commenters for their comments. Historically, the most common employment periods for members of the TPAF are 10- and 12-month employees. Variations to these work years may exist among the employers, but most often the additional work is not creditable compensation. However, if an employment contract is provided and the member is able to establish that the 11 months are base salary pursuant to N.J.S.A. 18A:66-2 and N.J.A.C. 17:3-4.1, (that is, annual compensation of a member, in accordance with contract, ordinances, resolutions, or other 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), the salary may be reported over a 12-month period. The Division acknowledges the need to recognize various employment scenarios other than the most common 10- and 12-month period. Since the Division's practice of 10- or 12-month employment status is embedded in the computer systems within the Division, it is not currently possible to program each potential employer variation of a "work year." However, the Division recognized flexibility in the administration of this period is necessary to allow credit to members who meet the Division's criteria but not within the September through June timeframe. When an employer does not meet the most common formats of reports, that is, 10 or 12 months, proofs regarding the additional period of employment may be submitted to the Division to consider on an individualized basis. Thus, the Division has added the words, "or any other approved 10- or 12-month approved contract period."

6. COMMENT: Regarding proposed N.J.A.C. 17:3-4.1, all three commenters addressed the issue of creditable compensation. Specifically, six issues were raised regarding this proposal. 1) Commenter No. 1 raised the issue of revising the term "sixth" teaching period to "extra teaching duty beyond the regular contracted day"; 2) Commenters 1 and 2 also requested that the words "may be considered" should be changed to "will be granted" regarding when a stipend is considered creditable compensation and subject to pension deductions for retirement credit; 3) Commenter 2 indicates that more specific examples of creditable compensation should be provided; 4) Commenter 3 suggests that the Division should not base anticipated annual compensation on the Consumer Price Index as it may not accurately reflect the outcomes of collective bargaining, salary guide construction and regular uniform compensation structures of school districts; and finally, 5) Commenter 3 suggests that the Division should return contributions with interest.

RESPONSE: The Board thanks each of the commenters for their comments. Specifically each response will be numbered accordingly. 1) The Board agrees with Commenter No. l's suggestion to change the phrase sixth period. The original intent of the phrase was to include, for credible compensation purposes, periods during the school day wherein compensation shall be offered to all eligible an certified employees in the same position or covered by the same collective bargaining agreement, reported in regular, periodic installments in accordance with the payroll cycle of the employer and not offered to employees in anticipation of retirement. Formerly, "sixth period" was typically in addition to the regular contracted workday; however, the phrase sixth period is outdated. It has become a common practice for school employers to regularly contract for a sixth period. Thus the intent of the rule is satisfied and remains consistent by adding the language "a period during the regular contracted day" in lieu of "sixth period". Further, the phrase suggested by the commenters was "extra teaching duty beyond the regular contracted day." This phrase goes well beyond the intent of the rule in that it dealt with an extra teaching duty beyond the regular contracted day. Clearly, extra duties beyond the regular contracted day are extra compensation and beyond the scope of the statutory authority and the rules. 2) The Board respectfully disagrees with the comment of Commenters 1 and 2, as not all stipends can be considered creditable and a determination of same should be left to the sound discretion of the Board on a case-by-case basis. 3) Regarding the assertion of Commenter 2 that more specific examples of creditable compensation should be provided, the Board points out that N.J.A.C. 17:3-4.1 specifically lists examples of forms of extra compensation. These forms are the most common and the list has been developed over the years when addressed by the Board. The rule can be amended each time new forms of extra compensation are identified through the Board's fact-finding process. 4) The Consumer Price Index is a uniform tool used by each of the Boards throughout the Division to be certain that the anticipated annual compensation is applied in a consistent and fair manner to all members of the State-administered retirement systems. It is important to note that the CPI is merely a tool for the Division staff to use as a baseline to review. As suggested by Commenter 3, the outcomes of collective bargaining, salary guide construction and regular uniform compensation structures of school districts are indeed considered once the matter is reviewed and investigated. Such individual data shall be provided to the Division staff and may indeed result in a finding that the member's increase is credible compensation. 5) Unfortunately, the statute does not provide for the return of contributions with interest.

7. COMMENT: Regarding proposed N.J.A.C. 17:3-4.2, Commenter 2 cites to the proposal that members shall not receive service credit for a month that a member does not work and is not on an approved leave of absence. This commenter would like to be sure this is not applied retroactively. Further, they would like to add that the exception to not receiving service credit for a month that the member does not work be when they are on an approved leave of absence and/or suspended with pay in the absence of criminal charges or other indictment.

RESPONSE: The first comment challenges a longstanding practice of the Division. Credit has never been given to a member for a period of time in which the member does not receive salary or is not on an official approved leave of absence. There is simply no statutory authority to permit such credit. As to the second prong of this comment, a member who is suspended with pay will receive their pension credit without interruption provided the employer remits same to the Division. Thus, the suggested language is superfluous, and does not add any further interpretation of the statute.

8. COMMENT: Regarding proposed N.J.A.C. 17:3-2.8(d), Commenter 1 expressed concerns regarding the addition credible salary or service if rendered after the seventh day of the pay period. This comment is in regard to (enrollment date) wherein it is proposed that an employee cannot receive credit in the retirement system for the initial pay period or month of employment if that employment began after the seventh day of the pay period or after the 16th day of the month.

RESPONSE: The Board thanks the commenter for its comments. The proposed addition to the rules establishes consistency among the various Boards for establishing a uniform enrollment date for all employees in the various retirement systems administered by the Division. It has been the longstanding administrative practice of the Division (longer than 30 years) to provide parameters for entitlement to service for the pay period or month for establishing membership. This administrative determination was originally made as the Division required that a member actually worked 50 percent of the time period in order to receive credit. Thus, for a pay period of 14 days, service credit in not permitted after the seventh day, and for the month, not after the 16th day of the month. Additionally, since the rules governing the Public Employees' Retirement System and the Police and Firemen's Retirement System contain identical provisions, inclusion in the Teachers' rules is appropriate. Members frequently question the process for choosing an enrollment date, since few members actually commence employment on the first day of the month. Additionally, it is important to note that the policy suggested by Commenter No. 1 is the reporting policy used once membership in the TPAF is established and is not addressed in these rules. Therefore, other than the initial enrollment requirements set forth in this proposal, if at any time during a member's employment enough salary is earned to make a pension contribution, such period is eligible for credit and the requirements set forth in the proposed regulation are not applicable to that scenario.

9. COMMENT: Regarding proposed N.J.A.C. 17:3-3.1, Commenter 1 expressed concerns that proof of insurability shall be required for all compulsory and option enrollees age 60 or older at the time their enrollment application is filed with the Division in order to qualify for noncontributory and contributory insurance coverage. The specific concern raised is that the member may be denied insurance coverage due to a local Board's failure to enroll the member in a timely fashion. Thus, the enrollee would be wrongfully penalized.

RESPONSE: While the Board sympathizes with the concerns raised by Commenter 1, N.J.S.A. 18A:66-38.1, specifically requires "satisfactory evidence of insurability on the effective date of membership." The Board is without discretion regarding the date that the member is enrolled.

10. COMMENT: Regarding proposed N.J.A.C. 17:3-3.15, all commenters raise concerns regarding this rule, which requires that a member suspended without pay have noncontributory life insurance coverage continued for a period of 93 days following the effective date of suspension. Continued coverage of this suspended member without pay of the contributory life insurance shall be by conversion and payment of the premium by the said member. Also, Commenter 2 states that the inclusion of a 93-day time limit is not in harmony with the Department of Education's maximum timeframe for a suspension without pay, which is 120 days. Lastly, Commenters 1 and 3 stated that once the member's suspension ends wherein the charges are later dismissed with an award of back pay, the member should be entitled to a refund of the premiums paid.

RESPONSE: The Board respectfully disagrees with the comments presented. N.J.S.A. 18A:66-38 specifically grants a period of 93 days upon which a member is covered by non-contributory life insurance when on a leave for any reason other than medical. Additionally, the Board desires to be consistent with the rules governing the Public Employees' Retirement System and the Police and Firemen's Retirement System. As such, the rules governing those other retirement funds contain the same language. With regard to the second comment raised by Commenters 1 and 3, the fact that the member is not paid beyond 31 days requires that the contributory insurance be converted. See N.J.S.A. 18A:66-179. Additionally, the right to convert the contributory insurance is optional. Lastly, once converted as with all insurance premiums refunds are not provided.

11. COMMENT: Regarding proposed N.J.A.C. 17:3-6.1, Commenter 1 objects to the use of a 30-day window for filing a new application after a member's application for disability has been denied by the Board as this is not enough time for applicants with a disability or serious illness to act.

RESPONSE: The period of 30 days appears in several places regarding the application for retirement and ultimate receipt of benefits. For example, N.J.A.C. 17:3-6.2(a) sets forth a 30-day period of time in which a retirement allowance may become due and payable. Therefore, during this timeframe, a member is free to change his or her other option, file a new application or withdraw. This is consistent policy in the Division and applies equally to all of the State-administered retirement systems. Therefore, the rule requiring that a member who has had a disability application denied, must file a new application within 30 day in order to retain the original filing date, is consistent with that long-standing Division policy regarding the due and payable provisions and is consistent with the manner in which each retirement system is administered.

12. COMMENT: Regarding proposed N.J.A.C. 17:3-4.7, Commenter 2 suggests that the language is inconsistent with that of proposed N.J.A.C. 17:3-4.1(d) in that N.J.A.C. 17:3-4.1(d) permits an administrative denial before the matter is referred to the Board.

RESPONSE: The Board agrees that the procedures in each of the proposed rules are not consistent. First, it is important to note that the issues in N.J.A.C. 17:3-4.7 involve interpretation of a settlement agreement. If the language in the settlement agreement is consistent with the terms of the rules regarding creditable compensation, the credit is applied to the member's account without issue.  If the language is inconsistent, there is no need for fact-finding by the Division and the matter is referred to the Board for action. However, in performing its administrative function in applying N.J.A.C. 17:3-4.1(d) and ultimately rendering an administrative decision, the Division seeks information from the member, employer, and any other affected party prior to rendering any decision. The Division's administrative determination will detail the findings of the Division and its ultimate conclusion. This will be communicated to the member by letter from the Division with notice that the matter will be referred to the Board within 45 days if the member does not agree with the outcome of the determination.  No action will be taken by the Division during the 45-day period that the member has to notify the Division of its intentions to appear before the Board. This process guarantees the member his or her due process.  The change made in this rule simply provides a referral to the Board of Trustees of the TPAF, when these administrative determinations pursuant to N.J.A.C. 17:3-4.1 are made (unless the member agrees with the administrative determination). This change permits both of these types of matters to be handled in a consistent basis.

Summary of Agency-Initiated Changes:

At N.J.A.C. 17:3-1.3(a) the Division found it necessary to delete from the proposed language, "and a representative to the State Investment Council." The language that was put into the regulation in its place reads: "The members of the Board shall elect a representative to the State Investment Council pursuant to N.J.S.A. 52:18A-83." This change was done to comply with governing legislation. N.J.S.A. 52:18A-83, which was enacted on or about the time the Board approved N.J.A.C. 17:3 for publication. This new legislation supercedes N.J.S.A. 18A:66-61.

Federal Standards Statement

The adopted amendment to N.J.A.C. 17:3-4.9, will provide further clarification regarding the requirement that loans from TPAF are subject to Federal regulation. In addition, N.J.A.C. 17:3-4.9 continues to ensure compliance with Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. §72(p) (2007), which requires that loan balances not exceed $ 50,000.

The adopted amendment to N.J.A.C. 17:3-5.5(b)1 sets forth a definition of the types of military services that are eligible for purchase as honorable service, which is in compliance with the Federal definition found at 10 U.S.C. §101 of the Internal Revenue Code. The adopted amendment to N.J.A.C. 17:3-5.6(c) will provide further clarification regarding lump sum payments and partial lump sum payments, which can include the direct rollover of tax-deferred contributions from financial plans that qualify under the terms specified under I.R.C. §401(a)(31) (2007) of the Internal Revenue Service.

A Federal standards analysis is not required for the expired rules adopted herein as new rules and the remaining adopted new rules and amendments because N.J.S.A. 18A:66-56 governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking.

Full text of the expired rules adopted herein as new rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:3.

Full text of the adopted amendments follows (additions to proposal indicated in boldface with asterisks *thus*; deletions from proposal indicated in brackets with asterisks *[thus]*):

SUBCHAPTER 1.  ADMINISTRATION

17:3-1.1   Board meetings

(a) The Board shall meet on the first Thursday of each month or at such time as may be deemed necessary by the Board.

(b) (No change.)

(c) The current rules within Roberts' Rules of Order, Second Edition, as well as future amendments thereto, are adopted and incorporated herein by reference as the source to be used by the Board of the TPAF in the conduct of its monthly meetings.

17:3-1.3   Officers and committees

(a) The members of the Board shall elect a chairperson and vice chairperson *[and a representative to the State Investment Council]* from its membership for the forthcoming year at its regular meeting held in July. *The members of the Board shall elect a representative to the State Investment Council pursuant to N.J.S.A. 52:18A-83.* A representative to the Pension System Actuary Selection Committee, as provided for by N.J.S.A. 43:4b-1, shall be elected by the Board whenever the selection of a new actuary is needed.

(b) The chairperson of the Board shall preside at all meetings or in the absence of the chairperson, the vice chairperson shall assume the chairperson's responsibilities. In the absence of the chairperson and vice chairperson, another member selected by the majority of the members in attendance will preside for that single meeting.

(c) (No change.)

(d) Pursuant to N.J.S.A. 18A:66-61, there shall be one standing committee which is the Finance Committee. The Committee shall be appointed at the July Board meeting by the chairperson elect for the forthcoming fiscal year. The committee shall consist of three members of who shall be elected members of the Board. The State Treasurer and the person designated to represent the Fund on the State Investment Council shall serve as members of the Finance Committee. The Finance Committee shall review all investment transactions and financial reports referred to it by the Secretary for presentation to the Board at its regular monthly meeting.

17:3-1.4   Election of member-trustee

(a) The Board shall hold an annual convention of delegates of the membership of the Fund each year for the purpose of:

1. Electing a member-trustee to the Board;

2.-3. (No change.)

(b) (No change.)

(c) The chairperson of the convention will be a member of the Board elected by the Board.

(d)-(o) (No change.)

(p) The trustee must be employed in or retired from a county in Group A, Group B or Group C. Members elected shall serve three-year terms. In the event an active or retired trustee elected by the membership is unable to finish the term, the vacancy shall be filled in the same manner and in the same group as the departing trustee, as set forth in N.J.S.A. 18:66-56. The term of this position shall be the remainder of the unexpired term.

(q)-(w) (No change.)

17:3-1.5   Certifying officer (employer)

(a)-(c) (No change.)

(d) Upon 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 Fund.

17:3-1.6   Records

(a) In the addition to the provisions of N.J.A.C. 17:1-1.2, the minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board Secretary.

(b)-(c) (No change.)

(d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board. The Division will 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. A copy of the Board appointed physician's medical report cannot be released until after the Board's initial determination. In no event will the report be released to any individual not authorized in writing to receive the report.

(e) The annual report of the Fund's actuary shall not be released until it has been approved by the Board.

(f) Original documents, if available, shall only be reviewed by appointment at the Division.

17:3-1.10  (Reserved)

17:3-1.13  Nearest attained age; enrollment; retirement

(a) (No change.)

(b) A flat five percent pension rate of contribution was enacted by P.L. 1994, c. 62 for all employees enrolled on or after July 1, 1994. For members enrolled prior to July 1, 1994 whose previous full rate of contributions was six percent or more, the five percent contribution rate became effective on July 1, 1995. For members enrolled prior to July 1, 1994 whose previous full rate of contributions was less than six percent, their rate of contributions became four percent on July 1, 1995 and then five percent on July 1, 1996. Effective January 1, 1998 the rate of contribution became four and one half percent. Pursuant to the provisions of P.L. 2001, c. 133 the contribution rate as of January 1, 2002 is three percent. Effective January 1, 2004 the rate of contribution was returned to five percent. This rate is subject to change based on the Treasurer's determination in accordance with N.J.S.A. 18A:66-18b.

SUBCHAPTER 1A.  DEFINITIONS

17:3-1A.1  Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Base salary" means the annual compensation of a member, in accordance with contracts, ordinances, resolutions, or other 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 reported in regular, periodic installments in accordance with the payroll cycle of the employer.

"Board" means the Board of Trustees of the Teachers' Pension and Annuity Fund, vested with the general responsibility for the proper operation of the Fund pursuant to N.J.S.A. 18A:66-56.

"Division" means the Division of Pensions and Benefits, Department of Treasury, in the State of New Jersey.

"Extra compensation" means individual salary adjustments, which are granted primarily in anticipation of a member's retirement; additional remuneration for performing temporary duties beyond the regular work day or work year or additional remuneration for performing duties that are not integral to the effective functioning of the regular school curriculum.

"Fund" or "TPAF" means the Teachers' Pension and Annuity Fund, created pursuant to N.J.S.A. 18A:66-56.

"PERS" means the Public Employees' Retirement System, created pursuant to N.J.S.A. 43:15A-17.

"Work year" means either a 10-month contracted employee who works from September through June of each year and is compensated for each month or a 12-month contracted employee who works from July through June and is compensated for each month *or any other approved 10- or 12-month approved contract period*.

17:3-2.1  Enrollment eligibility

(a) Any person appointed by the State, local board of education, or charter school to a position listed in the definition of "teacher" found at N.J.S.A. 18A:66-2(p) or as a regular, full-time or part-time employee in a position that meets the following conditions shall be required to become a member of the Fund effective as of the date of their employment:

1. The position requires a valid certificate issued by the State Board of Examiners, pursuant to N.J.S.A. 18A:6-34 et seq. and N.J.A.C. 6A:9, and the person employed holds this valid certificate;

2.-3. (No change.)

(b) An employee in an unclassified administrative position within the State Department of Education who possesses a valid certificate issued by the State Board of Examiners, pursuant to N.J.S.A. 18A:6-34 et seq. and N.J.A.C. 6A:9, is eligible for participation in the Fund.

(c)-(d) (No change.)

(e) N.J.S.A. 18A:66-2(p) specifically excludes substitute teachers from enrollment in the Fund. The statute also permits the Board to determine whether any person is a teacher as defined in this article. The following positions have been determined by the Board to be ineligible for enrollment in the Fund:

1.-3. (No change.)

(f) As of January 20, 2004, new part-time instructors employed at postsecondary vocational-technical schools are ineligible for enrollment in the Fund. Part time instructors at postsecondary vocational-technical schools who were members of the Fund, as of January 19, 2004, are "grandfathered" in their positions with postsecondary vocational-technical schools, as long as they remain with their current employers.

17:3-2.2   Documentation required

If a person is appointed to a position, which does not meet the eligibility requirements for membership in the Fund as specified in N.J.A.C. 17:3-2.1, the position shall be referred to the Board for their determination as to the person's eligibility for participation in the Fund. In order to determine such person's eligibility for enrollment, the employer shall be required to support the enrollment application with a statement setting forth the duties, qualifications, tenure rights and State Board of Examiners' Certification requirements of the position.

17:3-2.4   Emergency or provisional certificate

(a) (No change.)

(b) In the event a teacher does not qualify for a regular teaching certificate before the emergency or provisional certificate expires and such teacher is continued in employment as a substitute or temporary employee, such member:

1. Will not be permitted to make contributions to the Fund while employed in a substitute or temporary status;

2.-4. (No change.)

17:3-2.8  Enrollment date

(a)-(c) (No change.)

(d) An employee cannot receive credit in the retirement system for the initial pay period or month of employment if that employment began after the seventh day of the pay period or after the 16th day of the month.

SUBCHAPTER 3.  INSURANCE AND DEATH BENEFITS

17:3-3.1   Compulsory and optional enrollment

(a) For the purpose of contributory insurance, all compulsory enrollees, including veterans, under age 60 at the time their enrollment application is filed, shall be required to participate in the contributory insurance program for one year (12 calendar months) from the date of enrollment, or the effective date of insurance premium deduction, whichever is later. Proof of insurability shall be required for all compulsory and optional enrollees, age 60 and older, at the time their enrollment application is filed with the Division, in order to qualify for noncontributory and contributory insurance coverage.

(b) Optional enrollees under age 60 at the time their enrollment application is filed with the Division, may qualify for noncontributory and contributory insurance coverage only if they were actively at work performing all of the duties that the position requires at the time they made application for enrollment, and such application was filed within one year from the date they first became eligible for enrollment in the Fund. If an application for an optional enrollee is not received within one year after the optional enrollee became eligible for enrollment, evidence of insurability will be required for the noncontributory and contributory coverage.

(c) (No change.)

17:3-3.7   Withdrawal application; contributory insurance

A properly executed contributory insurance withdrawal application must be in the possession of the Fund before termination of the contributory coverage can be effected. Such withdrawal application cannot be retroactive and the contributory insurance will not be reinstated under the membership account number in which the cancellation was exercised.

17:3-3.8   Withdrawal and return, contributory insurance and conversion

(a) Withdrawal from contributory insurance coverage shall apply only to the membership account under which the cancellation was exercised. Any person, who has canceled contributory insurance coverage and withdraws from membership in the Fund, shall, upon subsequent re-enrollment in the Fund, be subject to the provisions of N.J.A.C. 17:3-3.1.

(b) If a member is covered by group life insurance during employment, the coverage ceases 31 days subsequent to the member's termination date from employment regardless of the cause of termination. A member can convert the life insurance at the members' expense as set forth in N.J.A.C. 17:3-3.13(b).

17:3-3.10  Contributory insurance premiums, leave of absence and workers' compensation

(a) Contributory insurance coverage will remain in effect for up to two years while a member is on an official leave of absence without pay for the personal illness of the member and without premiums paid by the member. The employer shall provide to the Division proof of the official leave of absence.

(b) Contributory insurance coverage will remain in effect while a member is on an official leave of absence without pay for the following reasons, provided that insurance premiums are paid by the member within 31 days of the official start date of the leave. It is the member's responsibility to make arrangements directly with the Division to continue these premium payments:

1.-2. (No change.)

(c) Contributory insurance coverage will remain in effect for members who are receiving periodic benefits directly from workers' compensation. No premiums are required pursuant to N.J.S.A. 18A:66-32.1.

17:3-3.12  Beneficiary designation; pension contributions

(a) (No change.)

(b) When a member establishes multiple status by becoming employed by one or more additional employers in an eligible position or positions and files an enrollment application, the beneficiaries designated on the most recently submitted enrollment application supersede any older designations of beneficiaries on file with the Division.

(c) All beneficiaries must be specifically named.

17:3-3.13  Benefits payable under P.L. 1984, c. 96, as amended by P.L. 1995, c. 221

(a) For the purposes of P.L. 1984, c. 96, section 1, as amended by P.L. 1995, c. 221, section 2, ( N.J.S.A. 18A:66-47), the person designated as the beneficiary of 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 TPAF Act, N.J.S.A. 18A:66-1 through 93, as amended and supplemented.

(b) 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 P.L. 1984, c. 96, section 1, as amended by P.L. 1995, c. 221, section 2, ( N.J.S.A. 18A:66-47), 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 Fund for benefits provided under the group policies.

17:3-3.14  Acceptable designations of beneficiaries

(a) (No change.)

(b) The beneficiary or beneficiaries of the group life insurance designated on the retirement application shall be the beneficiary or beneficiaries of the group life insurance.

1. (No change.)

17:3-3.15  Suspension

A member suspended without pay will have noncontributory life insurance coverage continued for a period of 93 days following the effective date of such suspension. A member will not be covered by contributory life insurance during a suspension without pay, but may convert the contributory insurance prior to 31 days after the effective date of the suspension.

SUBCHAPTER 4.  MEMBERSHIP

17:3-4.1   Creditable compensation

(a) The compensation of a member subject to pension and group life insurance contributions and creditable for retirement and death benefits in the Fund shall be limited to base salary, and shall not include extra compensation.

1. Forms of compensation that have been identified as extra compensation include, but are not limited to:

i.-viii. (No change.)

Recodify existing x.-xvii. as ix.-xvi. (No change in text.)

xvii. Compensation paid for working during vacation periods;

xviii. Compensation paid for serving as a bedside instructor or for leading extracurricular activities; and

xix. Compensation paid for additional services performed during a normal duty assignment, which are not included in base salary.

(b)-(c) (No change.)

(d) With respect to all claims for benefits, the Division shall investigate increases in compensation reported for credit, which exceed the reasonably anticipated annual compensation increases for members of the Fund based upon either the increase in the Consumer Price Index for the time period of the increases and the table of assumed salary increases recommended by the actuary and adopted by the Board or based on the averages of the regular increases in the employees' compensation preceding the periods in which the extra compensation was received. Those cases where a violation of the statute or rules is suspected shall be *[administratively denied with right of appeal]* *referred* to the Board.

(e) In connection with an investigation of an increase in compensation, the Board may:

1. 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 TPAF;

2.-3. (No change.)

(f)-(h) (No change.)

(i) To be creditable compensation for teaching *[sixth period]* *a period during the regular contracted day*, the compensation shall be offered to all eligible and certified employees in the same position or covered by the same collective bargaining agreement, reported in regular, periodic installments in accordance with the payroll cycle of the employer and not offered to employees in anticipation of retirement.

(j) A stipend may be considered credible compensation and subject to pension deductions for retirement credit if it:

1. Is included as part of the petitioner's regular payroll check; and

2. Represents duties not addressed in base compensation that are integral to the effective functioning of the school curriculum.

17:3-4.3  School year members; 10 and 12 months

(a)-(b) (No change.)

(c) A 12-month member is presumed to work each month of the fiscal year. Members shall not receive service credit for a month that a member does not work and is not on an approved paid leave of absence.

(d) If a member terminates a position that requires less than 12 months to constitute one full year of service at the end of the normal academic school year and accepts a 12-month position with the same employer or another employer that participates in the TPAF and begins employment on or before the date that was established by the previous year's contract position, such member will receive service credit within the TPAF for the period between the end of the previous contract and the employment date of the new 12-month position.

17:3-4.4  Loan tolerance

Interest will be calculated on a periodic basis on the unpaid loan balance. If scheduled payments are not paid timely, interest will be accrued and added to the remaining outstanding loan balance. If, at the end of the loan schedule, there is a balance of less than $ 50.00, it will be written off. If the balance is equal to or greater than $ 50.00, the member will be assessed.

17:3-4.7  Service and salary credit: awards of back pay

(a)-(c) (No change.)

(d) If the award or settlement is structured in such a way as to provide the member with a substantial increase of creditable salary at or near the end of the member's service, or a substantial increase in retirement benefits, the award or settlement shall be reviewed by the Board. If the Board determines that the pension benefit was part of the negotiations for the award or settlement, or if the award or settlement includes extra compensation as defined by N.J.A.C. 17:3-4.1, the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have the contributions for the salaries based on the award refunded without interest.

(e) (No change.)

17:3-4.9  Eligibility for loan

Only active contributing members of the Fund may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000. The loan is subject to I.R.C. §72(p) (2007) of the Internal Revenue Code.

17:3-4.11   Termination; withdrawal

(a) (No change.)

(b) No application shall be approved, if:

1. (No change.)

2. The member, or employer, certifies that the member's employment contract has not expired, or that the member has executed another contract to work in a position subject to TPAF coverage;

3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if the member has formally resigned from the position and there is no legal action contemplated or pending and the dismissal has been adjudged final. If the member or employer does not advise the Division that an appeal is pending and the withdrawal application is processed, the member will be required to repay the Fund the full amount of contributions with interest, before the account may be reinstated;

4. (No change.)

5. The member has a claim pending for workers' compensation benefits unless the member signs a waiver indicating that the member still wishes to withdraw.

SUBCHAPTER 5.  PURCHASES AND ELIGIBLE SERVICE

17:3-5.1  Eligibility for purchase

(a) (No change.)

(b) In order to be eligible to purchase service, a member must submit a request to purchase service and such purchase must be authorized by the member before the expiration date indicated on the letter, which quotes the terms of the purchase. If the Purchase Cost Quotation expires prior to authorization and subsequently the member requests the purchase of such service, the purchase cost will be subject to recalculation based upon all cost factors in effect at the time of the new request.

(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 shall disallow the purchase of all or a portion of service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.

17:3-5.5  Optional purchases of eligible 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 shall be calculated on the basis of the actuarial purchase 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.-2. (No change.)

3. Continuous temporary service without interruption or substitute service as a teacher immediately preceding enrollment is eligible for purchase provided the following conditions are met:

i. Continuous temporary service without interruption must be employment without a break in service. For an employer that reports on a monthly basis, a break in service is defined as no salary earned by an employee during a month. For an employer that reports on a biweekly basis, a break in service is defined as no salary earned by an employee during a biweekly pay period.

ii. Substitute service is eligible for purchase provided the employment immediately precedes enrollment in TPAF. Immediately preceding enrollment is defined as employment rendered the month or biweekly pay period, prior to the date of enrollment. The period(s) of substitute service that a member can request to purchase must meet the following criteria:

(1) A year of substitute service wherein a 10-month employee worked an average of 10 days per month and an aggregate of 100 days during a regular work year. A 12-month employee is required to have worked an average of 10 days per month and an aggregate of 120 days per year.

(2) Substitute service for a period of less than one year immediately preceding enrollment is eligible for purchase provided the member worked a minimum average of 10 days per month for each month of substitute service.

(3) When more than one year of substitute service is requested for purchase, each year of substitute service rendered prior to enrollment is reviewed and each year is required to meet the criteria set forth under the provisions of (a)3ii(1) above.

4.-6. (No change.)

7. Non-concurrent PERS service if a dual member of TPAF and PERS pursuant to P.L. 2001, c. 6 ( N.J.S.A. 18A:66-15.1). All or a portion of non-concurrent service in the PERS from an expired or withdrawn account may be purchased.

(b) The types of purchases indicated in (b)1 and 2 below are considered to be full-cost purchases. A member may purchase all, or a portion of, such eligible service. The lump sum purchase cost shall be calculated on the basis of the actuarial purchase factor established for the member's nearest 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 computed lump sum purchase cost will then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 18A:66-13 provides that the employer shall not be liable for any costs of purchasing this service; therefore, the member must pay both the employee and employer share.

1. Active duty military service prior to enrollment. Active military service, that is eligible for purchase, means honorable full-time duty in the active military service of the United States, which is the same as the Federal definition found at 10 U.S.C. §101. Such term includes full-time training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. It does not include periods of service of less than 30 days, weekend drills or annual summer training of a national guard or reserve unit, nor does it include periods when the member was on-call. It also does not include time spent in the Reserved Officers Training Corps or as a cadet or midshipman at one of the service academies. Military service before enrollment cannot be used to qualify for an ordinary disability retirement; and

2. (No change.)

(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 neither receiving nor will be entitled to receive a future retirement allowance for such service from any other public retirement system and provides proof to the Division that the member is not eligible to receive a current or future retirement benefit from that service. 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.

(d) (No change.)

17:3-5.6  Methods of payment

(a) Methods of payment for purchases include the following:

1. (No change.)

2. Partial lump sum; balance by additional payroll deductions; or

3. Extra deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years.

(b) Additional payroll deductions under (a)2 or 3 above will include regular interest for the term of the installment.

(c) Lump sum payments and partial lump sum payments can include the direct rollover of transfer of tax-deferred contributions from financial plans that qualify under terms specified under I.R.C. §401(a)(31) (2007) of the Internal Revenue Service. All payments remitted to the Division must be accompanied by a properly completed Direct Rollover/Trustee-to-Trustee Transfer of Funds for the Purchase of Additional Service Credit form. Checks remitted to the Division without the required forms shall be returned to the member. A lump sum rollover payment for a purchase cannot exceed the lump sum cost of that purchase. Checks in an amount greater than the lump sum cost of the purchase shall be returned to the member.

17:3-5.8  Service ineligible for purchase

(a) A member will not be granted, nor may a member purchase, prior service or membership credit, including, but not limited to, the following situations:

1. Service rendered outside of the United States, with the exception of service rendered to a local school board in territories or possessions of the United States, Washington, DC and the Canal Zone;

2. Additional service credit for out-of-State employment periods during leaves of absence;

3. Service rendered that is concurrent with service time or employment that the member has received membership service credit in the Fund;

4. Any service rendered, which was covered by the Alternate Benefits Program (ABP) or another defined contribution plan including any service associated with pension contributions transferred to the ABP;

5. A period of time when a member was on a suspension without pay during their employment; or

6. Any public service that was not eligible for either compulsory or optional enrollment in a State-administered retirement system at the time the service was rendered.

17:3-5.9  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 TPAF Law ( N.J.S.A. 18A:66-1 et seq.) and the rules of the Fund.

SUBCHAPTER 6.  RETIREMENT

17:3-6.1  Applications

(a) Applications for retirement must be made on forms required by the Fund. Such forms must be completed in all respects and filed with the 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. Members enrolled at multiple TPAF locations must retire from employment in all covered positions before a retirement shall become effective.

(b) (No change.)

(c) A member shall, on the retirement application, select one of nine ways (options) to receive retirement benefits. Each option provides the member with a lifetime monthly retirement benefit. Once a retirement benefit becomes due and payable as defined by N.J.A.C. 17:3-6.2, the option cannot be changed. Except under the Maximum Option and Option 1, once a member designates a beneficiary, that beneficiary cannot be changed. P.L. 2001, c. 120 provides for additional payment options that allow the member to choose an actuarially reduced retirement allowance in order to provide a beneficiary with an allowance equivalent to the full amount, three-quarters, one-half or one-quarter of the reduced allowance. If the beneficiary dies before the retiree, the retiree's allowance will increase to the maximum amount. These additional payment options shall be known as Options A, B, C, and D as defined below. The options, as established by N.J.S.A. 43:15A-50, include the following:

1. Maximum Option provides the largest allowance for the member but does not include a pension benefit paid to a beneficiary upon the member's death. If the total amount of retirement allowances received by a member or beneficiary under the option selected is less than the value of the member's contributions and regular interest on those contributions, the balance of contributions and regular interest shall be paid in a lump sum to the member's designated beneficiary or estate.

2.-9. (No change.)

(d) (No change.)

(e) In addition to the requirements in (a) through (d) above:

1. An application for a physical disability retirement must be supported by at least two reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

(f) (No change.)

(g) A member filing for a disability retirement shall not file a separate application for any other type of retirement while a disability application is pending.

(h) If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant will be required to submit a separate application for retirement. If the applicant submits the separate application for retirement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.

17:3-6.2  Effective date

(a) A member's retirement allowance shall not become due and payable until 30 days after the date the Board approved the application for retirement or 30 days after the date of retirement, whichever is later.

17:3-6.3  Effective date; changes

(a)-(b) (No change.)

(c) A deferred retirement shall become effective on the first of the month following the member's 60th birthday. Should the member's 60th birthday fall on the first of the month, the member may elect the retirement to commence on that date, provided that an application is received by the Division in accordance with N.J.A.C. 17:3-6.1.

(d) (No change.)

(e) Should the member continue to receive a salary beyond the effective date of retirement, no retirement benefits shall be paid for the period where the member received salary and no salary or service credit shall be provided for the service rendered after the effective date of retirement. This restriction also applies to payments of accrued sick or vacation time that is paid in periodic payments on the employer's regular payroll schedule.

17:3-6.4  Outstanding loan

(a) A member who has an outstanding loan balance at the time of retirement may repay the loan balance, with accrued interest, as follows:

1. (No change.)

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 accrued interest, is repaid as authorized by P.L. 1999, c. 132 ( N.J.S.A. 18A:66-35.1). 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 accrued 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 1 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.

17:3-6.8  Option selection; accidental disability denied

If an applicant for an accidental disability retirement benefit is rejected for an accidental disability benefit but is approved by the Board for retirement, in accordance with N.J.A.C. 17:3-6.7, the applicant will be permitted, within 30 days following Board approval of the retirement, to amend the option selection, which the applicant made on the original accidental disability retirement application.

17:3-6.10  Involuntary disability application

(a) If an application for an accidental disability retirement benefit or for an ordinary disability retirement benefit is filed by an employer for one of its employees, the member will be promptly notified by letter that:

1. 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;

2.-6. (No change.)

17:3-6.13  Disability retirant; annual medical examinations

(a) All disability retirants under the normal retirement age of 60 may be required to undergo a medical examination each year for a maximum period of five years by a physician designated by the Fund as of the anniversary date of their retirement, unless such examination requirement has been waived by the Board.

(b) (No change.)

17:3-6.14  Disability retirant; annual report (employment, earnings, test and adjustment)

(a) Pursuant to N.J.S.A. 18A:66-40, if a disability retirant is engaged in gainful employment that does not require reenrollment in the TPAF, then the amount of the retirant's pension benefit and cost-of-living increases based on the pension benefit, but not the annuity benefit, shall be reduced to an amount, when added to the amount then earned, shall not exceed the amount of salary now attributable to the position from which the member retired.

1. For the purposes of determining the amount of salary attributable to the position from which the member retired, the Division shall apply the salary assumption used by the Fund's actuaries in each calendar year of retirement to the retirant's final year's salary.

2. (No change.)

(b)-(d) (No change.)

17:3-6.15  Disability retirements; filing after more than two years' discontinuance of service

(a) Following the filing of a disability retirement application, a vested member, who has not withdrawn contributions from the retirement system, and has discontinued service for more than two consecutive years, and who was otherwise eligible for disability retirement at the time service was discontinued, shall be approved to receive disability retirement benefits by the Board, if:

1. The applicant demonstrates to the satisfaction of the Board that the applicant was physically or mentally incapacitated for the performance of duty at the time service was discontinued, and continues to be so incapacitated, with the same disability or disabilities, at the time of filing; and

2. The applicant factually demonstrates to the satisfaction of the Board that service was discontinued because of the disability or disabilities.

(b)-(c) (No change.)

17:3-6.17  Approved allowance

When a retirement allowance becomes effective pursuant to N.J.A.C. 17:3-6.2, the type of retirement benefit and option elected shall stand as approved.

17:3-6.20  Final compensation; 10 and 12-month members reported monthly

(a) In order to determine the final compensation (three-year average) for benefits of a member reported on a monthly basis under a 10-month contract, the creditable salaries upon which contributions were made to the Fund for the member's final 30 months, or the highest three fiscal years of pensionable service, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(b) In order to determine the final compensation (three-year average) for benefits of a member reported on a monthly basis under a 12-month contract, the creditable salaries upon which contributions were made to the Fund for the member's last 36 months or the highest three fiscal years of pensionable service, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(c) (No change.)

17:3-6.21  Determination of last year's salary; veterans paid on a monthly basis

(a) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age 55 or older, reported on a monthly basis under a 10-month contract, the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement or in the consecutive 10-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(b) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age 55 or older, reported on a monthly basis under a 12-month contract basis, the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, or in the consecutive 12-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(c) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 10-month contract, the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement or in the consecutive 10-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(d) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 12-month contract, the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, or in the consecutive 12-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees, shall be used.

(e) (No change.)

17:3-7.1  Honorable service; 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 the new State-administered retirement system shall disallow the transfer of all or a portion of prior service of any member of the former State-administered retirement system for misconduct occurring during the member's prior public service, which renders that prior service, or part thereof, dishonorable.

(b) A member is eligible to transfer membership from another State-administered retirement system, provided the membership has not expired or has not been withdrawn and provided that all service eligible for participation has ceased.

(c) The system will transfer membership to any State-administered retirement system as follows:

1.-4. (No change.)

5. The member is not eligible to transfer service credit if any of the following conditions apply:

i. (No change.)

ii. The member has credit in the present system for service earned after the date of enrollment in the new system (concurrent service) unless the member meets the criteria established by P.L. 2001, c. 341 ( N.J.S.A. 43:15A-14). P.L. 2001, c. 341 provides that a member of the PERS at the time of enrollment in the TPAF may transfer the non-concurrent PERS service if the member ceased to be an active contributing member of the PERS three or less years from the date of enrollment in the TPAF. The member must apply to transfer this service no more than two years from the date of the last contribution in the PERS unless the member is vested in the PERS, or the member's PERS account has not expired due to the provisions of N.J.S.A. 43:15A-8. A member who transfers service under this provision shall receive credit for the salaries earned in both the TPAF and PERS during the period of concurrent service; or

iii. (No change.)

6. (No change.)

Recodify existing (c) and (d) as (d) and (e) (No change in text.)

17:3-7.2  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 pension system are immediately eligible to transfer their membership to their new employers, as long as the following conditions are met:

1.-2. (No change.)

3. The account has not been canceled due to Board action. It is the responsibility of the employer to establish the employee's status. For accounts that are withdrawn, expired or canceled, an enrollment application is needed, and the standard enrollment rules are again in effect; and

4. (No change.)

(b) To transfer the member's account to the new employer, the new employer should file a Report of Transfer with the Division 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 the report of transfer was received by the Division plus an additional two months for administrative processing time, the employer will be assessed a late enrollment employer liability penalty plus delayed appropriation costs.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 3747(b)

ADOPTED AMENDMENT: N.J.A.C. 17:9-5.3

State Health Benefits Program

Local Employer Payment of Charges

Proposed: December 3, 2007 at 39 N.J.R. 5069(a).

Adopted: May 14, 2008 by the State Health Benefits Commission, Frederick J. Beaver, Secretary.

Filed: May 19, 2008 as R.2008 d.159, with a technical change not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 52:14-17.27.

Effective Date: June 16, 2008.

Expiration Date: October 9, 2008.

Summary of Public Comments and Agency Responses:

The State Health Benefits Commission (Commission) received comments from the persons and entities listed below. The responses are listed below as well.

  1. Michael A. Vrancik, Director of Governmental Relations, New Jersey School Boards Association
  2. Paul Kleinbaum, Esquire, Zazzali, Fagella, Nowak, Kleinbaum & Friedman

COMMENT: Michael A. Vrancik of the New Jersey School Boards Association (School Boards) submitted a comment commending the State Health Benefits Commission for promulgating this regulation. Specifically, the School Boards agree that the proposed rule makes premium sharing for employees and dependents alike; that the statute allows for different classifications of employees; and allows local employers to modify premium sharing agreements for non-represented employees in a manner consistent with any collective negotiations agreement to which the local employer is bound. The commenter suggests that these changes will be helpful to school districts because it provides them with opportunities for considerable costs savings in health benefits for employees.

RESPONSE: The Commission thanks commenter number 1 for its comments and agrees that the regulation is consistent with P.L. 2007 c. 62, that permitting the employers to negotiate with the various bargaining units for different costs-sharing arrangements for both the employees and the dependents will create a large costs savings.

COMMENT: Paul Kleinbaum, Esquire, set forth a few general comments. They are: 1) P.L. 2007 c. 62, does not require that the premium or periodic charges for the State Health Benefits Program be based upon binding collective negotiations. 2) Further, the commenter submits that nothing in this bill diminishes the current requirement that participating employers may only implement premium sharing arrangements if all such contributions were applicable to all employees of that employer. Further, the commenter states that this is an issue which should be addressed at the bargaining table, not dictated by administrative fiat. 3) The commenter states that there is no evidence or basis for the statement that there would be cost savings, which would accrue to the local taxpayer's benefit.

RESPONSE: 1) The regulation seeks to permit employers to negotiate with its employees regarding both the employee's cost-sharing for health benefits, as well as the previously permitted cost-sharing for employees' dependents. Clearly, there is no mandate to require the employees to contribute toward premium. However, the option to permit the employers this discussion at the bargaining table was introduced by P.L. 2007 c. 62. Likewise, the employer may negotiate different cost-sharing arrangement for employees and dependents alike, where previously all dependent cost-share had to be the same across all employees. As a result of this provision, most employers could not negotiate the same cost-sharing arrangements with all the bargaining units and resulted in the employer paying the entire dependent cost of health benefits. "Should the employer elect not to negotiate cost-sharing, but rather continue to pay for the employee's entire cost of health coverage, it is certainly free to do so."

2) There is nothing in P.L. 2007 c. 62, which requires that all employee and dependent cost-sharing be the same among the various bargaining units or within bargaining units. The intent of the Legislature is clearly put forth in Section 1 of P.L. 2007 c. 62 to "give local governmental units, including boards of education, the same flexibility that State government has to modify the payment obligations of the employer for active employee coverage under the State Health Benefits Program." Where the previous legislation, and likewise the regulation, required that there be consistency with cost-sharing arrangements for dependents, P.L. 2007 c. 62 does not contain this provision.  3) The regulations at issue permit the local employing agencies to bargain with the employees for cost-sharing. In the past, the only cost-sharing permitted was for the cost of the dependent coverage. Employees' coverage was paid at full cost. Since it was often the case that the various bargaining units could not agree on the dependent cost-sharing arrangements, employers were typically left to pay the entire share of dependent coverage as well. Clearly, the opportunity to negotiate cost-sharing will incur costs savings to the local employer.

Summary of Agency-Initiated Change:

At N.J.A.C. 17:9-5.3 the Commission found it necessary to delete the word "dependent" from the proposed heading language "Local employer payment of dependent charges." The language that was put into the regulation in its place reads: "Local employer payment of charges" because it no longer refers to dependents. This change was done to comply with governing legislation, P.L. 2007, c. 62 which was enacted on or about the time that the Commission approved N.J.A.C. 17:9-5.3 for publication.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-17.27 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows (deletion from proposal indicated in brackets with asterisks *[thus]*):

17:9-5.3   Local employer payment of *[dependent]* charges

(a) The obligations of a participating employer other than the State to pay the premium or periodic charges for health benefits coverage may be determined by means of a binding collective negotiations agreement.

(b) With respect to employees for whom there is no majority representative for collective negotiations purposes, the employer may, in its sole discretion, modify the respective payment obligations set forth in law for the employer and such employees for the coverage of the employee and enrolled dependents in a manner consistent with the terms of any collective negotiations agreement binding on the employer.

(c) Should the payment obligations of employees change as a result of the implementation of a collection negotiations agreement binding on the employer, or upon the extension of such an agreement to employees for whom there is no majority representative for collective negotiations purposes, the employer must notify the Division of Pensions and Benefits by submission of the appropriate resolution.

(d) The employer shall give all affected employees an opportunity for completing and forwarding a new enrollment form within 60 days following the change in the employee's cost.

(e) Any affected employee who fails to complete and forward the required form within the time limits, which have been prescribed, may effect such change of enrollment only during the annual enrollment period.

(f) The Division assumes no responsibility for maintaining coverage in accordance with the employer's legal obligations.

(g) No retroactive enrollment, coverage changes or terminations will be processed to meet the contract provisions.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
GENERAL ADMINISTRATION

40 N.J.R. 4625(a)

Special Adopted New Rules: N.J.A.C. 17:1-16

Implementation of State Early Retirement Incentive Program (P.L. 2008, c. 21)

Adopted: July 9, 2008 by the New Jersey Division of Pensions and Benefits, Frederick J. Beaver, Director.

Filed: July 11, 2008 as R.2008 d.233.

Authority: P.L. 2008, c. 21.

Effective Date: July 11, 2008.

Expiration Date: March 21, 2009.

Take notice that, in compliance with the provisions of P.L. 2008, c. 21, specifically section 1j, the Director of the Division of Pensions and Benefits in the Department of the Treasury promulgated rules concerning the implementation of the Early Retirement Incentive (ERI) program offered to eligible employees of the Executive Branch and Judicial Branch.

Federal Standards Statement

A Federal standards analysis is not required because the new rules are not being adopted under the authority of, or in order to implement, comply with or participate in, any program established under Federal law or under a State statute that incorporates or refers to Federal law, standards or requirements.

Full text of the special adopted new rules follows:

SUBCHAPTER 16. IMPLEMENTATION OF STATE EARLY RETIREMENT INCENTIVE PROGRAM (P.L. 2008, c. 21.)

17:1-16.1   Applicability and scope

P.L. 2008, c. 21 provides additional retirement benefits to certain employees of State government. These rules are promulgated by the Director of the Division of Pensions and Benefits to implement Section 1 of P.L. 2008, c. 21, concerning the implementation of the Early Retirement Incentive (ERI) program offered to eligible employees of the Executive Branch and Judicial Branch. These rules are adopted in order to provide the mechanism whereby eligible members of the retirement system may be guided on how to effectuate their retirement under the terms of this ERI. Further, these rules are adopted to assist those who may not understand whether they are eligible for this benefit. Lastly, these rules are adopted to provide guidelines for the implementation of this ERI for the staff of the Division to ensure that the retirement applications are handled correctly and in a consistent manner through the Division.

17:1-16.2   Construction of rules

This chapter shall be liberally construed to permit the Division to discharge its statutory functions under the Act.

17:1-16.3   Definitions

The following words and terms, as used in this subchapter, shall have the following meaning, unless the context clearly indicates otherwise.

"Act" means P.L. 2008, c. 21.

"Division" means the Division of Pensions and Benefits.

"Early Retirement Incentive (ERI)" means the additional retirement benefits provided under P.L. 2008, c. 21 to certain State employees enrolled in the Public Employees' Retirement System or the Teachers' Pension and Annuity Fund.

"Eligible State employee" means a full-time employee of the Executive Branch of State government eligible to participate in the New Jersey State Health Benefits Program of the State of New Jersey, including the New Jersey Commerce Commission. It shall not include, for purpose of election of the ERI, employees of the Department of Human Services; the Department of Military and Veterans' Affairs; the Department of Corrections; the Juvenile Justice Commission in but not of the Department of Law and Public Safety; the Office of the Public Defender in but not of the Department of the Treasury; the Department of Children and Families; Rutgers, the State University; the New Jersey Institute of Technology; the University of Medicine and Dentistry of New Jersey; or any State college or university. The term shall also not include an employee of a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated in but not of a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution authorized to participate in the Public Employees' Retirement System under section 73 of P.L. 1954, c. 84 ( N.J.S.A. 43:15A-73) or P.L. 1990, c. 25 ( N.J.S.A. 43:15A-73.2 et al.), which entity was authorized under P.L. 2002, c. 23 to provide additional retirement benefits to certain employees, as such entities are identified by the Division of Pensions and Benefits in consideration that the division submits a separate request for payment and receives a separate payment for benefits purposes from the entity.

"Executive Branch of State Government" shall be construed to include all employer locations with employees eligible to participate in the ERI as defined in the definition of "eligible State employee" above, as well as the Department of Human Services; the Department of Military and Veterans' Affairs; the Department of Corrections; the Juvenile Justice Commission in but not of the Department of Law and Public Safety; the Office of the Public Defender in but not of the Department of the Treasury; the Department of Children and Families; the New Jersey Commerce Commission, or its successors; Rutgers, the State University; the New Jersey Institute of Technology; the University of Medicine and Dentistry of New Jersey; and any State college or university. The term shall include public authorities, boards, commissions, corporations, or other agencies or instrumentalities of the State allocated in, but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution authorized to participate in the Public Employees' Retirement System under section 73 of P.L. 1954, c. 84 ( N.J.S.A. 43:15A-73) or P.L. 1990, c. 25 ( N.J.S.A. 43:15A-73.2 et al.), which entity was authorized under P.L. 2002, c. 23 to provide additional retirement benefits to certain employees, as such entities are identified by the Division of Pensions and Benefits in consideration that the division submits a separate request for payment and receives a separate payment for benefits purposes from the entity.

"Extension" means a delay in the effective date of retirement of the employee until the first day of any calendar month after August 1, 2008, but not later than July 1, 2009. This extension must be requested by the State department (or employer) and approved by the State Treasurer or requested by the Judiciary and approved by the Chief Justice.

"Seven days," as referenced in Section 1d of the Act, means seven calendar days.

17:1-16.4   Application for ERI retirement irrevocable after seven days

(a) Pursuant to Section 1d of the Act, "An application submitted by an eligible State employee or an eligible Judiciary employee for retirement within the time period set forth herein to received the benefit provided shall be irrevocable seven days after submission." The seven-day period during which an application for ERI retirement benefits may be revoked, canceled, rescinded or withdrawn shall be established as follows:

1. The seven-day period shall commence on the first day following the date the application for retirement under the ERI is received in the offices of the Division.

2. Should a member seek to revoke, cancel, rescind or withdraw their application for ERI benefits, such notice must be received in the offices of the Division by the close of the business day on the seventh calendar day following the date the application was received by the Division. Thereafter, the member's application for ERI benefits cannot be revoked, canceled, rescinded or withdrawn.

3. After the expiration of the seven-day period, the member may only amend a retirement option selection and/or pension beneficiary up until the date the retirement allowance becomes due and payable, pursuant to the provisions of N.J.A.C. 17:2-6.2 or 17:3-6.2.

17:1-16.5   Applications for ERI retirement filed prior to enactment of P.L. 2008, c. 21

Eligible State or Judiciary employees who filed an application for retirement prior to the enactment of P.L. 2008, c. 21, for a date of retirement eligible for the ERI under the provisions of the Act, shall be notified via certified mail by the Division of their eligibility to elect to receive ERI benefits. To receive ERI benefits, the retiree or retiring employee shall indicate their agreement with all terms and conditions of the ERI program by filing the appropriate form with the Division no later than August 1, 2008.

17:1-16.6   Applications for ERI retirement filed after enactment of P.L. 2008, c. 21

No application for benefits under the Act filed after its June 24, 2008 enactment will be accepted by the Division for any effective retirement date other than August 1, 2008. The last date that an application for benefits under the Act may be filed with the Division is the close of the business day on July 15, 2008.

17:1-16.7   Conditions of retirement under the ERI for eligible State employees

(a) To be eligible for continued benefits under the ERI, the eligible State employee shall forfeit all tenure rights, and for a period of three years following the effective date of retirement:

1. Shall not be eligible for appointment to, or employment in, any position or capacity in the Executive Branch of State government;

2. Shall be barred from being awarded any contract for professional services by the Executive Branch of State government; and

3. Shall be barred from performing professional services for the State as part of a contract awarded to a third party by the Executive Branch of State government.

17:1-16.8   Extension of service by State Treasurer or Chief Justice

(a) Pursuant to Section 1f of the Act, when the needs of the Executive Branch or the Judicial Branch of State government requires the services of an employee who has elected to retire under the ERI program, the Executive Branch or the Judiciary may delay the effective date of retirement of the employee until the first day of any calendar month after August 1, 2008, but not later than July 1, 2009. For Executive Branch employees, the State Department must request approval from the State Treasurer for any extension of service; for Judicial Branch employees, such requests for extension by the Judiciary shall be subject to protocols issued by the Chief Justice of the Supreme Court.

(b) An eligible State employee or an eligible Judiciary employee who applies for retirement benefits under this Act is deemed to consent to the delay in the employee's effective date should such an extension of services be approved. Should the extension of an employee's services be approved, the employee's eligibility for ERI benefits shall be conditioned upon satisfactory performance by the employee during the entire period of the extension of service originally approved. Should an employee refuse to delay the effective date of their retirement, the employee may retire based upon age and/or service; however, the employee will not qualify for any ERI benefit under this Act.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 6991(a)

Adopted Amendment: N.J.A.C. 17:2-2.8

Public Employees' Retirement System

Proposed: August 18, 2008 at 40 N.J.R. 4677(a).

Adopted: November 12, 2008 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary

Filed: November 17, 2008 as R.2008 d.372, without change.

Authority: N.J.S.A. 43:15A-17.

Effective Date: December 15, 2008.

Expiration Date: January 24, 2010.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-7 and 43:15A-75 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

17:2-2.8   Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles

(a)-(c) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

40 N.J.R. 6991(b)

Adopted Amendments: N.J.A.C. 17:4-2.1, 2.2, 2.6 and 5.3

Adopted New Rule: N.J.A.C. 17:4-2.4

Police and Firemen's Retirement System 

Proposed: August 18, 2008 at 40 N.J.R. 4678(a).

Adopted: November 3, 2008 by the Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary.

Filed: November 17, 2008 as R.2008 d.373, without change.

Authority: N.J.S.A. 43:16A-13(7).

Effective Date: December 15, 2008.

Expiration Date: March 10, 2011.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

SUBCHAPTER 2.  ENROLLMENT

17:4-2.1   Eligible positions

(a) (No change.)

(b) The following words and terms, as used in this subchapter and in N.J.S.A. 43:16A-1 et seq., shall have the following meanings:

1.-10. (No change.)

11. "Permanent police officer" under a Civil Service jurisdiction means a full-time police applicant who receives a certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and receives a regular appointment pursuant to N.J.A.C. 4A:4-5.1(a). For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal police officer approved by the New Jersey PTC.

12. "Permanent police officer" under a non-Civil Service jurisdiction means a full-time police applicant who receives certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and is employed in a regular budgeted position. For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal officer approved by the New Jersey PTC.

13. "Permanent firefighter" under a Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and receives a regular appointment in a Civil Service location pursuant to N.J.A.C. 4A:4-5.1(a).

14. "Permanent firefighter" under a non-Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and employed in a regular budgeted position.

Recodify existing 11.-14. as 15.-18. (No change in text.)

(c)-(j) (No change.)

(k) 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 the 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. The Board requires from fire districts for Civil Service and non-Civil Service employers, the following items:

1. A copy of the resolution established by the Board of Fire Commissioners, which provides the fire district with 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 under the provisions of N.J.S.A. 40A:14-81 et seq.;

2. A copy of the resolution, which establishes the position and sets forth the compensation and the duties associated with such position;

3. Verification that the resolution was published at least once in a substantial newspaper in the district;

4. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position;

5. Identification of the type of position (entry level, promotional, administrative/supervisory position over firefighters) and include a list of all job titles within the fire district;

6. The selection/promotional process for the candidate to this position;

7. An official job description for the position;

8. A copy of an organizational chart for the fire district, which identifies the positions and reporting relationships of the staff within the district. The chart must include names and pension member numbers;

9. A description of the training requirements including, but not limited to, the Fire Fighter I Certification issued by the Division of Fire Safety, Department of Community Affairs; and

10. The fire district must provide a list of any other employment requirements.

(l) To determine the PFRS eligibility for Civil Service and non-Civil Service fire positions for employers with an established firefighting unit with a State, county, regional services, or municipal firefighting department or unit, the Board requires the following items:

1. A copy of the ordinance or the legal authority, which provides the governing body of the State, county, regional services entity, or municipality to create and establish a paid or part-paid fire department and also provides the State, county, regional services entity or municipality with the powers, duties and functions relating to the prevention and extinguishment of fires and the regulation of fire hazards under the provisions of N.J.S.A. 43:16A-62, 40A:14-1 and 40A:14-7;

2. A copy of the ordinance or resolution, which establishes the position and sets forth the compensation and the duties associates with such position;

3. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position;

4. Identification of the type of position (entry level, promotional, administrative/supervisory position over firefighters). Also a list of all job titles within the fire department;

5. The selection/promotional process for the candidate to this position;

6. An official job description for the position;

7. A copy of an organizational chart for the fire department, which identifies the positions and reporting relationships of the staff within the fire department. The chart must include names and pension member numbers;

8. A description of the training requirements including, but not limited to, the Firefighter I certification issued by the Division of Fire Safety, Department of Community Affairs; and

9. The fire department must provide a list of any other employment requirements.

(m) To determine the PFRS eligibility for police positions for Civil Service and non-Civil Service employers in an established law enforcement unit with a State, county, or municipal police department or unit, the Board requires the following items:

1. A copy of the ordinance, resolution or legal authority of the governing body of the State, county or municipality to create and establish a State, county or municipal police department, as required under the provisions of N.J.S.A. 43:16A-62, 40A:14-106 and 40A:14-118 et seq.;

2. Statutory reference that provides the law enforcement unit with the authority of detecting crime and enforcing the general criminal laws of the State;

3. Statutory reference authorizing a police officer to carry a firearm in the performance of his or her duty;

4. Statutory reference that identifies the police powers of the position;

5. Statutory reference to the police training requirement of the Police Training Commission (PTC) or proof of comparable training;

6. Identification of the type of position (entry level, promotional, administrative/supervisory position over police officers). Also include a list of all job titles within the police department;

7. The selection/promotional process for the candidate to this position;

8. An official job description for the position;

9. A copy of the ordinance or resolution that establishes the position and sets forth the compensation and the duties associated with such position;

10. The preamble to the contract, including the specific articles of the executed contract and salary scale negotiated between the individual or collective bargaining group for the requested position; and

11. A copy of the organizational chart for the police department, which identifies the positions and reporting relationships of the staff within the police department. The chart must include names and pension member numbers.

17:4-2.2   Compulsory enrollment

Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, membership in the Police and Firemen's Retirement System of New Jersey is mandatory, and a condition of employment for every "police officer" or "firefighter" under the provisions of N.J.S.A. 43:16A-1 et seq.

17:4-2.4   Training requirements

(a) As required under N.J.S.A. 43:16A-1(2)(a)(iii), permanent, full-time police officers are required to successfully complete the training requirement prescribed under N.J.S.A. 52:17B-66 et seq., (Police Training Commission (PTC)) or proof of comparable training requirements as determined by the Board of Trustees.

1. For positions under the statutory authority of the PTC, all police applicants must receive certification of successful completion of the basic training course for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training approved by the PTC pursuant to N.J.S.A. 52:17B-66 et seq.

2. For positions that are not under the statutory authority of the PTC, all police applicants are required to complete comparable training to that prescribed by the PTC for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training. The applicant or the employer must submit proof of the aforementioned training.

3. An applicant may be exempt from some parts of the basic training course if the applicant has successfully completed police training conducted by a Federal, State or county agency if the requirements are substantially equivalent to the requirements of a municipal police officer and approved by the PTC.

i. For those positions under the statutory authority of the PTC, the applicant must receive certification from the PTC regarding such exemption and successfully complete the remaining course work at an approved PTC school in New Jersey.

ii. For those positions not under the statutory authority of the PTC, in order for the Division of Pensions and Benefits to consider whether the applicant qualifies under the comparable police training rule, the applicant must submit the following documents to the Division of Pensions and Benefits for review of the authorized training credit:

(1) A letter of waiver request;

(2) A transcript of the training courses from the prior Federal, State or county agency, including the dates of completion for each course; and

(3) The course description of each and every police training course that the police applicant wishes to use for an exemption.

4. Comparable training for out-of-State police training courses cannot be more than three years from the date the police applicant graduated from the police academy.

5. Comparable training for in-State police training courses cannot be more than three years from the date the police applicant separated service with the former New Jersey employer to the date of the employment with the current New Jersey employer.

6. The applicant must successfully complete the remaining course work at either an approved PTC school in New Jersey or school offered comparable training to that prescribed by the PTC as set forth in (a)2 above. The applicant or the employer must submit evidence to the Division of Pensions and Benefits that such basic training course was satisfactorily completed.

7. Any current PFRS police members that have not successfully completed the PTC or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.

(b) As required under N.J.S.A. 43:16A-1(2b), permanent, full-time firefighters are required to successfully complete the Firefighter I certification prescribed under N.J.A.C. 5:73-4.2, 4.3 and 4.4, or determined by the Board of Trustees.

1. Since all firefighting applicants must comply with N.J.A.C. 5:73-4.2, 4.3 and 4.4, the PFRS Board has determined that comparable training pursuant to the New Jersey Department of Community Affairs, Division of Fire Safety - Office of Training and Certification guidelines will be the only authorized agency to determine if the firefighting applicant's training meets the requirements for the Firefighter 1 certification.

2. Any current PFRS firefighting members that have not successfully completed the firefighter 1 certification or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.

17:4-2.6   Enrollment date

(a) Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee who is appointed to a regular classified appointment from a Civil Service list to a PFRS position shall be considered for PFRS enrollment upon successful completion of the police or firefighting training.

1. For employers who report on a monthly basis, the compulsory enrollment date shall be fixed as the first day of the following month after successful completion of the police or firefighting training.

2. For employers who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the following pay period after successful completion of the police or firefighting training.

(b) Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee in the unclassified service shall be considered as beginning service on the date employment began. The compulsory enrollment date for employers who report on a monthly basis shall be fixed as the first of the following month after successful completion of the police or firefighting training. The compulsory enrollment date for employers who report on a biweekly basis shall be fixed as the first day of the following bi-weekly pay period after successful completion of the police or firefighting training.

(c) Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, an employee who is appointed in a regular budgeted position with an employer not covered by Civil Service shall be considered for PFRS enrollment upon successful completion of the police or firefighting training.

1. For employers not covered by Civil Service who report on a monthly basis, the compulsory enrollment date shall be fixed as the first day of the following month after successful completion of the police or firefighting training.

2. For 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 following pay period after successful completion of the police or firefighting training.

(d) Employees (both Civil Service and non-Civil Service locations) who are hired into approved PFRS titles and are otherwise eligible, will not be permitted enrollment in PFRS, until the employer certifies that the employees have successfully completed the police or firefighting training.

(e) In the interim, individuals hired in eligible police or fire positions will not be permitted to participate in any other State-administered retirement system based upon the same police or fire position.

SUBCHAPTER 5.  PURCHASES AND ELIGIBLE SERVICE

17:4-5.3   Optional purchases of eligible 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 share-cost purchase will be calculated on the basis or the actuarial purchase 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.-2. (No change.)

3. Temporary Service:

i. "Special Police Officer" service cannot be purchased; and

ii. Police academy or firefighting training cannot be purchased unless the training was rendered while serving and receiving compensation in an eligible New Jersey police or firefighting position;

4. Leaves of absence without pay when:

i. The period of the leave is for personal reasons, which does not exceed 93 days. Childcare is considered leave for personal reasons; and

ii. The period of the leave is up to two years for personal illness. The Division may require proof from the employer that the illness existed for the length of the leave; and

5. (No change.)

(b)-(c) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 277(a)

Readoption with Amendments: N.J.A.C. 17:1-1 through 15

Adopted New Rules: N.J.A.C. 17:1-1.1A, 1.13, 2.17, 5.5, 5.6, 5.8, 6.3 and 15

Adopted Repeals and New Rules: N.J.A.C. 17:1-2.11, 7.1 and 14.6

General Administration

Proposed: September 2, 2008 at 40 N.J.R. 4928(a).

Adopted: December 9, 2008 by Frederick J. Beaver, Director, Division of Pensions and Benefits.

Filed: December 10, 2008 as R.2009 d.25, with substantive and technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 52:18A-96 et seq. and 52:14-15.1a (P.L. 1996,  c. 8).

Effective Date:  December 10, 2008, Readoption; January 5, 2009, Amendments, Repeals and New Rules.

Expiration Date: December 10, 2013.

Summary of Public Comments and Agency Responses:

The Division of Pensions and Benefits (Division) received comments from the persons and entities listed below. The numbers following each comment correspond to the commenter's listed below.

1. Jo Ann D. Bartoletti, Executive Director and Richard J. Klockner, Director of Retirement Services, New Jersey Principals and Supervisors Association

2. James Jameson, NJEA Research, New Jersey Education Association

3. The Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF)

4. Celeste Carpiano, Executive Director, New Jersey Association of Counties

COMMENT: Referring to proposed N.J.A.C. 17:1-1.1(a), Commenter No. 1 expresses support regarding the fact that this regulation addresses the issue of eligibility rules for members of the various retirement systems and the process for which candidates can be elected as a representative to the State Investment Council.

RESPONSE: The Division thanks the commenter for the comment in support of proposed N.J.A.C. 17:1-1.1(a).

COMMENT: Referring to proposed N.J.A.C. 17:1-1.13:

(a) Commenters No. 1, No. 2 and No. 3 all take issue with the insertion of two additional words in subparagraphs (a)4ii and iii, "information" and "accusation," respectively, which refer to actual pleadings received by the Division of Pensions and Benefits with regard to the suspension of pension checks. It is suggested that the insertion of this language is overly broad, vague and subject to misapplication. All commenters expressed concern that any person can make an accusation against another without any evidence to back up the claim. All of the other charges have some sort of investigative screening process to insure against fraudulent claims.

(b) Commenter No. 1 expressed concern with the insertion of the language in subparagraph (a)4iv, "An administrative or disciplinary action," since it appears to refer to the potential of a post-retirement administrative or disciplinary action not necessarily related to the member's former employment.

(c) Commenter No. 1 also expressed issue with the insertion of the language in subparagraph (a)4vi, "A license or credential review," since under the proposed wording, any review of a member's credentials without regard to the outcome would result in the suspension of the member's retirement benefit. Further, Commenter No. 1 argues that if the intent is to limit a suspension of benefits to official action taken by the credentials agency such as the State Board of Examiner's, the language should be more specific, and any suspension should be tied to the reasons for the license or credentials review.

(d) Commenter No. 2 suggests that in N.J.A.C. 17:1-1.13(a)6, the language should be amended to read "benefits may or may not be forfeited during the period of incarceration."

RESPONSE: The Division would like to thank each of the commenters for their statements.

(a) In response to statements from Commenters No. 1, No. 2 and No. 3, the Division finds it necessary to include the language in subparagraphs (a)4ii and iii, "information" and "accusation," respectively, since the two additional words refer to actual pleadings that are filed by a court and often received by the Division of Pensions and Benefits. These pleadings clarify that the Boards of Trustees of the various retirement systems may suspend retirement benefits pending the outcome of charges. The insertion of the pleading term "information" refers to information that is presented in the form of an accusation without an official indictment. The pleading term "accusation" is included to refer to an official charge in the form of an accusation regarding an alleged crime.

(b) Commenter No. 1 is concerned with the language inserted in subparagraph (a)4iv, "An administrative or disciplinary action." These words refer to actual pleadings filed by an employing agency to take action against the retirant. Any charge resulting in criminal, administrative or disciplinary action may have an impact on the retirant's pension. Such action, however, can be appealed by the retirant to the Board of Trustees of the retirement system for a review and determination.

(c) Commenter No. 1 also takes issue to the language inserted in subparagraph (a)4vi, "A license or credential review." These words refer to actual pleadings filed by the issuing agency to take action against the retirant. The outcome of these charges may have an impact on the retirant's pension. Such action, however, can be appealed by the retirant to the Board of Trustees of the retirement system for review and determination.

(d) The Division disagrees with Commenter No. 2 suggestion that in N.J.A.C. 17:1-1.13(a)6, the language should be amended to include that "benefits may or may not be forfeited during the period of incarceration." While the Division sympathizes with the concerns raised by Commenter No. 2, N.J.S.A. 43:1-2 specifically requires "no pension or subsidy shall be paid by this State or by any municipality or school district of this State to any person for the period during which he is confined in a penal institution as a result of conviction of a crime involving moral turpitude, and such person shall lose all right to so much pension or subsidy as he would receive or be entitled to receive had he not been so confined."

COMMENT: Referring to proposed N.J.A.C. 17:1-2.10(d)2, Commenters No. 1 and No. 2 expressed opposition to limit the maximum schedule of repayment to the proposed five-year schedule since it may create financial hardship through significant reductions in a member's monthly retirement allowance.

RESPONSE: The Division would like to thank the commenters for their comments. The proposed amendment limits the maximum schedule of repayment that may be administratively determined by staff to five years and requires retirees to request repayment schedules in excess of five years to be referred to the respective Board or Commission is reasonable. Prior to August 2003, the regulation limited repayment schedules determined by the Division staff to a period not to exceed 12 months and required all other schedules to be referred to the Board of Trustees. In August 2003, the regulation was amended to permit repayment schedules to be determined by Division staff for a period of up to 10 years. The 10-year repayment schedule has proven to be excessive and in many cases the retirement system is unable to collect these monies owed. If the retiree claims dire financial need, then these cases will be referred to the Board of Trustees for a determination. The Division has a fiduciary responsibility to collect all monies owed to the various retirement systems and a maximum schedule of five years is both reasonable and responsible.

COMMENT: Regarding proposed N.J.A.C. 17:1-5.5, Commenters No. 1, No. 2 and No. 3 indicated that in the event an active member dies before the repayment of outstanding obligations, the remaining balance will be deducted first from the return of pension contributions and then from the group life insurance proceeds.

RESPONSE: The Division would like to thank the commenters for their statements. It has been a long standing practice of the Division to deduct from the return of pension contributions first and then from the group life insurance for active members. Therefore, N.J.A.C. 17:1-5.5 is withdrawn from the general administration regulation.

COMMENT: Regarding proposed N.J.A.C. 17:1-5.6(b), statements from Commenters No. 1 and No. 2 address the retired members repayment of any outstanding obligations, which first is deducted from group life insurance and then any remaining balance will be deducted from the retiree's last check benefit. Commenter No. 1 is concerned with the language in N.J.A.C. 17:1-5.6(b) and requests clarification for the reference to "these benefits" which represent the group life insurance, the last check benefit or the monthly pension allowance payable to the beneficiary. In cases where they are multiple beneficiaries it is not uncommon for different beneficiaries to be named for either the pension benefit or the group life insurance. Commenter No. 2 is concerned with the deduction being taken first from group life insurance since life insurance payments are not taxable as income, and not using pension benefits first may create a tax disadvantage to the beneficiaries.

RESPONSE: The Division thanks the commenters for their statements. It has been a long standing practice of the Division to deduct any outstanding obligation from the group life insurance first, in the event a retired member dies. If there are multiple beneficiaries, each group life insurance beneficiary will share and share alike in the deduction taken. If there are monies still owed, then the last check benefit or the pension allowance would be withheld until the obligation is satisfied. Commenter No. 1 states that the reference to "these benefits" in N.J.A.C. 17:1-5.6(b) is unclear as to whether the Division is referring to the group life insurance, pension allowance or both. Since there are circumstances when both the group life insurance and pension allowance can be used to satisfy an outstanding obligation, the Division concludes that the language "these benefits" is properly used in this subsection. Commenter No. 2 is concerned that there may be a tax disadvantage to beneficiaries by not deducting from the pension allowance first. The Division does not recognize a tax disadvantage when monies owed are taken from group life insurance first and then the pension allowance. If monies are deducted from the beneficiary's pension allowance, a 1099R is always issued whether the pension allowance deduction is taken before or after the group life insurance.

COMMENT: Regarding proposed N.J.A.C. 17:1-6.2(a) and (b), Commenter No. 1 is concerned about the inclusion of the two additional pleading terms "information" or "accusation" regarding indictment, dismissals, litigation or appeals. The commenter questions if the intent of the Division is to relate these terms to an accepted legal definition, and that the standard should be better defined. Commenter No. 2 is opposed to the language "accusation" as a determiner for suspending a pension and states that "accusations can be made by anyone without a substantial amount of proof."

RESPONSE: The Division would like to thank the commenters for their statements. The Division finds it necessary to insert the language in N.J.A.C. 17:1-6.2(a) and (b) to further clarify that the Boards of Trustees of the various retirement systems may suspend retirement benefits pending the outcome of charges. The insertion of the pleading term "information" refers to information that is presented in the form of an accusation without an official indictment. The pleading term "accusation" is included to refer to an official charge in the form of an accusation regarding an alleged crime. If an administrative or disciplinary action is filed by an employing agency, which may have an impact on the member's pension, such actions are usually appealed to the Board of Trustees of the particular retirement system for a review and determination. Therefore, it is necessary to include these terms in the rule. Historically, both the State and Federal courts refer to these pleadings pending the outcome of official charges.

COMMENT: Regarding proposed N.J.A.C. 17:1-6.3, Commenter No. 4 raised concerns that the provisions of the proposed regulation regarding settlement agreements and the employer's responsibility for reimbursement to the pension fund or retirement system for associated costs may dissuade public employers from settling with their employees, thus resulting in potentially costly and burdensome litigation for all parties involved. The proposed language provides that State, county or local employers must notify the Division and provide a copy of any settlement agreements executed between the public employer and employee when the agreement restricts the employer from seeking civil, criminal or misconduct related charges in exchange for the employee's resignation in good standing. The proposed regulation provides further that the State, county or local employers will be liable to the appropriate trustees for any pension or retirement related cost incurred as a result of such a settlement agreement.

RESPONSE: The Division thanks the Commenter for the statement and respectfully disagrees with the comments submitted. P.L. 2007, c. 49 specifically grants the boards of trustees of any State or locally-administered pension fund or retirement system the authority to subpoena witnesses and compel their attendance, and also may require the production of documentation in the matter concerning the rendering of honorable service by a public officer or employee seeking to receive a public pension or retirement benefit. If any person refuses to obey any subpoena so issued, or refuses to testify or produce the requested documentation, the board may apply to the Superior Court to compel the person to comply with the subpoena. The intent of the law is clear that employers must fully disclose to the boards of trustees all settlement agreements, since many of these agreements result in additional costs to the pension fund or retirement systems. Case in point, Puglisi v. Board of Trustees of the New Jersey Police and Firemen's Retirement System, 185 N.J. 391, 886 A.2d 662 (2005). The retiree had filed a civil rights lawsuit against the city with whom he was employed. Pursuant to the settlement agreement, the city promoted him to captain and granted him one year of terminal leave at a captain's salary; he agreed to retire at the end of the terminal leave period. After he retired as a captain, the Board, characterizing his promotion as "severance pay," reduced the retiree's creditable salary, thereby denying him pension benefits based on the captains salary. The Appellate and Supreme Courts affirmed that the appropriate amount of his pension had to be calculated on the basis of a lieutenant's salary. The Division contends that P.L. 2007, c. 49 does not dissuade public employers and employees from settling their employment related disputes outside of the judicial process. Instead it provides a means for the pension fund or retirement system to be informed of such agreements and to determine if there are additional costs to the pension fund or retirement system as a result of such agreements.

COMMENT: Regarding proposed N.J.A.C. 17:1-7.7(b), Commenter No. 1 suggests that the language for post-retirement employment for 10-month members is inconsistent with post-retirement employment when considering the provisions of P.L. 2001, c. 355, which provides an exemption from the reenrollment after retirement provisions to retirees of the TPAF who are certificated superintendents or certificated administrators. In addition, the proposed regulation appears to deviate from the current guidelines of the Division of Pensions and Benefits Fact Sheet #28.

Commenter No. 2 suggests that the language in N.J.A.C. 17:1-7.7(b) requires clarification. The commenter refers to the example of a TPAF member that retires July 1st and accepts a position as a teacher aide in September; there should not be a waiting period since the position is covered under PERS.

RESPONSE: The Division thanks the commenters for their statements. Commenter No. 1 suggests that N.J.A.C. 17:1-7.7(b) does not provide a distinction for post-retirement employment in accordance with P.L. 2001, c. 355, which provides an exemption from reenrollment in the cases of certified superintendent or a certificated administrator, who after having been granted a retirement allowance, becomes employed by the State Department of Education, or becomes employed by a board of education as a certificated superintendent or certificated administrator in a position of critical need on a contractual basis for a term of not more than one year. The statute clearly makes the exception that the cancellation, reenrollment, and additional retirement allowance provisions shall apply if the former member becomes employed within 120 days with the employer from which the member retired. In this instance, the certified superintendent or administrator has a reemployment term of one year or renews a contract for one additional year not to exceed a two-year period. The insertion of N.J.A.C. 17:1-7.7(b) does not affect the exemption outlined in P.L. 2001, c. 355. The proposed rule is intended to clarify that members employed on a 10-month schedule who retire as of July 1st and return to the same, or another 10-month position within the same pension system, prior to October 1st shall be deemed not to have a valid break-in service for retirement purposes. The reference to the Division of Pensions and Benefits Fact Sheet #28 is not relevant at this time since it is unavailable and is being updated to include the proposed language in N.J.A.C. 17:1-7.7(b).

In regards to Commenter No. 2, the proposed addition to the rule clarifies that 10-month members do not establish a break-in-service if they retire on July 1st and return to work in September to the same, or another, 10-month position within the same pension system; prior to October 1st there is not a valid break-in service for retirement purposes. The commenter refers to the example of a TPAF member that retires July 1st and accepts a position as a teacher aide in September covered under PERS. In this situation, the TPAF retiree could accept the teacher aide position in September since it is not a position covered by the same retirement system (TPAF); however, a new enrollment for the teacher aide position cannot be established in PERS. The Division's intent for the addition to the rule is to provide clarity that 10-month members must have a break-in-service for positions within the same retirement system to establish a bona-fide retirement.

COMMENT: Regarding proposed N.J.A.C. 17:1-7.10, Commenter No. 2 suggests that the use of the 30-day window for filling a new application after a member's application for disability has been denied by the Board is not enough time for applicants that qualify for workers' compensation settlements to delay or change their retirement benefit based on all the information that is available.

RESPONSE: The Division thanks the commenter for their statement. The period of 30 days appears in several places regarding the application for retirement and ultimate receipt of benefits. For example, N.J.A.C. 17:3-6.2(a), 17:2-6.2 and 17:4-6.2 all set forth a 30-day period of time in which a retirement allowance may become due and payable. Therefore, during this timeframe, a member can change the retirement option, file a new application or withdraw the benefit. This is consistent policy within the Division and applies equally to all of the State-administered retirement systems. Workers' compensation settlements may take many months to settle; therefore, delaying or changing a retirement benefit would be inconsistent with the long-standing Division practice regarding each of the retirement systems' due and payable provision.

Summary of Changes Upon Adoption:

The Division of Pension and Benefits will withdraw and recodify proposed N.J.A.C. 17:1-5.5, since it was erroneously added to the General Administration regulations. It has been the Division's practice in an active member's death to obtain the repayment of any outstanding obligation first from the member's pension contribution and then the remaining balance will be deducted from the member's group life insurance proceeds. Several of the Commenters' statements reflected the inconsistency to the insertion of this regulation to actual Division policy. N.J.A.C. 17:1-5.5 will be recodified to Retired members--group life insurance and pension benefits, N.J.A.C. 17:1-5.6 will be recodified to Domestic partners and N.J.A.C. 17:1-5.7 will be recodified to Civil Unions.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:18A-96 et seq. governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:1-1 through 15.

Full text of the adopted amendments and new rules follows (addition to proposal indicated in boldface with asterisks *thus*; deletion from proposal indicated in brackets with asterisks *[thus]*):

SUBCHAPTER 1.  ADMINISTRATIVE PRACTICES

17:1-1.1   Description of the Division of Pensions and Benefits

(a) The Division is the successor to the former Bureau of Public Employees' Pensions created in June 1952. Under the general reorganization acts of 1948, the pension funds were located within the State Division of Budget and Accounting. In 1950 they were transferred to the Division of Investment under the statute creating that division.

(b) The Division, under the Department of the Treasury, was created by P.L. 1955 c. 70. All administrative functions of the State pension funds, except for the investment of the assets retained in the Division of Investment, were assigned to the Division.

(c) The Division is responsible for one of the largest public employee benefits program in the nation. It administers a comprehensive benefit program that enables public employers throughout the State to attract and retain skilled and talented employees. These include State employees, teachers, police officers, fire fighters, correction officers, judges, and many other local employees whose jobs are fundamental to the safety and well being of all New Jersey residents. The Division administers 10 separate pension systems.

(d) The Division also administers the State Health Benefits Program (SHBP) that includes health plans, dental plans, and a prescription drug plan. This program provides coverage for employees, retirees, and their dependents, of the State and participating local employers. The enactment of N.J.S.A. 52:14-17.46 et seq., creates the School Employees' Health Benefits Program, which will be administered by the Division.

(e) (No change.)

(f) The following Boards and Commissions provide oversight and direction to the benefits programs:

1.-6. (No change.)

7. Defined Contribution Retirement Program Commission;

8. (No change in text.)

9. School Employees' Health Benefits Commission;

Recodify existing 8.-10. as 10.-12. (No change in text.)

13. The State Investment Council.

(g) The Director is responsible for the coordination of the functions of the Division, the development of the Division budget and communication with other branches of State government, local government and the public. The Director serves as the Secretary to the Supplemental Annuity Collective Trust Council, the State Health Benefits Commission, the School Employees' Health Benefits Commission and the State House Commission in its capacity as the Board of Trustees for the Judicial Retirement System. The Director is responsible to oversee the Division's operations and the Board of Trustees administration in accordance with statute and rules. In addition, the Treasurer has delegated the responsibility of maintaining the Federal-State Agreement for Social Security to the Director.

(h) The Division falls under the jurisdiction of the New Jersey Department of Treasury. The Director reports directly to the State Treasurer. The Treasurer is an ex-officio member of all State pension boards and commissions.

(i) The administrative rules that apply generally to all of the retirement systems and benefit plans that the Division administers may be found in this chapter. The administrative rules of the various retirement systems and benefit plans may be found in N.J.A.C. 17:2 through 17:10.

17:1-1.1A  Election of representative to the State Investment Council

(a) Pursuant to N.J.S.A. 52:18A-83a.(1), the Board of Trustees of the Public Employees' Retirement System (PERS), the Board of Trustees of the State Police Retirement System (SPRS), the Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) and the Board of Trustees of the Police and Firemen's Retirement System (PFRS) of New Jersey shall elect one of the active members of its retirement system, or one of the retirees of its retirement system who is receiving a retirement allowance, to serve as a member of the State Investment Council at its regular meetings for a three-year term commencing on July 1.

(b) Pursuant to N.J.S.A. 52:18A-83b., an active or retired member of the PERS, SPRS, TPAF, and PFRS may apply to serve as a member of the State Investment Council provided that the applicant does not hold any office, position or employment in any political party and does not benefit directly or indirectly from any transaction made by the Director of the Division of Investment.

(c) The Division will be required to provide a timely general notice of vacancy of a State Investment Council position to the active and retired members of the PERS, SPRS, TPAF, and PFRS prior to the expiration of the term. Such notice shall provide information regarding the term of office, description and/or requirements for the position, and the application process.

1. The notice to active members of the PERS, SPRS, TPAF, and PFRS, will be prepared by the Secretary of the Board and forwarded to the certifying officers of the employing locations. It will be the responsibility of each certifying officer to post the notice in a public area at the workplace.

2. A timely notice to the retired members of the PERS, SPRS, TPAF, and PFRS will be prepared by the Secretary of the Board and published in the Division's semiannual newsletter to retired members, prior to the expiration of the term.

3. Such notice will also be posted on the Division's public website during the election period.

(d) Any active or retired member of the system who is interested in applying for the position of State Investment Council representative will be required to submit a letter of interest, which shall include a resume of the member's education and experience, directly to the attention of the Secretary of the Board at the Division of Pensions and Benefits within the requisite timeframe provided in the notice.

(e) As stipulated in N.J.S.A. 52:18A-83a.(1), the Board of Trustees of the PERS, SPRS, TPAF and PFRS will elect one of the active members of its retirement system, or one of the retirees of its retirement system who is receiving a retirement allowance, to serve as a member of the State Investment Council. However, depending on the number of responses submitted, the Board of Trustees may seek assistance from individuals outside the Division of Pensions and Benefits in the review and recommendation process, or may elect to form a subcommittee to assist the Board of Trustees in reviewing the candidates applications.

1. Any active or retired member elected by the Board of Trustees of the PERS, SPRS, TPAF and PFRS to serve as the State Investment Council representative shall be required to comply with the requirements provided in N.J.S.A. 52:18A-83. Any elected member who fails to comply with the requirements stipulated in the law will be automatically disqualified as a representative.

2. A vacancy in the membership of the council occurring other than by expiration of the term, shall be filled in the same manner as provided in the original appointment, but for the remaining term only.

17:1-1.2   Records

(a) The records of all employee benefit programs administered by the Division are public records and may be requested through the Treasury Government Records Unit. Records shall be provided during regular business hours.

(b) Records considered confidential include protected health information (PHI) as defined by the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191, Social Security numbers, pension membership numbers, medical information submitted for any purpose, mailing addresses of active and retired members, individual files pertaining to beneficiary designation and any proprietary information provided to the Division from another source. Further records considered to be confidential may be found at N.J.S.A. 47:1A-10.

(c) All medical records obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Boards of Trustees. Upon request, 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 after the Board's initial decision is rendered. In no event shall the report be released to any individual not authorized by the member in writing to receive the report.

(d) Charges for copies of pension records that have been deemed to be public information will be made in accordance with the provisions of N.J.S.A. 47:1A-5.

(e) Requests for access to government records must be in accordance with the Department of Treasury's procedures as provided by the Open Public Records Act.

17:1-1.3   Hearing request

(a) The applicant will be given written notice of any decision by the Division, Board or Commission. Said notice shall inform the applicant of the appeal process available in the event the applicant disagrees with the decision of the Division, Board or Commission, including the proper procedure for requesting a hearing.

(b)-(c) (No change.)

(d) The following statement shall be incorporated in every written notice setting forth the Division, Board or Commission's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative: If you disagree with the determination of the Board, Commission or Division, you may appeal by submitting a written statement to the Board, Commission or Division Director 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, Commission or Division'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, Commission or Division shall be final.

(e) The Board, Commission or Division Director shall determine whether to grant an administrative hearing based upon the standards for a contested case hearing set forth in 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.

(f) Administrative hearings shall 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.

(g) If the granted appeal involves solely a question of law, the Board, Commission or Division Director may retain the matter and issue a final 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, Commission's or Division Director's final determination may be appealed to the Superior Court, Appellate Division.

(h) If the granted appeal involves a question of facts, the Board, Commission or Division Director shall submit the matter to the Office of Administrative Law.

17:1-1.4   Mail distribution

(a) All mail sent to the Division will be received, opened and sorted by the mail section, with the exception of registered or certified mail, which will be sent directly to the addressee.

(b) (No change.)

17:1-1.5   Annual statements; retirement system

(a) Statements of members' accounts are mailed annually to employers after the fourth quarter of the calendar year is complete for the following active members:

1. Public Employees' Retirement System - State and local employers;

2. Teachers' Pension and Annuity Fund - State employers;

3. Police and Firemen's Retirement System - State and local employers;

4. State Police Retirement System; and

5. Alternate Benefit Program.

(b) Statements of members' accounts are mailed annually to employers after the employer reporting for the second quarter of the calendar year is complete for the following active members:

1. Legislative part of the Public Employees' Retirement System;

2. Prosecutor Part of the Public Employees' Retirement System;

3. Workers Compensation Judge part of the Public Employees' Retirement System;

4. Judicial Retirement System; and

5. Teachers' Pension and Annuity Fund - local employers.

(c) (No change.)

(d) It is the responsibility of the employer to direct all statements to the appropriate party when a disputed address is involved. Employers will mail statements for transferred employees to the new employer for distribution. Employers will mail statements to the employee's home address for any situation where the employee is not available for statement distribution at the employer's location.

17:1-1.6   Quarterly statements; supplemental annuity

Statements of members' accounts are mailed quarterly to participants of the tax sheltered and nontax sheltered Supplemental Annuity Collective Trust.

17:1-1.7   Endorsements

(a) (No change.)

(b) In cases where a member or beneficiary is mentally or physically incompetent, the appointment of a legal guardian, conservator or committee will be required. The Division must be supplied with a copy of the legal document and the guardian's signature must be registered with the Division on a signature card. In cases where an incompetent retired member or beneficiary is confined to a State institution in New Jersey in lieu of guardianship, his or her retirement allowance may be continued upon court order directing the retirement system to make payment to the chief administrative officer for the use and care of said member or beneficiary during the period of confinement.

(c) (No change.)

(d) A person holding a power of attorney will be permitted to endorse a check payable to such person as attorney for the retiree or beneficiary. A power of attorney form will specify the authority of the person to endorse a check issued to the retiree or beneficiary.

(e) (No change.)

(f) When an individual holding a power of attorney specifying the authority of the person to endorse a check and acting on behalf of a member makes application for a retirement allowance, the power of attorney may choose any option available and may designate the individual to receive a monthly retirement allowance under the options that provide for a survivor's benefit.

(g) An individual holding a power of attorney and acting on behalf of a member shall designate the member's estate as the beneficiary for all life insurance benefits and any other benefits payable, which are not covered by (f) above, on the member's account unless the power of attorney form specifically grants the individual the right to designate others as beneficiaries or specifically grants them the right to name themselves.

17:1-1.8   Priorities

(a) In the event the Division is required to establish priorities for the performance of a particular obligation, such priorities shall be made known to all members involved and shall be established in the following order:

1.-3. (No change.)

(b) The priority of deductions from the monthly retirement allowance shall be the following:

1. Internal Revenue Service tax levy;

2. (No change.)

3. Loan and various other deductions owed to the Division;

4. State Health Benefits Program and the School Employees' Health Benefits medical plan deductions;

5. State tax;

6. Dental Plan deductions; and

7. (No change in text.)

17:1-1.9   Bankruptcy; subsequent loans

(a) (No change.)

(b) A member or retired member's outstanding loan balance is not discharged by bankruptcy.

(c) (No change.)

17:1-1.12   Domestic relations orders

(a) The Division will honor court orders for child support, alimony or equitable distribution. The matrimonial order must require the Division to withhold the specified amounts. The matrimonial order must also designate a specific dollar amount, a specific percentage of the gross monthly retirement benefit, or a percentage of the gross monthly retirement benefit the member will receive based on the specific number of years and months of service the member accrued while married.

(b)-(c) (No change.)

(d) The Division cannot guarantee the implementation of any irrevocable designation of death benefits or selection of retirement option. Such designation or selection remains the prerogative of the member.

17:1-1.13   Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances:

1. If a disability retirant fails to appear for a medical examination scheduled by the Division;

2. If a widow, widower, parent or guardian of minor child(ren) fails to file a certificate of eligibility, which is normally mailed to such beneficiaries on a periodic basis;

3. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this instance shall be suspended until a proper legal representative has been appointed;

4. If a retirant is receiving a retirement benefit, the Boards may suspend retirement benefits pending the outcome of charges including, but not limited to, the following:

i. An indictment;

ii. An information;

iii. An accusation;

iv. An administrative or disciplinary action;

v. An ethics violation; or

vi. A license or credential review;

5. If a retirant or beneficiary fails to cash three consecutive monthly pension checks the monthly benefit shall be suspended until a personally endorsed, notarized signature card has been received; or

6. In the event of incarceration of the retirant, pursuant to the provision of N.J.S.A. 43:1-2, the retirement benefits will be forfeited during the period of incarceration.

SUBCHAPTER 2.  ACCOUNTING

17:1-2.2   Remittance; limitation

The monthly remittances for pension contributions to the Division by employers shall be by electronic fund transfer (EFT). All other remittances to the Division shall be by check, bank draft or money order.

17:1-2.3   Due dates for remittances and reports

(a) Monthly remittances for the Police and Firemen's Retirement System, Teachers' Pension and Annuity Fund and the Public Employees' Retirement System are to be transmitted through the electronic funds transfer system by the seventh day of the month following the close of the preceding month for which contributions are required.

(b) The biweekly report to the approved investment providers of the Alternate Benefit Program shall be due from the Centralized Payroll Unit to the Division no later than the pay date for each biweekly payroll period for which deductions or reductions were required. Remittance of contributions and related reports will be transmitted to investment providers no later than five business days following the corresponding biweekly payroll date.

(c) Deductions and reductions for Alternate Benefit Program participants of county and State colleges and universities will be transmitted to approved investment providers no later than five business days following the corresponding payroll date. County and State colleges and universities, which are prepaying the employer contributions on behalf of the State of New Jersey and have agreed to be fully accountable and responsible for the timely submission of such contributions shall submit a monthly report(s) to the Division by the 15th day of the month following the close of the preceding month detailing those prepayments in a format to be determined by the Director of the Division. County and State colleges and universities will be reimbursed for prepaid employer contributions in accordance with the prevailing statutes, within 15 business days of submitting all required reports in approved formats.

(d) Quarterly reports, including the remittance for the third month of the calendar quarter, for the Public Employees' Retirement System, Teachers' Pension and Annuity Fund, and the Police and Firemen's Retirement System are due in the Division the seventh day of the month following the close of the preceding quarter.

(e) (No change.)

(f) Monthly remittances for the State Health Benefits Program are due on the date indicated on the invoice. Reporting agencies will be considered in default if premiums are not paid on or before that date.

(g) (No change.)

17:1-2.4   Delinquent notices

(a) Reporting agencies, which do not file timely reports or remittances will receive a delinquent notice.

(b) In the event the employer does not respond to the delinquent notice for the Report of Contributions, and if the report is not received in a timely manner to update the members of the local employer's report, the mayor, school superintendent or person of a similar authority will be sent a letter advising of the delinquency and the ramifications of such delinquency.

17:1-2.5   Interest charges; delinquent remittance; report of contributions

(a) If payment in full, representing the monthly remittance and report of contributions or charges, is not made within 15 days of the due dates for such remittance and reports, interest at the rate of six percent per annum for the Teachers' Pension and Annuity Fund and the Public Employees' Retirement System, and 10 percent per annum for the Police and Firemen's Retirement System shall commence to run against the total remittance of contributions for the period on the first day after such 15th day.

(b) The penalty will also apply where the monies have been forwarded but without the report of contributions necessary to distribute such monies to the proper accounts. The penalty amount will be computed using the total contribution amount for pension fund members listed on the report of contributions.

(c) No interest charges will be billed for delinquent remittances or the report of contributions referred to in (a) above if the interest charge is less than $ 10.00.

17:1-2.8   Disbursement; limitations

All disbursements returned by the Federal post office as "undelivered" shall be credited to the appropriate account. Disbursements that are made by check shall be delivered by the Federal post office unless otherwise authorized by the Director of the Division.

17:1-2.10   Minimum adjustments; repayment schedules

(a) In order to facilitate the reconciliation of members' accounts upon death, no refunds or additional contributions shall be made to a member's loan and arrearages balances if such adjustments involve amounts of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.

(b)-(c) (No change.)

(d) Rules concerning the unresolved differences in retirement accounts are as follows:

1. (No change.)

2. All money found to be due and payable subsequent to a member's retirement shall be repaid in one sum. In the event the retiree is unable to make payment in one lump sum, repayment may be scheduled over a period not to exceed five years. Regular interest, as defined by N.J.S.A. 43:15A-6n, 18A:66-2m, 43:16A-1(9), 53:5A-3p and 43:6A-3n, shall apply to all such repayment schedules. Any other schedule of repayment shall be referred to the Board of Trustees for consideration. As a condition of establishing a repayment schedule, the Division will automatically put a hold on the distribution of the member's group life insurance until such time that the obligation is satisfied. Any remaining funds from the group life insurance will be distributed in accordance with the member's last Designation of Beneficiary on file.

(e) Audit differences of $ 5.00 or less in the reporting of members' pension contributions or contributory life insurance premiums during a quarter will not require a cash adjustment.

(f) Audit differences of $ 20.00 or less in the reporting of members' pension contributions or contributory life insurance premiums covering an annual period are not subject to cash adjustments.

17:1-2.11   Reports of salary changes

The report of salary changes is available upon request in a format to be determined by the Director of the Division.

17:1-2.12   Lost pension checks

(a) Upon receiving notification that a retiree or other payee has not received a particular check for whatever reason, the Division shall send the payee an affidavit of non-receipt for completion.

1.-3. (No change.)

(b) The Division upon being notified that the retiree has not received a particular check, shall review its canceled check file.

1.-2. (No change.)

17:1-2.13   Administrative expenses; prorated among systems

(a) Not later than 60 days after receipt of the expenditures by account, the Division will prepare a complete fiscal statement indicating the administrative expenses incurred by the Division within its State appropriation for the previous fiscal year ending the prior June 30.

1. (No change.)

2. Supplemental statements will be prepared allocating specific costs attributable to each of the retirement systems, State Health Benefits Program, and the School Employees' Health Benefits Program within the operation of the respective bureaus; and

3. (No change.)

(b)-(c) (No change.)

17:1-2.16   Workers' compensation without pay: employer's obligation regarding employee contributions

(a) (No change.)

(b) An employer is not responsible for the payment of an employee's pension contributions while the employee is receiving a periodic award of benefits through workers' compensation if a valid termination from employment has occurred. If an employer ceases payment of employee pension contributions due to a valid termination, as listed in (b)3 or 4 below, the employer shall notify the Division in writing of the reasons for the cessation of payments. A valid termination exists when:

1.-4. (No change.)

17:1-2.17   Report of contributions; reporting media

The report of contributions will be prepared and submitted to the pension fund administrator through secure electronic data submission provided through the State of New Jersey.

SUBCHAPTER 3.  ENROLLMENT, MEMBERSHIP, TRANSFERS AND WITHDRAWALS

17:1-3.1   Compulsory enrollments; failure to enroll

(a) When an employee fails to file an application for enrollment even though the employee and employer have been advised of the compulsory nature of enrollment, the certifying officer is obligated to complete the employee's section of the enrollment application, as well as such other information required on the enrollment application. Upon receipt of a properly completed enrollment application, the member's beneficiary shall automatically be their estate until the member files a Designation of Beneficiary form.

(b) For the purpose of establishing an employer's liability on delinquently filed enrollment applications, as well as the member's requirement to prove insurability, one year shall cover the 12-month period plus an additional two months to allow for administrative processing, elapsing between the employee's date of enrollment or transfer and the date the enrollment application or report of transfer is received by the Division.

(c) (No change in text.)

17:1-3.3   Enrollment schedules

(a) Employees appointed after the seventh day of the biweekly pay period will be enrolled the next pay period and after the 16th day of a month for members scheduled on a monthly basis will be enrolled as of the first of the following month.

(b) (No change.)

17:1-3.4   Proof of veteran's status

Members wishing to establish veteran status with the retirement system must submit copies of their discharge papers (DD 214) to the New Jersey Department of Military and Veterans' Affairs. A member who fails to submit evidence of military discharge will be enrolled as a nonveteran and this nonveteran classification shall not be altered until such time as the member's military discharge papers are received by the Department of Military and Veterans' Affairs and eligibility for a veteran classification is confirmed.

17:1-3.9  Waiver of retirement benefits upon withdrawal

If a member is eligible to begin receiving a monthly retirement allowance (due to the member's age or years of creditable service), the Division shall inform the member how to obtain the estimated amount of the retirement allowance and shall require the member to sign a waiver of such benefits, should the member still wish to withdraw.

17:1-3.10   Peacetime military service; service credit

(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 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 law (38 U.S.C. §§4301 et seq.), may obtain service credit in the State-administered retirement system as provided in this section.

(b) A member reemployed under this section shall be treated as not having incurred a break in service with the employer by reason of the member's period of service in the uniformed services only for the purposes of vesting or determining eligibility for retirement and health benefits.

(c) The types of service or situations eligible for reemployment rights include regular active duty, initial active duty for training, active and inactive duty training for members of reserve components and National Guard units, and situations where an employee leaves employment for the uniformed services or for examination of fitness for the uniformed services and is not taken into the uniformed services.

1.-3. (No change.)

4. The person shall be denied reemployment rights if:

i.-iii. (No change.)

iv. The employment from which the person leaves to serve in the uniformed services is for a brief, nonrecurring period (temporary employment) and there is no reasonable expectation that such employment will continue indefinitely; or

v. (No change.)

5.-9. (No change.)

10. The member is permitted to make additional elective deferrals to the Supplemental Annuity Collective Trust (SACT), the New Jersey Employees' Deferred Compensation Plan, Additional Contributions Tax Sheltered Programs (ACTS) and the Alternate Benefit Program in an amount not exceeding the maximum amount the employee would have been permitted to contribute during the period of military service if the employee had actually been employed by the employer during that period.

11. (No change.)

12. An employer who participates in the Alternate Benefit Program (ABP), reemploying a person under this section, with respect to the period served by a person in the uniformed services, upon reemployment of that person, shall be liable to the employee pension plan for funding any obligation of that plan to provide benefits under that plan, and shall allocate the amount of any employer contribution for that person in the same manner and extent that the allocation occurs for other employees during the same period of service. However, the employer is not required to make up the earnings that those contributions would have made had the person reemployed under this rule been employed continuously.

i.-iii. (No change.)

iv. Any employer who reemploys a person under this section shall, within 30 days after the date of reemployment, provide information in writing of such reemployment to the Division.

17:1-3.11 Compensation limit for exclusion from membership after retirement

Beginning with the calendar year 2002, and for any calendar year thereafter, the Director of the Division may adjust the compensation limit for exclusion from membership after retirement in the Public Employees' Retirement System. The compensation limit shall be adjusted by increments of $ 1,000, when $ 15,000 increased by 3/5 times the change in the Consumer Price Index as defined in N.J.S.A. 43:3B-1f from the Index applicable to calendar year 2001 to the Index applicable to the calendar year immediately preceding the year of adjustment, rounded to the next highest 100 dollars, exceeds the previous compensation limit by $ 1,000.

17:1-4.1   Purchases; cancellation, interest on outstanding purchases or cash discount requested

(a)-(b) (No change.)

(c) A member who authorizes a purchase, which requires installment payments but who has not had installment payments made toward that purchase for two years due to inactivity in the account, shall be informed by the Division that the remainder of the purchase will be canceled. The member shall receive a pro rata credit for the service purchased to the date that the installment payments ceased. The member may request to pay the cash discount value of the outstanding arrearage for the purchase in full within 60 days of the Division notice. Any subsequent requests to purchase the remaining service credit shall be based on the laws and rules in effect on the date that the subsequent request is received.

(d)-(e) (No change.)

17:1-4.2   Purchase terms; grace period

A member who receives a written optional purchase cost quotation is given a 90-day grace period to confirm that he or she wishes to make the purchase of service credit. If the confirmation of the purchase is not received from the member within 90 days, the cost of purchase must be recalculated to determine if any change in the cost is warranted as a result of change in age or salary.

17:1-4.3   Final compensation; salaries to be used for a period of purchased service credit

(a) A period of purchased New Jersey service may be included in the period for the calculation of final compensation. Actual base salaries paid during such period will be certified and used in the computation.

(b) (No change.)

17:1-4.4   Purchase of service credit; continuation of death benefits coverage; maternity leaves of absence

No period for unpaid maternity leave, even if granted by the public employer, can be approved for the subsequent purchase of service credit in excess of three months unless the Division receives verification that such member was disabled due to pregnancy and resulting disability for the period in excess of three months. During the first three months of an unpaid leave of absence for maternity, the member shall be presumed to be disabled from the performance of her job duties because of her pregnancy and any resulting disabilities.

SUBCHAPTER 5.  INSURANCE AND DEATH BENEFITS

17:1-5.2   Optional settlements; group life insurance

As the statutes provide that death benefits under the group life insurance contracts may be paid under any optional settlement made available by the insurance company. The beneficiary will be informed of such opportunity when such optional settlements are possible. If the beneficiary requests advice concerning such settlements, the claim shall be forwarded to the carrier for contact with the beneficiary. The Division will be advised of the final settlement for the recording of the data with the retirement system.

17:1-5.4   Group life insurance and pension benefits

(a) A deceased member's group life insurance and pension benefits shall be payable directly to a named beneficiary who is at least 18 years old.

(b) If a member designates a beneficiary who is not yet 18 years old to receive the group life insurance and pension benefits, and no trustee or guardian is appointed, the Division will pay the benefit as soon as possible after the beneficiary's 18th birthday. The beneficiary must notify the Division at the time of his or her 18th birthday for the benefit to be paid.

(c) (No change.)

*[17:1-5.5  Active members--group life insurance and pensions benefits

In the event an active member dies before repaying any outstanding obligations, the remaining balance will be deducted first from the group life insurance proceeds and then from the return of pension contributions. If multiple beneficiaries are to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which he or she is entitled to the benefits. Any remaining funds will be distributed in accordance with the member's last Designation of Beneficiary on file.]*

17:1-*[5.6]**5.5*  Retired members--group life insurance and pension benefits

(a) If the member was retired at the time of death, the benefits to eligible beneficiaries shall become effective on the first of the month following the member's death and shall terminate as of the month in which the beneficiary no longer qualifies for such benefits. A pension allowance shall be payable for the entire month in which the retirant or beneficiary dies.

(b) In the event a retired member dies before repaying any outstanding obligations, the remaining balance will be deducted first from the group life insurance proceeds and then from the proceeds of any pension benefit, such as a monthly allowance or last check benefit. If multiple beneficiaries are to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which he or she is entitled to the benefits. Any remaining funds will be distributed in accordance with the member's last Designation of Beneficiary on file.

17:1-*[5.7]**5.6*  Domestic partners

(a) Resolutions by the employer to adopt the provisions of P.L. 2003, c. 246, the Domestic Partnership Act, cannot take effect prior to the date of the resolution. If the employer decides to adopt the provisions of P.L. 2003, c. 246, the employer must adopt the provisions for all its employees and retirees in all of the retirement systems in which it participates and not just members of a specific retirement system.

1. An employer may adopt the provision of P.L. 2003, c. 246, for the State Health Benefits Program (SHBP) and School Employees Health Benefits Program (SEHBP) separately from the resolution for the retirement systems. Once a resolution is adopted, it may only be rescinded on a prospective basis. Anyone receiving a survivor's benefit, SHBP or SEHBP coverage based on the old resolution shall continue to do so until such time as they no longer meet the definition of widow, widower, surviving spouse or dependent.

2. A retired employee of a public employer that has not elected to provide coverage for domestic partners or does not participate in the SHBP or SEHBP cannot add a domestic partner to SHBP or SEHBP coverage.

(b) Pursuant to P.L. 2003, c. 246, the Domestic Partnership Act (N.J.S.A. 26:8A-1 et seq.), the SHBP, SEHBP and State-administered retirement system provisions found in sections 41 through 56 of the Act only apply in the case of two persons who are of the same sex and have established a domestic partnership. Therefore:

1. (No change.)

2. The domestic partner of a participant in the SHBP or SEHBP who is the opposite sex of the participant cannot enroll for SHBP or SEHBP coverage; and

3. (No change.)

(c) Since the Federal tax code does not view a domestic partner in the same manner as a spouse, any benefit an employer provides its employees or retirees for a domestic partner will be taxable to the employee or retiree. The employer who adopts the domestic partner benefit for its active and retired employees should report the value of the benefit provided for the domestic partner on Form W-2 as income to the employee or retiree, and the value of the benefit will be subject to Federal income, Social Security, and Medicare taxes. The adopting employer shall also be responsible for the employer share of Social Security and Medicare taxes due on the domestic partner benefit, including the taxes due on any State paid benefits.

1. (No change.)

2. Anything that the employee or retiree pays for the domestic partner coverage through premium sharing arrangements will reduce the amount of the income reported to the Federal government for the domestic partner benefit. These premiums cannot be made on a pre-tax basis unless the domestic partner meets the Federal definition of dependent. If the domestic partner qualifies as a dependent of the covered member for Federal income tax purposes, the value of the domestic partner benefit will not be taxable to the employee or retiree, and any premium paid by the employee toward the domestic partner benefit can be deducted on a pre-tax basis through the State's Section 125 Tax$ ave Program. To be eligible for the tax exemption, the employee or retiree must file a certification of tax dependency with the Division.

(d) (No change.)

17:1-*[5.8]**5.7*  Civil unions

(a) Civil union partners have all the rights and privileges as married couples. The Federal Internal Revenue Code (IRC) allows an employer to provide certain benefits to its employees on a tax-exempt basis. Those benefits can also be extended to spouses and dependents of an employee on the same tax-exempt basis. The IRC, however, does not recognize a civil union partner in the same manner as a spouse and does not automatically recognize a civil union partner as a dependent for tax purposes. Therefore, employers may have to treat civil union SHBP and SEHBP benefits as taxable on Form W-2 and withhold Federal income, Social Security and Medicare taxes on its value. The employer shall be responsible for the employer share of Social Security and Medicare taxes due on the civil union benefit, including the taxes due on any State paid benefits.

1. The income reported by the employer shall be the full cost of single coverage in the plan in which the civil union partner is enrolled.

2. Anything that the employee or retiree pays for the civil union coverage through premium sharing arrangements will reduce the amount of the income reported to the Federal government for the civil union benefit. These premiums cannot be made on a pre-tax basis unless the civil union partner meets the Federal definition of dependent. If the civil union partner qualifies as a dependent of the covered member for Federal income tax purposes, the value of the civil union benefit will not be taxable to the employee or retiree, and any premium paid by the employee toward the civil union partner can be deducted on a pre-tax basis through the State's Section 125 Tax$ ave Program. To be eligible for the tax exemption, the employee or retiree must file a certification of tax dependency with the Division.

17:1-6.1   Honorable service

(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. Pursuant to N.J.S.A. 43:1-3, the Boards of Trustees of the State-administered retirement systems are authorized to order the forfeiture of all or part of the pension or retirement benefit of a member of the fund or system for misconduct occurring during the member's public service, which render the member's service or part thereof, dishonorable.

(b) (No change.)

(c) In circumstances where the termination of pension rights as of the date of the misconduct results in no reduction, or a minimal reduction of pension or retirement benefits, or in an excessive forfeiture, as compared to the nature and extent of the misconduct and the years of honorable service, the Board may, in its sole discretion, provide a more equitable relief. Alternate methods available to the Board when a forfeiture of service renders an unreasonable or unjust result include, but are not limited to:

1.-2. (No change.)

3. Forfeiture of right to participate in the retired SHBP and SEHBP;

4.-7. (No change.)

17:1-6.2   Indictments, dismissals, litigation or appeals

(a) When a member is subject to criminal charges, such an indictment, information or accusation or dismissed from public employment due to administrative charges, the matter shall be referred to the Board Secretary's office to determine the status of any claim, which may be filed by the member.

(b) No credit shall be granted for the period during which the member's salary has been terminated while under indictment, information, accusation or suspension, until the outcome of the proceedings determines the basis for the award of such credit, if any.

(c) All claims for retirement, death benefits and the return of contributions cannot be processed until the matter has been fully adjudicated and completely resolved to the satisfaction of the Board of Trustees, pursuant to N.J.A.C. 17:1-1.13(e). Resolution of these charges must be verified by contact with the County Prosecutor's Office, the Attorney General's Office, the Department of Education, the Department of Personnel, the employer or other responsible agencies.

(d) (No change.)

(e) If charges listed in N.J.A.C. 17:1-1.13(e) are received by the Boards or Division after the member's date of retirement, the Boards may suspend retirement benefits pending the outcome of such charges.

17:1-6.3   Settlement agreements; employer responsibility for reimbursement to the pension fund or retirement system for associated costs

(a) Pursuant to the provisions of P.L. 2007, c. 49 (N.J.S.A. 43:1-3.3), the following shall apply:

1. A State, county or local employer participating in a State pension fund or retirement system shall be responsible for informing the Division of any settlement agreement between the employer and an employee that provides for the employer not to pursue any civil or criminal charges or an action for misconduct against the employee in exchange for the employee's resignation in good standing. A copy of the settlement agreement must be provided to the Division by the certifying officer within 60 days of execution of such agreement. Such agreement must also be included with any employer certification of service and salary relative to an employee's claim for benefits from the pension fund or retirement system; and

2. Should the Division determine that the terms of the settlement agreement result in additional costs for the pension fund or retirement system, the State, county or local employer shall be responsible for the reimbursement of all such costs to the State pension fund or retirement system.

17:1-7.1   Retirement quotations

(a) Members who apply for retirement will receive a quotation of retirement benefits upon the completion of the retirement calculation. For members of retirement systems which provide for optional survivor benefits, the retirement quotations will include a description of the various options available. If the member named a spouse as the pension beneficiary on the application and provides the spouse's birth date, in addition to the maximum allowance, all survivor options will be included in the quotation.

(b) The quotation of retirement benefits shall inform the member of their right to withdraw, cancel, or change the application for retirement at any time before the later of 30 days after the retirement date or 30 days after the date the Board of Trustees approves the application.

(c) In the event the quotation of retirement benefits is not issued prior to the date of retirement or before the date of approval by the Board of Trustees, then the member will be provided with a 30-day period in which to amend the retirement option selection.

17:1-7.2   Retroactive salary increases

Except as in N.J.A.C. 17:2-4.5, 17:3-4.7, 17:4-4.8 and 17:5-3.6, retroactive salary adjustments that have been authorized after the member's effective date of retirement or date of death may be used as creditable salary for pension or insurance purposes even if the period covered by the salary adjustment extends to a period before the member's effective date of retirement or date of death.

17:1-7.3   Final compensation

(a) With respect to all claims for benefits, the Division shall investigate increases in compensation reported for credit, which exceed reasonably anticipated annual compensation increases for members of the retirement system based upon consideration of the Consumer Price Index for the time period of the increases, the table of assumed salary increases recommended by the actuary and adopted by the Board, and the annual percentage increases of salaries as indicated in data from the Public Employment Relations Commission, or through other reliable industry sources of information regarding average annual salary increases.

(b) (No change.)

17:1-7.4   Biweekly salary computation; retirement and death benefits

(a)-(b) (No change.)

(c) In order to compute the amounts under (a) and (b) above for biweekly employees, the actuary will supply factors to convert biweekly salaries to compensate for biweekly payroll schedules. Application of the factors to the salaries reported for pension purposes will develop the wage base for the calculation of benefits.

(d)-(f) (No change.)

17:1-7.6   Medical examinations; out-of-State

(a) (No change.)

(b) In the event the Board or Commission contemplates the denial of a disability claim based on an out-of-State physician's medical report, the employee will be required to be examined by a physician selected by the Division.

(c) (No change.)

17:1-7.7   Post-retirement employment; employer certification; break-in-service--10-month members

(a) Employers shall certify on the Certification of Service and Final Salary form that the retiring employee has terminated all service.

(b) Members employed on a 10-month schedule who retire as of July 1st and return to the same, or another 10-month position within the same pension system, prior to October 1st of the same year are not considered to have a bona fide retirement. Ten-month members who retire effective July 1st and return to 10-month employment the following September shall be deemed not to have a valid break-in-service for retirement purposes.

17:1-7.9   Workers' compensation; reduction of retirement allowance

(a) A member who retires on an accidental disability retirement under the provisions of the applicable statutes governing the various State-administered retirement systems and who receives periodic benefits under the workers' compensation law after the date of retirement shall be subject to a reduction in the pension portion of the member's retirement allowance in the amount of the periodic benefits received after the date of retirement.

1. (No change.)

2. If the retiree receives a retirement allowance without reduction and periodic benefits under the workers' compensation law for any time period after the date of retirement, the retiree shall repay to the retirement system the amount of the pension portion of the retirement allowance, which should have been subject to reduction under the applicable statute and this rule. If the retiree is unable to make payment in one sum, repayment may be scheduled over a period not to exceed five years. Regular interest, as defined by N.J.S.A. 43:15A-6n, 18A:66-2m, 43:16A-1(9), 53:5A-3p and 43:6A-3n, shall apply to all such repayment schedules. Any other schedule of repayment shall be referred to the Board of Trustees for consideration. In the event of the death of the retiree before full repayment of the amount required under this rule, the remaining balance shall be deducted from any death benefits payable on behalf of the retiree.

3. (No change.)

(b) (No change.)

17:1-7.10  Ordinary disability applications; medical examinations

(a) (No change.)

(b) If the medical information supplied by the applicant is sufficient for the Medical Review Board to make a medical recommendation, it shall return the case to the Disability Review Section with its recommendation. If the Medical Review Board deems that the medical information supplied by the applicant is not sufficient for it to make a medical recommendation, it shall advise the Disability Review Section to arrange to have the applicant examined by a physician or physicians under contract with the Division to perform disability examinations, or to obtain additional information needed to make its medical recommendation.

(c) The Board or Commission, which governs the pension fund or retirement system may request that an applicant be examined or reexamined by a physician or physicians under contract with the Division or that additional information be obtained, if it deems that the medical information available is insufficient to make a decision on the eligibility of the applicant for ordinary disability retirement.

(d) A member filing for a disability retirement shall not file a separate application for any other type of retirement while the disability application is pending.

(e) If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant will be required to submit a separate application for retirement. If the applicant submits the separate application for retirement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.

17:1-7.11  Waiver

(a) Application for waiver in whole or part by a retiree or beneficiary who is eligible to receive the increased allowance shall be made at least 30 days prior to the desired effective date on a form required by the Division and shall be effective on the first day of a subsequent month.

(b) A waived benefit may be reinstated by application to the Division prior to the reinstatement date and shall be effective on the first of the month subsequent to the notice of cancellation of the waiver. There shall be no retroactive payments of any benefits waived thereto.

SUBCHAPTER 8.  PENSION ADJUSTMENT PROGRAM

17:1-8.2   Employer payments; delinquencies

(a) The Division will inform all retirees and beneficiaries of the reason for the suspension of payments.

(b) (No change.)

17:1-8.4   Employer payments

The employers shall review the detailed tabulations of retirees and beneficiaries provided with the invoice for employer liability submitted by the Division and shall report any corrections or revisions within 60 days of receipt of the invoice, otherwise invoices must be paid as submitted.

17:1-8.5   Calculation of cost-of-living adjustment (COLA) under P.L. 2002, c. 109

(a) The calculation for the increased benefit under P.L. 2002, c. 109 for all employees who retired prior to January 1, 2001, shall be done by the Division using the calendar year 2001 average Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items.

(b)-(c) (No change.)

(d) On or before November 15th of each year, the Division shall provide employers participating under the provisions of P.L. 2002, c. 109 with a rate chart to be used to calculate the above increases.

SUBCHAPTER 9.  UNEMPLOYMENT INSURANCE

17:1-9.1   Due dates for contributions and reports

(a) State employing subgroups participating in the Unemployment Insurance Program whose employees are not paid by the State Centralized Payroll Unit shall file the required data and reports of unemployment insurance contributions with the Division by the 15th day following the end of each calendar quarter, together with the remittance for the deductions taken from their eligible employees' salaries or wages. State Centralized Payroll will remit weekly an Unemployment Tax Register report, which summarizes the Unemployment Compensation information for covered employees in each of the biweekly payroll units. The register is due within five days of the date the payroll is prepared.

(b) The Division shall prepare a consolidated quarterly report of Unemployment Insurance contributions on behalf of the State Centralized Payroll Unit and other State employing subgroups. The consolidated report shall be filed with the Department of Labor by the last day of the month following the end of each calendar quarter. In addition, the Division shall remit to the Department of Labor on a quarterly basis the amount of reimbursable unemployment claim charges as specified on NJ Form B-187Q.

17:1-9.6   Designated contractor

A contractor will be designated to develop and maintain a cost control program in accordance with the terms of the contract awarded by the State. The Division will coordinate the contractor's activities with respect to State employing units and review quarterly reports of claims activity prepared by the contractor. 

SUBCHAPTER 10.  SOCIAL SECURITY

17:1-10.2 Federal-State agreement; modifications

All modifications of the Federal-State agreement are prepared by the Division and subject to review by the Attorney General's office.

SUBCHAPTER 12.  CENTRAL PENSION FUND

17:1-12.1  Application required

For retirement of State employees under the Veterans Retirement Act, N.J.S.A. 43:4-1 et seq., or the Heath Act, N.J.S.A. 43:5-1 et seq., an application on a form provided by the Division must be prepared by the employee, certified by the employing agency and filed with the Division.

17:1-12.2  Disability certification form

Where disability is the cause for the pension, a certification of the disability by a physician on a form provided by the Division must be filed with the Division.

17:1-12.3  Withholding forms

A W-4P, "Withholding Certificate for Pension or Annuity Payments," must be filed with the Division.

17:1-12.4  Surrogate's certification

(a) When a pensioner dies and a residual benefit is payable, the claimant shall file an appropriate certification from the Surrogate's Office with the Division.

(b)-(c) (No change.)

17:1-12.5  Last check benefit

After July 19, 2004, and pursuant to N.J.S.A. 43:3B-2A, a cost-of-living adjustment shall be payable to the estate of a pensioner who is receiving a benefit under the provisions of N.J.S.A. 43:4-1 et seq., 43:5-1 et seq., or 43:5A-1 et seq., for the entire month in which the pensioner dies.

SUBCHAPTER 13.  NEW JERSEY STATE EMPLOYEES TAX SAVINGS PROGRAM (TAXVE)

17:1-13.2  Unreimbursed medical spending account

(a) Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create an unreimbursed medical spending account (UMSA) to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all medical and dental expenses not reimbursed, or only partially reimbursed, under the employee's health benefit plan or any other benefit plan, and considered by the Internal Revenue Service (IRS) to be a tax deductible medical expense. Also eligible for reimbursement are certain expenses for medical care, that is, costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, that the IRS determines may be reimbursed by an UMSA even though these expenses are not deductible for the purpose of itemizing medical expenses for Federal taxes.

1.-2. (No change.)

3. Premium contributions required for any medical or dental coverage are paid through premium conversion and not from the unreimbursed medical spending account. Such premium contributions for the State Health Benefits Program coverage do not qualify as eligible medical expenses under the UMSA. Likewise, premium contributions paid by the employee's eligible dependents for health care insurance coverage outside the State Health Benefits Program do not qualify as eligible UMSA medical expenses.

17:1-13.5  Salary reduction elections

(a) (No change.)

(b) Salary-reduction elections shall be made during enrollment periods announced by the Division and shall be submitted to the plan administrator. An employee shall not be permitted to make salary-reduction elections once the enrollment period for the plan year has ended unless the employee experiences a qualifying change in family circumstances as recognized under §125 of the Internal Revenue Code, 26 U.S.C. §125. A new employee shall be permitted to make a salary-reduction election for a period of 30 days following the employee's hire date. An employee who becomes eligible to participate in the plan following the end of the enrollment period shall also have 30 days from the employee's eligibility date to make a salary-reduction election. Information about the plan administrator and election forms shall at all times be available from the Division.

(c) In each calendar year, an employee establishing an unreimbursed medical spending account must elect a salary reduction amount of at least $ 100.00 but not more than $ 2,500 for this account.

(d)-(e) (No change.)

17:1-13.6  Claims for payment from plan accounts

(a) Claims for payment of expenses eligible for payment from plan accounts shall be submitted to the plan administrator. Information about the plan administrator and claim forms are available from the Division.

(b) In each plan year, the total payments from a plan account shall not exceed the total salary reduction amount elected by the employee for that account for that plan year. Under the unreimbursed medical spending account (UMSA), the employee will be reimbursed for the maximum amount of the elected total contribution to the plan, whether or not the deductions from the employee's pay have totaled the amount of the filed claim. Conversely, under the Dependent Care Spending Account, the maximum amount of reimbursement available to the employee during the period of coverage shall be the amount posted to the employee's account at the time the employee files a reimbursement claim.

(c) The program period is based on a calendar year from January 1 to December 31; however, the plans have adopted the 2 1/2 month grace period rule permitted under the Federal tax code that extends the period of time for incurring qualifying expenses through March 15 of the following year. The employee may continue to submit claims for expenses incurred in the plan year through April 30 of the following year.

(d) (No change.)

17:1-13.7  Forfeiture of account balances

In the event that the amount elected by an employee to fund a plan account in a given plan year exceeds the employee's total eligible claims for expenses incurred in that plan year, including the 2 1/2 month grace period immediately following the end of the calendar year (as submitted no later than April 30 of the following calendar year), and eligible for payment from the plan account, the balance in the plan account shall be forfeited to the State.

SUBCHAPTER 14.  THE NEW JERSEY STATE EMPLOYEES COMMUTER TAX SAVINGS PROGRAM (COMMUTER TAXVE PROGRAM)

17:1-14.1  Establishment of plan

State employees eligible to participate in the State Health Benefits Program, except those part-time employees participating due to the provisions of P.L. 2003, c. 172 (N.J.S.A. 52:14-17.33a), are eligible to participate in the New Jersey State Employees Commuter Tax Savings Program, which shall be referred to as the Commuter Tax$ ave Program, set forth in this subchapter. The Division has been charged by the Treasurer with responsibility for administering the Commuter Tax$ ave Program. In each month, an employee, but not the employee's spouse or domestic partner, may participate in one or both of the plan options available; mass transit expenses and commuter parking expenses.

17:1-14.2  Enrollment in and deductions for the Commuter Tax$ ave Program

(a) (No change.)

(b) Monthly deductions shall be taken by Centralized Payroll in the first pay period of the month prior to the benefit month. State colleges and universities may establish during the month prior to the benefit month, when deductions will be taken.

(c) (No change.)

17:1-14.4  Reimbursement of qualified transportation fringe benefit

(a)-(c) (No change.)

(d) Refunds of unused election amounts are not permitted as described in N.J.A.C. 17:1-14.6; however, unclaimed amounts can be carried over month-to-month and applied toward future months' transit and parking expenses.

17:1-14.5 Claims for payment from plan accounts

(a) Claims for payment of expenses eligible for payment from the Commuter Tax$ ave Program account shall be submitted to the plan administrator with parking or park-and-ride receipts. Information about the plan administrator and claim forms shall at all times be available from the Division.

(b) In each month, the total payments from a Commuter Tax$ ave Program account shall not exceed the prescribed Federal pre-tax monthly election limit.

(c)-(d) (No change.)

17:1-14.6  Forfeiture of account balances

(a) In accordance with Section 132 of the Federal Internal Revenue Code of 1986, 26 U.S.C. §132, refunds of unused election amounts to the employee are prohibited. If an employee terminates from the Commuter Tax$ ave Program and has an unused account balance on the effective termination date, such unclaimed balance shall be forfeited to the State.

(b) In the event the amount elected by an employee to fund a Commuter Tax$ ave Program Commuter Parking Reimbursement account in a given month exceeds the employee's total claims for Commuter Parking Reimbursement expenses incurred in that month and eligible for payment from the Commuter Tax$ ave Program Commuter Parking Reimbursement account, the unused balance will roll forward and shall be available to cover qualifying expenses incurred in a future benefit month.

(c) Cash reimbursement for qualified parking expenses through the plan's CashBack program must be requested within 180 days after the expense has been incurred by the employee. If an employee incurs qualifying expenses to cover the employee's benefit election in a given month but the employee fails to file a claim for reimbursement within 180 days of the incurred expense, it shall no longer qualify as an eligible reimbursable expense from a Commuter Parking Reimbursement Account. However, the funds not claimed timely shall roll forward and may be used for reimbursement of future eligible parking expenses that are submitted within 180 days of the date incurred.

SUBCHAPTER 15.  THE NEW JERSEY SCHOOL EMPLOYEES' HEALTH BENEFITS PROGRAM

17:1-15.1  Establishment of the School Employees' Health Benefits Program (SEHBP)

Effective July 1, 2008, P.L. 2007, c. 103 established the SEHBP as a separate health program from State Health Benefits Program (SHBP). The State Health Benefits Commission (SHBC) is responsible for administering the SHBP by promulgating rules, contracting for services and benefits and providing a review process for members disputing eligibility or claims. N.J.S.A. 52:14-17.46.3 created a separate School Employees' Health Benefits Commission (SEHBC) designed as the agency responsible for the administration of the SEHBP.

17:1-15.2  Temporary administration of the SEHBP

Until such time as the SEHBC adopts its own rules, the SHBC will act as the administrator for the SEHBP and all rules applying to the SHBP will apply to the SEHBP. Except as provided by law, the two programs will be administered in the same manner.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 624(a)

Readoption: N.J.A.C. 17:10

Judicial Retirement System

Proposed: September 2, 2008 at 40 N.J.R. 4942(a).

Adopted: December 15, 2008 by the Judicial Retirement System, Peter Gorman, Acting Secretary, State House Commission.

Filed: December 17, 2008 as R.2009 d.33, without change.

Authority: N.J.S.A. 43:6A-29d.

Effective Date: December 17, 2008.

Expiration Date: December 17, 2013.

Summary of Public Comment and Agency Response:

No comments were received. The rules proposed for readoption without change were published in the New Jersey Register at 40 N.J.R. 4942(a) on September 2, 2008. The comment period closed November 1, 2008.

Federal Standards Statement

A Federal standards analysis is not required for the readopted rules because N.J.S.A. 43:6A-29d governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:10.


 
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