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Pensions and Benefits
RULE CHANGES
2010
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 2010 at this time.


Proposed Rules

PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Proposed Amendment: N.J.A.C. 17:2-1.4, Public Employees Retirement System (PERS)

Proposed New Rule: N.J.A.C. 17:1-2.18, Public Employees Retirement System (PERS), Teachers' Pension Annuity Fund (TPAF), Police and Firemen's Retirement System (PFRS), State Police Retirement System (SPRS), Defined Contribution Retirement Program (DCRP) and the Alternate Benefits Plan (ABP)

Proposed Repeal: N.J.A.C. 17:4-4.8, Police and Firemen's Retirement System (PFRS)

Proposed Repeal: N.J.A.C. 17:7-3.9, Alternate Benefit Program (ABP)

Proposed Repeal: N.J.A.C. 17:3-4.7, Teachers' Pension Annuity Fund (TPAF)

Proposed Repeal: N.J.A.C. 17:5-3.6, State Police Retirement System (SPRS)

Proposed New Rule: N.J.A.C. 17:2-2.8, Public Employees Retirement System (PERS)


Adoptions

Readoption with Amendments: N.J.A.C. 17:2; Cite as 42 N.J.R. 1612(b) (PERS) - July 19, 2010

Final Adoption: N.J.A.C. 17:1-2.18, Cite as 42 N.J.R. 2139(a), Public Employees Retirement System (PERS), Teachers' Pension Annuity Fund (TPAF), Police and Firemen's Retirement System (PFRS), State Police Retirement System (SPRS), Defined Contribution Retirement Program (DCRP) and the Alternate Benefits Plan (ABP) - September 7, 2010

Adopted Repeal: N.J.A.C. 17:7-3.9,Cited as 42 N.J.R. 2141(a), Alternate Benefit Program (ABP) - September 7, 2010

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PUBLIC NOTICES

There are no Public Notices for 2010 at this time.


PROPOSED RULES


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

42 N.J.R. 2316(a)

Proposed Amendment: N.J.A.C. 17:2-1.4

Click here to view Interested Persons Statement

Election of Member-Trustee
 
Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.
 
Authority: N.J.S.A. 43:15A-1 et seq.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2010-233.
 
Submit comments by December 3, 2010 to:

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

The agency proposal follows:
 
Summary

The Board of Trustees of the Public Employees' Retirement System (PERS) proposes to amend N.J.A.C. 17:2-1.4, Election of member-trustee. A proposed amendment will establish new procedures for the notice of election and the nominating process to elect a member-trustee to the PERS Board of Trustees. The current procedural practice to elect a member-trustee begins with a notice of election mailed to certifying officers of each employing PERS location to distribute to each member who is eligible to vote. Typically, in the case of a PERS election, a State position requires the printing of over 100,000 notices, a county election requires over 53,000 notices and a municipal election over 140,000 notices.

In an effort to decrease administrative costs, the Board proposes to amend the current rule and establish procedures that will permit the Division to electronically send a certifying officer letter with an attached notice of election. In addition to the notice of election, each employer will receive directions to distribute such notice to each eligible employee electronically, if possible. This will enable the employers to receive the information much faster and the Division saves on printing and postage costs. Further, employers are able to distribute the information to employees via e-mail and post it to their employee intranet site, or can print the PDF file and distribute it to eligible employees. The employer will be instructed to send an e-mail back to the Division confirming distribution of the notice of election. The Division has been providing information electronically to employers including the certifying officer letters since July 2006. Employers have been receptive to this form of communication and have been compliant with Division requests.

Currently, members who are interested in becoming a candidate for a position on the Board must request the necessary forms to collect the required signatures for their candidacy. These forms allow for at least 25 signatures per page and require either the social security number or pension number of all the persons supporting their candidacy. This is necessary in order to verify that the person signing the petition form was eligible to do so. Division staff can only verify this information by keying the member number or social security number into a database. The passing of the form from member to member to obtain the supporting number of signatures poses a potential for identity theft and other privacy issues. A proposed amendment to the rule addresses these issues since members will be provided with a secure website and will not be able to view personal information of others supporting the candidate. When necessary, a petition form may be provided to the member to support a candidate.

Throughout this section the PERS Board of Trustees is addressed as the Board and technical amendments are proposed to establish consistency and conformity in the language.

The proposed amendments follow:

N.J.A.C. 17:2-1.4, Election of member-trustee, is proposed for amendment at subsection (a) to clarify the period of time in which the election cycle begins and ends. Subsection (b) is proposed for a technical amendment only and subsection (c) is proposed for amendment for consistency purposes regarding the term "notice of election." Paragraph (c)1 is proposed for amendment to include that during the election cycle the notice of election shall be prepared and distributed electronically instead of printed and mailed. Paragraph (c)2 is proposed for amendment for consistency purposes regarding the term "notice of election." Subparagraph (c)2iii is proposed for amendment to clarify that the nominating instructions, rather than the nominating petitions and petition forms, are available from the Board Secretary. Paragraph (c)3 is proposed for amendment to clarify that the notice of election and instructions shall be provided, rather than forwarded in bulk, to the certifying officer of each employing location. Paragraph (c)4, concerning confirmation of delivery, is proposed for deletion and a new paragraph is proposed to state that each employing agency shall respond electronically to the Division that the notice of election has been properly distributed. This will provide a record that each location has received and distributed the notice of election to employees. Paragraph (c)5 is proposed for amendment to further clarify that the election notices shall be distributed electronically and these notices will also be posted on the Division's website.

Subsection (d) and paragraph (d)1 are proposed for amendment to remove the word "petition" and replace it with the instructions for the nominating "process." Paragraph (d)2 is proposed for deletion and replaced with a new paragraph to describe the nominating process, which begins with a written request from a member to the Board Secretary seeking the nomination to be a candidate. Paragraph (d)3 is proposed for amendment to replace "petition forms" with "nominating instruction." Subparagraphs (d)3i through iii are proposed for amendment to state that active members of the State, municipal and county can register their nomination for the candidate through a designated website or, if necessary, paper petition, rather than just signing the petition of the candidate. The preferred method to register the nomination is through the designated website.

Paragraph (d)4 is proposed for deletion and replaced with new subparagraph (d)3iv, which states that the petitioner shall be provided with an alternative method to designate their candidate selection, which is electronically through a designated website. When necessary a petition form will be made available. Paragraph (d)5 is recodified as subparagraph (d)3v and proposed for amendment to clarify that an active member shall nominate only one candidate to the Board. Paragraph (d)6 is recodified as subparagraph (d)3vi and proposed for amendment, to clarify that the last date for nominating a candidate shall be identified in the nominating instructions that are sent to the employers for distribution to the voters. Paragraph (d)7 is proposed for deletion, since the proposed process will be electronic. Paragraph (d)8 is proposed for recodification as paragraph (d)4 without change.

New paragraphs (d)5 through 7 describe the procedures if there are no candidates that qualify for the trustee position, when there are two positions for the same election and when there are two positions for the same election and more than two candidates qualify. Subparagraph (e)2vii is proposed for amendment to clarify that the candidate that receives the highest number of legal votes cast, rather than a "plurality" of all votes, shall be declared elected to the position. Paragraph (e)4 is proposed for amendment to state that the certifying officer shall "electronically" receive a notice requesting that they acknowledge the receipt and distribution of the election packets. This acknowledgement will become the record that the notice was received and distributed. Subsection (j) is proposed for amendment to clarify the procedure for when a candidate dies or is unable or unwilling to serve as member-trustee prior to the beginning of the candidate's term. If there is no second runner-up then the Board shall conduct a new election to fill the Board vacancy for the remainder of the term during the next election cycle.

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 Public Employees' Retirement System work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement system 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. The members 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.

Proposed amendment to rule N.J.A.C. 17:2-1.4 will clearly detail the Board's position regarding election of member-trustee to the PERS Board. In the current economic climate, it is important to determine how the election process can be streamlined in consideration of staffing limitations and decreasing administrative budgets. The proposed amendment to the election procedures will eliminate the costly paper election notices and replace it with a more efficient electronic process.

The social benefits of the proposed amendment outweigh any negative effect that this amendment may impose on members or employers. Providing proper interpretation of the Board election process will provide members and employers with a better understanding of this administrative practice. The taxpaying public may be affected by these rules, since public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the retirement system which the rules require.
 
Economic Impact

The proposed amendment will have a positive economic impact on the Public Employees' Retirement System, since it will reduce the administrative costs of the Board elections for member-trustee. The upcoming PERS election cycle will be for State, municipal and county positions, which would require the printing of approximately 300,000 election notices. The proposed change to the rule will allow the Division to electronically send a certifying officer letter, along with a notice of election to each employer, with directions to distribute such notice to each eligible employee electronically. This will result in the Division saving the costs associated with the printing and postage of the election notices. The Division will continue to monitor the impact of the proposed amendment to the rule.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq., govern 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 Board invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment along with their written comments.
 
Agriculture Industry Impact

The proposed amendment will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed amendment has no effect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Public Employees' Retirement System in New Jersey.
 
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 have no impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing because the rule pertains to the PERS election process.
 
Smart Growth Development Impact

The proposed amendment will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rule would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rule pertains to the PERS election process.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
17:2-1.4   Election of member-trustee
 
(a) The procedures as required by N.J.S.A. 43:15A-17 for the election of a State, municipal or county trustee representative to the PERS Board [of Trustees] are set forth in this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PERS Board.
 
(b) Eligible candidates shall include any active or retired member of the PERS. Only State members may seek State seats, only municipal members may seek municipal seats[,] and only county members may seek county seats on the Board [of Trustees]. All candidates shall comply with any and all requirements as provided by law and these rules. Any candidate who fails to comply with the law and [these rules] this chapter is automatically disqualified as a candidate.
 
(c) The following shall apply to [election] the notice[s] of election:
 
1. At least nine months prior to the [expiration of the term of each elected trustee or immediately upon a vacancy on the Board,] next election cycle a notice shall be prepared and distributed electronically by the Secretary of the Board or a contracted vendor, through the certifying officers, to provide to each member who is eligible to vote;
 
2. The [election] notice of election shall:
 
i.-ii. (No change.)
 
iii. State that instructions for the nominating [petitions are required and that the petition forms] process are available from the Board Secretary at the Division;
 
iv.-vi. (No change.)
 
3. [Election] A notice[s] of election shall be [forwarded in bulk and in appropriate number] provided to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices;
 
[4. A confirmation form shall also be forwarded to each certifying officer or appropriate fiscal officer. Such form shall be returned to the Board Secretary or contracted vendor and shall include documentation of:
 
i. Receipt of the notice by the certifying officer or other appropriate fiscal officer; and
 
ii. The extent to which the certifying officer or other appropriate fiscal officer has distributed the notice to eligible members; and]
 
4. The employing agency shall be required to respond electronically that the notice of election has been properly distributed to those identified in (c)3 above; and
 
5. Election notices shall be distributed electronically to each eligible member through the certifying officer of each employing location. In addition, this notice will be posted to the Division's website. Only active members of the PERS may vote in the election of member-trustees of the Board of Trustees of the PERS.
 
(d) The following shall apply to the nominating [petitions] process:
 
1. [Nominating petition forms] The instructions for the nominating process shall be available from the Office of the Board Secretary of the PERS;
 
[2. Nominating petitions shall be forwarded to each active or retired member who requests them after the Division verifies the member's eligibility to run for such election;]
 
2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;
 
3. The [petition forms] nominating instructions shall explain that:
 
i. For State trustee, at least 500 active State members, who are eligible to vote for the position, are required [to sign the petition for the candidate] to register their nomination for the candidate through a designated website or, if necessary, paper petition;
 
ii. For municipal trustee, at least 500 active municipal members, who are eligible to vote for the position, are required to [sign the petition for the candidate] register their nomination for the candidate through a designated website or, if necessary, paper petition; [or]
 
iii. For county trustee, at least 500 active county members, who are eligible to vote for the position, are required to [sign the petition for the candidate] register their nomination for the candidate through a designated website or, if necessary, paper petition;
 
[4. Each petition form shall require the candidate's name, membership number and employer, as well as the petitioner's name, signature, employer, pension membership or Social Security number;]
 
iv. To register a nomination for a candidate, the petitioner shall be required to designate their candidate selection either electronically through a designated website or, if necessary, through a petition form;
 
[5.] v. [The form shall explain that an] An active member shall [sign] nominate only one [petition] candidate, with State members petitioning for a State candidate, municipal members petitioning for a municipal candidate and county members petitioning for a county candidate; and
 
[6.] vi. The last date[s for filing and returning the petitions] for nominating a candidate shall be identified, as well as the approximate date that election packets shall be sent to employers for distribution to voters;
 
[7. Candidates named on the petitions shall sign each petition in a designated space indicating their willingness to be a candidate; and]
 
[8.] 4. (No change in text.)
 
5. If no candidates receive the requisite 500 signatures to qualify for the position, the vacancy will remain vacant until the next election cycle and the position will be for the remainder of the unexpired term;
 
6. In the event there are two positions for the same election because a vacancy causes an unexpired term and another term expires (State, municipal or county) and only two candidates qualify, the Office of the Board Secretary shall hold a drawing by lot to determine which candidate shall fill the full-term position and which candidate shall fill the unexpired position; and
 
7. In the event there are two positions for the same election, (State, municipal or county) and more than two candidates qualify, an election by ballot shall be held. The candidate receiving the highest number of votes will fill the full-term position. The candidate receiving the second highest number of votes will fill the unexpired term position.
 
(e) The following applies to distribution of election packets:
 
1. (No change.)
 
2. For each eligible voter, there shall be forwarded to the certifying officer, individual member packets with instructions for balloting, which shall include the following information:
 
i.-vi. (No change.)
 
vii. Notification that the candidate receiving [a plurality of] the highest number of legal votes cast shall be declared elected to the position;
 
viii.-ix. (No change.)
 
3. (No change.)
 
4. A notice shall be [signed by] forwarded to each certifying officer [acknowledging] electronically requesting that they acknowledge the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:15A-67 and 80.
 
(f)-(i) (No change.)
 
(j) In the event, the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the candidate who obtained the [next] second highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up, the Board shall conduct a new election to fill the Board vacancy[. For purposes of this provision, a member-trustee's term begins upon the taking of the oath of office.] for the remainder of the term during the next election cycle.


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
GENERAL ADMINISTRATION

42 N.J.R. 896(a)

Proposed New Rule: N.J.A.C. 17:1-2.18

Service and Salary Credit: Awards of Back Pay
 
Authorized By: Frederick 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 2010-044.
 
Submit comments by July 16, 2010 to:

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

The agency proposal follows:
 
Summary

The Division of Pensions and Benefits (Division) proposes new N.J.A.C. 17:1-2.18, Service and salary credit: awards of back pay. This section is simultaneously proposed to be repealed from N.J.A.C. 17:2-4.5, 17:3-4.7, 17:4-4.8, 17:5-3.6 and 17:7-3.9. The proposed new rule is intended to amend the general administration rules and provide a central location for this issue since it affects the Public Employees Retirement System (PERS), Teachers Pension Annuity Fund (TPAF), Police and Firemen's Retirement System (PFRS), State Police Retirement System (SPRS), Defined Contribution Retirement Program (DCRP) and the Alternate Benefits Plan (ABP). The rule clarifies that members shall receive service and full salary credit for the period in which a full normal pension contribution is received by the retirement system. It is a procedural practice that awards or settlement agreements are reviewed by the Division. In cases, where an award or settlement is structured in such a way as to provide the member with a substantial increase in salary or service credit in anticipation of retirement or to provide service credit for retirement eligibility, the Division may adjust the compensation or service credit when the justification of such an increase is not substantiated or acceptable.

Further, the proposed rule brings greater clarity to the Division's procedure to request when necessary, all supporting documentation from the employer that will substantiate the award or settlement agreement.

The enactment of P.L. 2007, c. 92 established a Defined Contribution Retirement Program for elected and certain appointed officials. The program became operational on July 1, 2007. This proposed regulation impacts those members participating in the PERS, TPAF, PFRS, SPRS, DCRP and the ABP. The DCRP and ABP, which are both defined contribution retirement are included in the proposal to clarify that the award or settlement agreement must be equal to full back pay in order to receive employer contributions for the period of the award. The member is not entitled to any investment gains or losses that occur during the period of award.

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 Division work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement 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. The members 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.

Proposed new rule N.J.A.C. 17:1-2.18 will clearly detail the Division's position regarding awards of back pay and settlement agreements. This administrative rule provides a central location for this issue, since it affects the various retirement systems, and will ensure consistency and uniformity of the Division procedure. The rule also clarifies that the certifying officer of the employing location has the responsibility of reporting the proper base salary to use in computing pension contributions. This clarification will provide guidance to members and employers who are negotiating back pay awards and settlements.

The social benefits of this proposed new rule outweigh any negative effect that this addition may impose on members or employers. Providing proper interpretation of back pay and settlement agreements will provide members and employers with a better understanding of this administrative practice. The taxpaying public may be affected by these rules, since public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the retirement systems which the rules require.
 
Economic Impact

The proposed new rule will have a positive economic impact on the various pension systems, since it clarifies that members and employers entering into back pay and settlement agreements cannot structure them in a way as to provide the member with a substantial increase in creditable salary or provide service credit that will entitle the member to file for benefits to which they would not otherwise have qualified; thus creating an unfunded liability in the retirement system. The Division will continue to monitor the impact of the proposed new rule.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 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 proposed new rule will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of this proposed new rule along with their written comments.
 
Agriculture Industry Impact

The proposed new rule will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed new rule has no affect on small businesses as the term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the public retirement systems in New Jersey.
 
Smart Growth Impact

The proposed 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 new rule will not have an impact on affordable housing in New Jersey since the new rule applies to the State-administered retirement systems, it will have no impact on the average cost of housing in New Jersey.
 
Smart Growth Development Impact

The proposed new rule will not have any impact on the achievement of smart growth development in Planning Areas 1 or 2, or in designated centers, because it applies to the public retirement systems.
 
Full text of the proposed new rule follows:
 
SUBCHAPTER 2. ACCOUNTING
 
17:1-2.18   Service and salary credit: awards of back pay
 
(a) A member who appeals the suspension or termination of the member's employment and who, by award or settlement, becomes entitled to full pay for all or a portion of that employment for the period of such suspension or termination shall receive service credit for the period covered by the award or settlement provided a full normal pension and, if applicable, the contributory group life insurance contribution is received from the member or is deducted from the value of the award. The member must receive full back pay, including normal salary increases before mitigation and the contributions will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. In the event that the amount of back payment, after mitigation, is insufficient to deduct the value of the normal pension contributions and, if applicable, the contributory group life insurance due, such contribution shall be paid by the member to the respective retirement system by certified check or money order.
 
(b) If a member waives an award of back pay, then the member cannot receive service or salary credit for the period of the award.
 
(c) 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, or provides service credit that entitles a member to file for retirement benefits to which they would not otherwise have qualified, the award or settlement shall be reviewed by the Division. If the Division 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 the various retirement systems, the Division shall determine the compensation and/or service credit to be used to calculate the retirement allowance, and the member shall have the pension contributions for the salaries based on the award refunded without interest.
 
(d) It is the responsibility of the certifying officer to provide to the Division a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document and all details pertaining to a mitigated award of back pay. Any resolution or legal document submitted to the Division must be fully executed by all parties to the agreement.
 
(e) When necessary, the Division shall request all supporting documentation regarding the award or settlement agreement from the employer. The Division has the ability to request proof of mitigation from the member.
 
(f) For those defined contribution retirement programs administered by the Division, the member is not entitled to the employer contributions for the period of the award unless the member receives an award equal to full back pay pursuant to N.J.A.C. 17:1-2.18.
 
(g) For those defined contribution retirement programs administered by the Division, the member is not entitled to investment gains or losses that the contribution would have been subject to had the member receiving the award of back pay been employed continuously during the period of the award.


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

42 N.J.R. 898(a)

Proposed Repeal: N.J.A.C. 17:4-4.8

Service and Salary Credit: Awards of Back Pay
 
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 2010-043.
 
Submit comments by July 16, 2010 to:

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

The agency proposal follows:
 
Summary

The Board of Trustees of the Police and Firemen's Retirement System (PFRS) proposes to repeal N.J.A.C. 17:4-4.8, Service and salary credit: awards of back pay. This section is simultaneously proposed to be repealed from N.J.A.C. 17:2-4.5, 17:3-4.7, 17:5-3.6 and 17:7-3.9. A proposed new rule, N.J.A.C. 17:1-2.18, is intended to amend the general administration rules and provide a central location for this issue since it affects the Public Employees Retirement System, Teachers Pension Annuity Fund, PFRS, State Police Retirement System and the Alternate Benefits Plan. The rule clarifies that members shall receive service and full salary credit for the period in which a full normal pension contribution is received by the retirement system. It is a procedural practice that awards or settlement agreements are reviewed by the Division. In cases, where an award or settlement is structured in such a way as to provide the member with a substantial increase in salary or service credit in anticipation of retirement or to provide service credit for retirement eligibility, the Division may adjust the compensation or service credit when the justification of such an increase is not substantiated or acceptable.

Further, this rule brings greater clarity to the Division's procedure to request when necessary, all supporting documentation from the employer that will substantiate the award or settlement agreement.

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 Police and Firemen's Retirement System affect and work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement 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. The members 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.

The proposed repeal of N.J.A.C. 17:4-4.8 will not have any social impact on the taxpaying public. The Board is not aware of any provisions in the rule proposed for repeal that would impose any hardship or costs on the members of the State-administered retirement systems in New Jersey or on the public in general.
 
Economic Impact

The proposed repeal of N.J.A.C. 17:4-4.8 will have a positive economic impact on the Police and Firemen's Retirement System, since it clarifies that members and employers entering into back pay and settlement agreements cannot structure them in a way as to provide the member with a substantial increase in creditable salary or provide service credit that will entitle the member to file for benefits to which they would not otherwise have qualified; thus, creating an unfunded liability in the retirement system.
 
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 rule proposed for repeal will not result in the generation or loss of jobs. The Board invites any interested parties to submit any data or studies concerning the jobs impact of the rule proposed for repeal along with their written comments.
 
Agriculture Industry Impact

The rule proposed for repeal will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the rule proposed for repeal has no affect on small businesses as the term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Police and Firemen's Retirement System.
 
Smart Growth Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth and the implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact

The rule proposed for repeal will not have an impact on affordable housing in New Jersey since the rule applies to the Police and Firemen's Retirement System. The rule proposed for repeal will have no impact on the average cost of housing in New Jersey.
 
Smart Growth Development Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth development in Planning Areas 1 or 2, or in designated centers, because the rule applies to the public retirement systems.
 
Full text of the rule proposed for repeal follows (deletions indicated in brackets [thus]):
 
SUBCHAPTER 4. MEMBERSHIP
 
17:4-4.8   [Service and salary credit: awards of back pay] (Reserved)
 
[(a) A member shall receive service credit toward retirement for any month or biweekly pay period for which a full normal deduction is received by the Retirement System.
 
(b) A member who appeals the suspension or termination of the member's employment and who, by award or settlement, becomes entitled to back pay for all or a portion of that employment for the period of such suspension or termination shall receive service credit for the period covered by the award or settlement provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the pension contribution will be determined by the provisions of the award or settlement. If the member receives full back pay, including normal salary increases before mitigation, then the contribution will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. When the award or settlement is less than the full back pay, the pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment. In the event that the amount of back payment, after mitigation, is insufficient to deduct the value of the normal pension contributions due, such contribution shall be paid by the member.
 
(c) In no case shall service or salary credit be given if the award of back pay, before mitigation, is less than the value of the normal pension contributions due. If a member waives an award of back pay, then the member cannot receive service or salary credit for the period of the award.
 
(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 of Trustees. 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. 17:4-4.1, the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have the pension contributions for the salaries found not to be creditable refunded without interest.
 
(e) It is the responsibility of the certifying officer to provide a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document that details the terms of the settlement.]


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
ALTERNATE BENEFIT PROGRAM

42 N.J.R. 900(a)

Proposed Repeal: N.J.A.C. 17:7-3.9

Awards of Back Pay
 
Authorized By: Frederick Beaver, Director, Division of Pensions and Benefits.
 
Authority: N.J.S.A. 18A:66-172.
 
Calendar Reference:
See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2010-047.
 
Submit comments by July 16, 2010 to:

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

The agency proposal follows:
 
Summary

The Division of Pensions and Benefits (Division) proposes to repeal N.J.A.C. 17:7-3.9, Awards of back pay. This section is simultaneously proposed to be repealed from N.J.A.C. 17:2-4.5, 17:3-4.7, 17:4-4.8 and 17:5-3.6. A proposed new rule, N.J.A.C. 17:1-2.18, is intended to amend the general administration rules and provide a central location for this issue since it affects the Public Employees Retirement System, Teachers Pension Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System and the Alternate Benefits Plan. The rule clarifies that members shall receive service and full salary credit for the period in which a full normal pension contribution is received by the retirement system. It is a procedural practice that awards or settlement agreements are reviewed by the Division. In cases, where an award or settlement is structured in such a way as to provide the member with a substantial increase in salary or service credit in anticipation of retirement or to provide service credit for retirement eligibility, the Division may adjust the compensation or service credit when the justification of such an increase is not substantiated or acceptable.

Further, this rule brings greater clarity to the Division's procedure to request when necessary, all supporting documentation from the employer that will substantiate the award or settlement agreement.

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 Alternate Benefit Program work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the program to provide them with retirement benefits, with proper crediting of service, with death benefits and with the information they need regarding their individual accounts. The members 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.

The proposed repeal of N.J.A.C. 17:7-3.9 will not have any social impact on the taxpaying public. The Division is not aware of any provisions in the rule proposed for repeal that would impose any hardship or costs on the members of the State-administered retirement systems in New Jersey, or on the public in general.
 
Economic Impact

The proposed repeal of N.J.A.C. 17:7-3.9 will have a positive economic impact on the Alternate Benefit Program, since it clarifies that members and employers entering into back pay and settlement agreements cannot structure them in a way as to provide the member with a substantial increase in creditable salary that will entitle the member to file for benefits to which they would not otherwise have qualified; thus, creating an unfunded liability in the program.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 18A:66-172 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 rule proposed for repeal will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of the rule proposed for repeal along with their written comments.
 
Agriculture Industry Impact

The rule proposed for repeal will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the rule proposed for repeal has no affect on small businesses as the term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Alternate Benefits Program.
 
Smart Growth Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth and the implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact

The rule proposed for repeal will not have an impact on affordable housing in New Jersey since the rule applies to the Alternate Benefit Program. The rule will have no impact on the average cost of housing in New Jersey.
 
Smart Growth Development Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth development in Planning Areas 1 or 2, or in designated centers, because the rule applies to the public retirement systems.
 
Full text of the rule proposed for repeal follows (deletions indicated in brackets [thus]):
 
SUBCHAPTER 3. MEMBERSHIP
 
17:7-3.9   [Awards of back pay] (Reserved)
 
[(a) A member shall receive credit for any month or biweekly pay period for which a full normal deduction is received by the Alternate Benefits Program.
 
(b) A member who appeals the suspension or termination of the member's employment and is awarded back pay for all, or a portion, of that employment for the stated period of such suspension or termination shall receive service credit for the period covered by the award, provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the employee pension contribution will be determined by the provisions of the award. If the member receives full back pay, including normal salary increases, then the contributions will be computed on the base salaries that the employee would have earned for the reinstated, suspended or terminated period. When the settlement is less than the full back pay, the employee pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment.
 
(c) In no case shall the award of back payment be less than the value of the normal pension contributions due. If the amount of the award of back pay is mitigated so that the member does not receive an amount equal to or greater than the value of the normal pension contributions due, then the member is required to remit the normal pension contribution to the employer who shall then submit it to the appropriate investment provider.
 
(d) The member is not entitled to investment profits or losses that the contributions would have made had the member receiving the award of back pay been employed continuously.
 
(e) The member is not entitled to the employer contributions for the period of the award unless the member receives an award equal to at least 50 percent of full back pay pursuant to N.J.A.C. 17:7-3.3.
 
(f) It is the responsibility of the certifying officer to provide a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document that details the terms of the award.]


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
TEACHERS' PENSION AND ANNUITY FUND

42 N.J.R. 897(a)

Proposed Repeal: N.J.A.C. 17:3-4.7

Service and Salary Credit: Awards of Back Pay
 
Authorized By: Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.
 
Authority: N.J.S.A. 18A:66-56.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2010-045.
 
Submit comments by July 16, 2010 to:
   Susanne Culliton
   Administrative Practice Officer
   Division of Pensions and Benefits
   PO Box 295
   Trenton, NJ 08625-0295
 
The agency proposal follows:
 
Summary

The Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) proposes to repeal N.J.A.C. 17:3-4.7, Service and salary credit: awards of back pay. This section is simultaneously proposed to be repealed from N.J.A.C. 17:2-4.5, 17:4-4.8, 17:5-3.6 and 17:7-3.9. The proposed new rule N.J.A.C. 17:1-2.18 is intended to amend the general administration rules and provide a central location for this issue since it affects the Public Employees Retirement System, TPAF, Police and Firemen's Retirement System, State Police Retirement System and the Alternate Benefits Plan. The rule clarifies that members shall receive service and full salary credit for the period in which a full normal pension contribution is received by the retirement system. It is a procedural practice that awards or settlement agreements are reviewed by the Division. In cases, where an award or settlement is structured in such a way as to provide the member with a substantial increase in salary or service credit in anticipation of retirement or to provide service credit for retirement eligibility, the Division may adjust the compensation or service credit when the justification of such an increase is not substantiated or acceptable.

Further, this rule brings greater clarity to the Division's procedure to request when necessary, all supporting documentation from the employer that will substantiate the award or settlement agreement.

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 Teachers' Pensions and Annuity Fund affect and work to the benefit of the past, present and future employees of public education. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement 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. The members 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.

The proposed repeal of N.J.A.C. 17:3-4.7 will not have any social impact on the taxpaying public. The Board is not aware of any provisions in the proposed repeal that would impose any hardship or costs on the members of the State-administered retirement systems in New Jersey or on the public in general.
 
Economic Impact

The proposed repeal of N.J.A.C. 17:3-4.7 will have a positive economic impact on the Teachers' Pension and Annuity Fund, since it clarifies that members and employers entering into back pay and settlement agreements cannot structure them in a way as to provide the member with a substantial increase in creditable salary or provide service credit that will entitle the member to file for benefits to which they would not otherwise have qualified; thus, creating an unfunded liability in the retirement system.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 18A:66-56 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 rule proposed for repeal will not result in the generation or loss of jobs. The Board invites any interested parties to submit any data or studies concerning the jobs impact of the rule proposed for repeal along with their written comments.
 
Agriculture Industry Impact

The rule proposed for repeal will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the rule proposed for repeal has no affect on small businesses as the term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Teachers' Pension and Annuity Fund.
 
Smart Growth Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth and the implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact

The rule proposed for repeal will not have an impact on affordable housing in New Jersey since its repeal applies to the Teachers' Pension and Annuity Fund. The rule proposed for repeal will have no impact on the average cost of housing in New Jersey.
 
Smart Growth Development Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth development in Planning Areas 1 or 2, or in designated centers, because the rule applies to the public retirement systems.
 
Full text of the rule proposed for repeal follows (deletions indicated in brackets [thus]):
 
SUBCHAPTER 4.  MEMBERSHIP
 
17:3-4.7   [Service and salary credit: awards of back pay] (Reserved)
 
[(a) A member shall receive service credit toward retirement for any month or biweekly pay period for which a full normal deduction is received by the Fund.
 
(b) A member who appeals the suspension or termination of the member's employment and who, by award or settlement, becomes entitled to back pay for all or a portion of that employment for the period of such suspension or termination shall receive service credit for the period covered by the award or settlement provided a full normal pension and contributory group life insurance contribution (if applicable) is received from the member or deducted from the value of the award. The amount of the pension and group life insurance contribution will be determined by the provisions of the award or settlement. If the member receiving full back pay, including normal salary increases before mitigation, then the contributions will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. When the award or settlement is less than the full back pay, the pension and group life insurance contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment. In the event that the amount of back payment, after mitigation, is insufficient to deduct the value of the normal pension contributions and contributory group life insurance due, such contribution shall be paid by the member.
 
(c) In no case shall service or salary credit be given if the award of back pay, before mitigation, is less than the value of the normal pension and group life insurance contributions due. If a member waives an award of back pay, then the member cannot receive service or salary credit for the period of the award.
 
(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) It is the responsibility of the certifying officer to provide a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document that details the terms of the settlement.]


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

42 N.J.R. 899(a)

Proposed Repeal: N.J.A.C. 17:5-3.6

Service and Salary Credit: Awards of Back Pay

Authorized By: State Police Retirement System, Board of Trustees, Wendy Jamison, Secretary.

Authority
: N.J.S.A. 53:5A-30h.

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

Proposal Number: PRN 2010-046.

Submit comments by July 16, 2010 to:

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

The agency proposal follows:

Summary

The Board of Trustees of the State Police Retirement System (SPRS) proposes to repeal N.J.A.C. 17:5-3.6, Service and salary credit: awards of back pay. This section is simultaneously proposed to be repealed from N.J.A.C. 17:2-4.5, 17:3-4.7, 17:4-4.8 and 17:7-3.9. The proposed new rule N.J.A.C. 17:1-2.18 is intended to amend the general administration rule and provide a central location for this issue since it affects the Public Employees Retirement System, Teachers Pension Annuity Fund, Police and Firemen's Retirement System, SPRS and the Alternate Benefits Plan. The rule clarifies that members shall receive service and full salary credit for the period in which a full normal pension contribution is received by the retirement system. It is a procedural practice that awards or settlement agreements are reviewed by the Division. In cases, where an award or settlement is structured in such a way as to provide the member with a substantial increase in salary or service credit in anticipation of retirement or to provide service credit for retirement eligibility, the Division may adjust the compensation or service credit when the justification of such an increase is not substantiated or acceptable.

Further, this rule brings greater clarity to the Division's procedure to request when necessary, all supporting documentation from the employer that will substantiate the award or settlement agreement.

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 State Police Retirement System affect and work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement 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. The members 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.

The proposed repeal of N.J.A.C. 17:5-3.6 will not have any social impact on the taxpaying public. The Board is not aware of any provisions in the rule proposed for repeal that would impose any hardship or costs on the members of the State-administered retirement systems in New Jersey, or on the public in general.

Economic Impact

The proposed repeal of N.J.A.C. 17:5-3.6 will have a positive economic impact on the State Police Retirement System, since it clarifies that members and employers entering into back pay and settlement agreements cannot structure them in a way as to provide the member with a substantial increase in creditable salary or provide service credit that will entitle the member to file for benefits to which they would not otherwise have qualified; thus, creating an unfunded liability in the retirement system.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 53:5A-30h 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 rule proposed for repeal will not result in the generation or loss of jobs. The Board invites any interested parties to submit any data or studies concerning the jobs impact of the rule proposed for repeal along with their written comments.

Agriculture Industry Impact

The rule proposed for repeal will have no impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the rule proposed for repeal has no affect on small businesses as the term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the State Police Retirement System.

Smart Growth Impact

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

Housing Affordability Impact

The rule proposed for repeal will not have an impact on affordable housing in New Jersey since the rule applies to the State Police Retirement System. The rule proposed for repeal will have no impact on the average cost of housing in New Jersey.

Smart Growth Development Impact

The rule proposed for repeal will not have any impact on the achievement of smart growth development in Planning Areas 1 or 2, or in designated centers, because the rule applies to the public retirement systems.

Full text of the proposed repeal follows (deletions indicated in brackets [thus]):

SUBCHAPTER 3. MEMBERSHIP

17:5-3.6 [Service and salary credit: awards of back pay] (Reserved)

[(a) A member shall receive service credit toward retirement for any month or biweekly pay period for which a full normal deduction is received by the Retirement System.

(b) A member who appeals the suspension or termination of the member's employment and who, by award or settlement, becomes entitled to back pay for all or a portion of the member's employment for the period of such suspension or termination shall receive service credit for the period covered by the award or settlement provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the pension contribution will be determined by the provisions of the award or settlement. If the member receives full back pay, including normal salary increases before mitigation, then the contribution will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. When the award or settlement is less than the full back pay, the pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment. In the event that the amount of back payment, after mitigation, is insufficient to deduct the value of the normal pension contributions due, such contribution shall be paid by the member.

(c) In no case shall service or salary credit be given to a member who appeals the suspension or termination of the member's employment if the award of back pay, before mitigation, is less than the value of the normal pension contributions due. If a member waives an award of back pay, then the member cannot receive service or salary credit for the period of the award.

(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. 17:5-3.1, the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have the pension contributions for the salaries found not to be creditable refunded without interest.

(e) It is the responsibility of the certifying officer to provide a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document that details the terms of the settlement.]




TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

42 N.J.R. 3045(a)

Proposed New Rule: N.J.A.C. 17:2-2.8

Click here to view Interested Persons Statement

Enrollment Eligibility of Provisional or Temporary Employees Occupying Full-Time Police and Fire Titles
 
Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.
 
Authority: N.J.S.A. 43:15A-1 et seq.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2010-315.
 
Submit comments by February 18, 2011 to:

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

The agency proposal follows:
 
Summary

The Board of Trustees of the Public Employees' Retirement System (PERS) proposes new rule N.J.A.C. 17:2-2.8, Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles. The proposed rule was inadvertently repealed, in its entirety during the proposed readoption of N.J.A.C. 17:2.  The Board repealed this section because a temporary or provisional employee who holds a Police and Firemen Retirement System (PFRS) position is not permitted to enroll into PERS while awaiting permanent appointment to his or her position. That portion of the original rule that deals with this issue was correctly repealed, but there was additional language in this rule that should not have been repealed. Therefore, it is proposed herein as new N.J.A.C. 17:2-2.8.

Prior to the repeal, the rule permitted an employee that was hired provisionally or on a temporary basis into an eligible PFRS title and was under the age of 35 to enroll in the PERS after completing one year of continuous service. This rule was not supported in statute and subsequent case law and was correctly repealed.

Those portions of the original rule that comprise the proposed new rule, clarify the legislative intent regarding the enrollment eligibility of those provisional or temporary employees that are not seeking enrollment into the PERS while awaiting permanent appointment in a PFRS position.

The proposed new rule clarifies that any State or county employee who has already established an active membership in PERS and becomes provisional or temporary in an eligible PFRS title and cannot meet the maximum age requirement for membership in the PFRS shall remain in PERS after attaining permanent appointment.

Municipal employees holding a provisional or temporary PFRS title who cannot meet the maximum age requirements associated with those positions shall not continue employment in the PFRS covered position and shall not remain a member of PERS while working in the PFRS covered position.

The proposed new rule also clarifies that any municipal police officer must be a member of the PFRS per N.J.S.A. 40A:14-12.4. In addition, N.J.S.A. 43:16A-39 establishes that a policeman or fireman employed by a municipality must meet the requirements for membership in the PFRS and shall be enrolled in the retirement system as a condition of employment. Thus, a municipal police officer is not eligible for PERS enrollment.

N.J.S.A. 43:16A-1.2, states "A person employed in a position on or after the effective date of a determination by the board of trustees that the position is covered by the retirement system is required to enroll in the retirement system as a condition of employment, provided the person is otherwise eligible for membership by meeting the appointment age and health requirements prescribed by all members."

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 PERS work to the benefit of the past, present and future public employees of the State, counties, municipalities and other public agencies. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement system 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. The members 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.

Proposed new rule N.J.A.C. 17:2-2.8 supports the statutory authority of N.J.S.A. 43:16A-1.2 and 43:16A-39. All eligibility requirements must be met in order for an employee to become a participant of the PFRS. Employees that cannot meet the maximum age requirements associated with the PFRS and have already established membership in the PERS will remain in PERS if they are employees of a State or county employer. If the employer is a municipality and the employee cannot meet the eligibility requirements of the PFRS the employee cannot occupy the PFRS title.

The social benefits of this proposed new rule outweigh any negative effect that this rule may impose on members or employers. Providing proper interpretation of the rule will provide members and employers with a better understanding of this administrative practice. The taxpaying public may be affected by these rules, since public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the retirement system which the rule requires.
 
Economic Impact

The proposed new rule will not present any economic effects on the public, since it addresses enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles. The rule does not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration of the PERS. The rule will enable the Division to continue to provide for benefits in a manner that meets the statutory requirements. The Division will continue to monitor the impact of this rule through research and review of new legislation.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. govern the subject of this rulemaking and there are no Federal requirements or standards that affect or are impacted by this rulemaking.
 
Jobs Impact

The proposed new rule will not result in the generation or loss of jobs. The Board invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment along with their written comments.
 
Agriculture Industry Impact

The proposed new rule will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

The rules of the PERS only affect public employers and employees. Thus, the proposed new rule does not impose any reporting, recordkeeping or other compliance requirements upon small businesses as the term is 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 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 new rule will not have an impact on affordable housing in New Jersey and the rule will not evoke a change in the average costs associated with housing because the rule only applies to how the PERS is administered.
 
Smart Growth Development Impact

The proposed new rule will not evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rule only applies to how the PERS is administered.
 
Full text of the proposal follows (additions indicated in boldface thus; deletion indicated in brackets [thus]):
 
17:2-2.8   [(Reserved)] Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles
 
(a) Any employee who has an active membership in the PERS and becomes employed provisionally or on a temporary basis in an eligible PFRS title and is under the age of 35 shall continue membership in the PERS until meeting the eligibility requirements for entry in the PFRS. This applies to both employees continuing employment with the same employer, and those leaving one public employer and taking a position with another.
 
1. State and county employees holding provisional or temporary PFRS titles who cannot meet the maximum age requirement for membership in the PFRS (age 35) shall remain in the PERS after attaining permanent appointments.
 
2. As a condition of municipal employment, employees holding provisional or temporary PFRS titles who cannot meet the maximum age requirements associated with those positions shall not continue employment in the PFRS covered position and shall not remain a member of the PERS while occupying the PFRS title.


ADOPTIONS


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

42 N.J.R. 1612(b)

Readoption with Amendments: N.J.A.C. 17:2

Adopted New Rule: N.J.A.C. 17:2-4.17

Adopted Repeals: N.J.A.C. 17:2-1.8, 2.8 and 4.5

Adopted Repeals and New Rules: N.J.A.C. 17:2-1.13 and 2.7

Public Employees' Retirement System
 
Proposed: December 21, 2009 at 41 N.J.R. 4667(a).
 
Adopted: June 16, 2010 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.
 
Filed: June 16, 2010 as R. 2010 d.149, without change.
 
Authority: N.J.S.A. 43:15A-1 et seq.
 
Effective Date: June 16, 2010, Readoption;
 
July 19, 2010, Amendments, Repeals and New Rules.
 
Expiration Date: June 16, 2015.
 
Summary of Public Comments and Agency Responses:

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

1. Rae Roeder, President, CWA Local 1033 and the following 120 members of the CWA all represent Commenter No. 1:

Abdullah, Deborah
Adam-Jupillar, Frederique
Afteb, Shaheena
Aicher, Dorothy
Amantia, Maria
Anen, Walter
Baker, Sandra
Barnes, Cynthia
Bassaur, Gina
Bauer, William
Bensinger, Laraine
Berry, Gloria
Blakeslee-Malpus, Jean
Bracken, Neal
Brancolino, Earl
Brettell
Brilla, Frances
Brillante, Pamela
Brown, Elizabeth
Brown, Linda
Buchley, Tom
Burawski, Nancy
Burch, Eileen
Burger, Paul
Burger, Stasia
Burrus, Paulette
Calisti, Gregory
Cannarozzi, Michael
Carlos, Anthony
Carmona-Bell, Linda
Cascino, Debra
Castro, Ana
Ciccanti, Louis
Cierniak, Kathleen
Cierniak, Stanley
Cipullo, Robert
Clark, Judith
Cohen, Beverly
Cole, John
Coleman, Phyllis
Conjura, Nancy
Cooper, Clifford
Corey, Harry
Counts, Barbara
Cross, Gary
Cuadra, William
Damiani, Priscilla
Davidson, Barbara
Deckerson, Gaie
Dickerson, Janielle
Dickson, Patricia
Davidson, Arlene
Dijak, Denise
DeLucca, John
DeMarco, Margaret
DiMemmo, Barbara
DeVries, Linda
Durkalski, P
Eckstine, Jack
Eclgleill, Dolores
Edwards, Joyce
Ellis, Sharon
Everett, Carol
Ewart, Joyce
Feggans, Charles
Fenimore, Charlene
Fera, Gregory
Fillat, Frank
Fiorello, Carmela
Fluellen, Robert
Figueroa, Ada
Floyd, Irene
Foy, Fred
Freihaut, Jacob
Friedman, Marsha
Fruecione, Stella
Frumen, Karen
Foxworth, Shirley
Gamm, Emil
Gatmaitan, Rosemarie
Genco, Elisabeth
German, Gloria
Gifford, Robert
Gould, James
Gourley, Marlene
Greco, Lawrence
Groze, Gloria
Hagins, Shanikia
Hansson, Robert
Harris, John
Harrison, Evonne
Haruin, Shirley
Hearn, Fred
Hearn, Marion
Hendrix, Julian
Heredia, Maria
Hill, Robert
Hillman, Nancy
Hoffman, John
Hulbert, Bernard
Hulbert, Cathi
Hutchinson
Hutchinson, Brett
Ihekuna, Remigius
Immesserger, Loraine
Izbicki, Marilyn
Jackson, Regina
Jacobs, Deborah
Jacobs, Howard
Jarvie, Karen
Jarzyk, Patricia
Jennings, Diana
Jeter, Caretha
Johnson, Frank
Jones, Bessie
Jones, Donald
Jurkiewicz, Laura
Kahl
Kais, Katherine
Kaszyc-Rank,

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

3. William G. Dressel, Jr., Executive Director, New Jersey State League of Municipalities

4. Michele McNair, member of the PERS

5. Jean Public, interested citizen

The Public Employees' Retirement System Board of Trustees wishes to thank each of the commenters for their valuable comments.

1. COMMENT: Commenters No. 1 have requested a public hearing on the proposed readoption with amendments, repeals and new rules of N.J.A.C. 17:2. Their correspondence does not specifically state why a public hearing is necessary nor does it address any specific concerns with the proposed regulations. The correspondence only requests that a public hearing be held to have CWA members voice their opinions, ask questions and respond to the proposals.

RESPONSE: The Board rejects the opinion of Commenters No.1 (121 members) that a public hearing is needed to clarify the proposed readoption with amendments of N.J.A.C. 17:2. The language in N.J.A.C. 1:30-5.5, Public hearings, clearly states that sufficient public interest for conducting a public hearing pursuant to this subsection shall be determined by the proposing agency based upon definite standards it has adopted as part of its rules of practice required under N.J.S.A. 52:14B-3(2). As of July 1, 2009, there were 316,849 members actively participating in PERS. There were 121 requests for a public hearing sent to the Division. The Board submits that the low number of requests received is not sufficient public interest to warrant a public hearing. The regulation for public hearings requires that the party requesting the public hearing shall also submit a copy of the request to the Office of Administrative Law (OAL). A copy of the request was never submitted to the OAL. The commenters' assertion that a public hearing is necessary has not been substantiated by sufficient public interest. Further, there was no specificity in the request regarding the proposal; therefore, the Division cannot respond to concerns that have not been specifically set forth.

2. COMMENT: Commenters No.1 and No. 2 wrote that the Division should consider changes within N.J.A.C. 17:2-2.3 which is proposed for readoption with amendment. The commenters' wrote that the Division should be required to notify all public employees that are retirement eligible of the income limitations a retiree faces if they begin working in a PERS-covered position upon retirement. A PERS retiree that returns to work in an otherwise PERS-covered position may currently only earn up to $ 15,000 per calendar year.

RESPONSE: The Boards thanks the commenters for their valuable opinion. The Division currently provides active and retired members with information regarding the earnings limit of $ 15,000 per calendar year for return to a PERS-covered position upon retirement. The Board approval letter for retirement clearly states that there are earnings limitations if a PERS retiree returns to PERS covered employment. Additionally, there are several sources for this information and members and employers are advised to avail themselves of them. Fact Sheet #21, "Employment After Retirement," details information for PERS retirees returning to work in a PERS covered position. The Division's website also provides several sources of information for employment after retirement. There are Certifying Officers' Letters which notify the employers of any updates or changes to pension and health benefits. Members can avail themselves of these letters on the Division's website. There are Quick Links on the Division's website that provide member and retiree information. In addition, the PensionNews, a retiree newsletter, provides information regarding any changes and updates to the pension or health benefits. The employers are continuously informed of changes to the pension system through the Division's website, Certifying Officers' Letters, the Employers' Pension and Benefits Administration Manual (EPBAM) and the Employer Pensions and Benefits Information Connection (EPIC) which provides updates, forms, and processing capabilities. Since the Board is aware of all the sources the Division has made available to members, retirees and employers regarding the issue of return to employment in a PERS-covered position, no further amendments to this subsection are necessary.

3. COMMENT: Commenter No. 2 wishes the Board to delete the amendments to N.J.A.C. 17:2-1.4(f) allowing the possible elimination of a paper ballot for electing members to the PERS Board of Trustees. The commenter argues that since packets are already being mailed, and processing and postage is being incurred, there is no expense to adding a single piece of paper to serve as the ballot. This will only serve as a deterrent since members would have to call to request a paper ballot.

RESPONSE: The Board at this time has no immediate plans to eliminate the paper ballots. Currently, members have the option of mailing in the paper ballot, calling a toll-free number or using the Internet. These ballots are not just a single sheet; rather they are self-contained postage-paid mailers. However, in an effort to decrease administrative costs Division-wide, the elimination of paper ballots will be considered, since it is a huge expense. Further, if the ballots are eliminated members still have the option of casting their vote by calling a toll-free number or using the Internet.

4. COMMENT: Commenters No. 1 and No. 2 take issue with the proposed new N.J.A.C. 17:2-1.4(g)4, which clarifies that endorsements are not permitted in the biographical sketches submitted by the candidates for the Board.

RESPONSE: The proposed new paragraph at N.J.A.C. 17:2-1.4(g)4 is added to clarify that endorsements are not permitted in the biographical sketches submitted by the candidates for the Board. The Division does not wish to print information that is not substantiated and the process for verifying each endorsement could be very time consuming. The Division does not have any mechanism in place to verify these endorsements. Decreasing staff, mandatory furloughs and a limited operational budget will make it extremely difficult to verify such statements. Endorsements for candidates appear on all of the union web pages and in the union newsletters. Candidates may still include their various affiliations in their biographical sketches.

5. COMMENT: Commenter No. 1 takes issue with the interpretation of P.L. 2005, c. 368 and the one-year limitation on the purchase of unpaid union leave. The commenter claims that the law signed by the Governor does not include the one-year limitation in the text.

RESPONSE: The reference to N.J.S.A. 43:15A-8 as the statutory authority for P.L. 2005, c. 368 is incorrect. Instead, Chapter 368 was codified at N.J.S.A. 43:15A-39.1, which was signed by the Governor. This law became effective January 12, 2006 and permits Public Employees' Retirement System (PERS) members to purchase PERS service credit for a paid or unpaid leave of absence while serving as an elected or appointed officer or representative of a local, county, or State labor organization which represents, or is affiliated with an organization which represents public employees. In addition, this law permits that a public employee, who had been granted and had taken an approved unpaid leave of absence in the past and who had not received PERS credit for that service, may purchase the credit within one year after its effective date. Specifically, Section 4 of N.J.S.A. 43:15A-39.1 can be found only in advanced law since it was temporary and executed (T&E); it was deleted from the statute once the year expired.

6. COMMENT: Commenter No. 1 suggests that N.J.A.C. 17:2-1.3 should be amended to require the PERS representative to the State Investment Council provide a monthly report to the PERS Board to keep members of the Board apprised of the activities of the State Investment Council that are relative to the PERS.

RESPONSE: The Board thanks the commenter for the statement and agrees that a report or presentation from the representative to the State Investment Council to the PERS Board on a monthly to quarterly basis depending on the Council activities is advisable. The Board does not feel at this time that such a suggestion warrants amending the proposal for readoption. Instead, the Board suggests that this recommendation be placed in N.J.A.C. 17:1, General Administration, since it would benefit all of the various Boards of Trustees.

7. COMMENT: Commenter No. 3 wishes to express approval for the proposed rule changes and readoptions outlined in 41 N.J.R. 4667-4681.

RESPONSE: The Board wishes to thank the commenter for his valuable comments.

8. COMMENT: Commenter No. 4 raises issue with the PERS contribution rate increase.

RESPONSE: The increase in the member contribution rate for the PERS from five percent to 5.5 percent of annual compensation was amended with the enactment of P.L. 2007 c. 103. Since this is statute, the Board does not have the discretion to change anything in the law.

9. COMMENT: Commenter No. 5 refers to N.J.A.C. 17:2-1.13 and suggests that pension benefits not become available to members until they reach the age of 67.

RESPONSE: N.J.A.C. 17:2-1.13 refers to the age the member is assigned at the date of enrollment, for purchasing additional service credit, for calculating a retirement option selection, for calculating an Option 1 reserve balance, and for calculating group life insurance benefits upon death. This section does not address the age of retirement for members of the pension system. The age of retirement for members of the pension system is based upon statutory authority. The Board does not have the discretion to change this law.

10. COMMENT: Commenter No. 5 refers to N.J.A.C. 17:2-2.2 and takes issue with the provision that a newly elected official on or after July 1, 2007 must enroll in a Defined Contribution Retirement Program instead of PERS, and argues that all elected officials should be in the same plan.

RESPONSE: The enactment of P.L. 2007, c. 92 establishes a Defined Contribution Retirement Program for certain newly elected and appointed officials. However, an elected official who has already established membership in the retirement system prior to July 1, 2007 is not impacted by this legislative change if they are continuously re-elected to the same office and choose to continue participation in the PERS. This law implements certain recommendations contained in the report of the Joint Legislative Committee on Public Employee Benefit Reform dated November 15, 2006. Since this is a statutory change, it is not at the discretion of the Board to amend.

11. COMMENT: Commenter No. 5 takes issue with N.J.A.C. 17:2-2.6, which refers to the enrollment eligibility of professors and instructors on a temporary, provisional or adjunct basis and the issue that they are no longer eligible to enroll in PERS after the effective date of the law. The commenter suggests that these temporary employees should not be eligible for any pension system.

RESPONSE: N.J.A.C. 17:2-2.6 is amended to include the provisions of P.L. 2008, c. 89, which, after November 2, 2008, provides that adjunct faculty members or part-time instructors at a public institution of higher education are eligible for membership in the Alternate Benefits Program instead of the PERS. These individuals are not temporary employees; instead, they have employment agreements that can be renewed on a yearly basis. Since this is a statutory change it is not at the discretion of the Board to amend.

12. COMMENT: Commenter No. 5 argues that N.J.A.C. 17:2-6.11 provides members with early retirement benefits that should not be permitted before age 65 and 67, which should be the normal retirement age.

RESPONSE: The age for retirement is set in statute and is not at the discretion of the Board to amend.

13. COMMENT: Commenter No. 5 makes reference to N.J.A.C. 17:2-6.26, and takes issue that all disability retirement applicants should be examined by a State medical physician, since the member's doctor may not be sufficient for verifying disability.

RESPONSE: The Division's long-standing practice requires all disability applicants to submit a copy of at least two medical reports, one by the member's attending physician and the other may be either hospital records supporting the disability or a report from a second physician. These reports are submitted to the Medical Review Board (MRB). If all medical documentation is complete to the satisfaction of the MRB, it is not necessary for the applicant to again be evaluated by an independent medical examiner. In the case of an accidental disability all applicants are required to have an independent medical exam. The request to have all disability applicants scheduled for an independent medical exam is extremely costly. Since the medical reports are reviewed by the MRB, sufficient review of the medical documents already exists.

14. COMMENT: Commenter No. 5 takes issue with N.J.A.C. 17:2-2.3, and believes that no one should return to work for any State or government entity.

RESPONSE: Since the return to public employment issue is provided in statute, it is not at the discretion of the Board to amend.

15. COMMENT: Commenter No. 5 takes issue with N.J.A.C. 17:2-4.3, and writes, "that no employee shall be able to base his pension payments on his last three years of work. The entire work history should be included for pension purposes."

RESPONSE: This section refers to 10-month and 12-month employees who are employed for the full school year. It has no bearing on the comments that pension should be calculated on a members' entire work history. The issue of the number of years of service calculated for pension is provided in statute and it is not at the discretion of the Board to amend.

16. COMMENT: Commenter No. 5 takes issue with N.J.A.C. 17:2-5.5, and believes that no temporary employee should be permitted to purchase service credit, and is also against all special rules for prosecutors.

RESPONSE: N.J.A.C. 17:2-5.5, Optional purchases of eligible service, does not provide temporary employees with the opportunity to purchase service credit. Only active contributing members of the pension system are eligible to make application to purchase service credit. Since this issue is provided in statute, it is not at the discretion of the Board to amend. The provisions of P.L. 2010, c. 1 close the PERS Prosecutors Part to new enrollees. Prosecutors taking office after the effective date of May 21, 2010 are enrolled as a "regular" member of the PERS.
 
Federal Standards Statement

A Federal standards analysis is not required for the rules readopted with amendments, new rules and repeals because N.J.S.A. 43:15A-7 governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking, other than those mentioned below.

The adopted amendment to N.J.A.C. 17:2-4.9 will provide further clarification regarding the requirement that loans from PERS are subject to Federal regulation. In addition, N.J.A.C. 17:2-4.9 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. 17:2-5.5(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. 17:2-5.6(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.
 
Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:2.
 
Full text of the adopted amendments and new rules follows:
 
SUBCHAPTER 1. ADMINISTRATION
 
17:2-1.3 Officers and committees
 
(a) The members of the Board shall elect a chairperson and vice chairperson. 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. A representative to the State Investment Council shall be elected pursuant to N.J.S.A. 52:18A-83 and N.J.A.C. 17:1-1.1A, from its membership for the forthcoming year at its regular meeting held in July.
 
(b) (No change.)
 
(c) The chairperson and the Secretary of the Board shall have the power to act for the Board in any matter which may be referred to them by the Board.
 
(d) There shall be one standing committee, which is the finance committee pursuant to N.J.S.A. 43:15A-32. The committee shall be appointed by the chairperson at the July meeting for the forthcoming fiscal year. The Secretary shall provide all investment transactions and financial reports for presentation to the Board at its regular monthly meetings. The committee shall consist of five members, three of whom shall be elected members of the Board.
 
17:2-1.4 Election of member-trustee
 
(a) The procedures as required by N.J.S.A. 43:15A-17 for the election of a State, municipal or county trustee representative to the PERS Board of Trustees are set forth in this section.
 
(b) (No change.)
 
(c) The following shall apply to election notices:
 
1. At least nine months prior to the expiration of the term of each elected trustee or immediately upon a vacancy on the Board, a notice shall be prepared and distributed by the Secretary of the Board or a contracted vendor through the certifying officers to each member who is eligible to vote;
 
2. The election notice shall:
 
i.-ii. (No change.)
 
iii. State that nominating petitions are required and that the petition forms are available from the Board Secretary at the Division;
 
iv.-v. (No change.)
 
vi. Include any other information regarding a particular election, as specified by the Board of Trustees;
 
3. Election notices shall be forwarded in bulk and in appropriate number to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices;
 
4. A confirmation form shall also be forwarded to each certifying officer or appropriate fiscal officer. Such form shall be returned to the Board Secretary or contracted vendor and shall include documentation of:
 
i. (No change.)
 
ii. The extent to which the certifying officer or other appropriate fiscal officer has distributed the notice to eligible members; and
 
5. Election notices shall be distributed to each eligible member through the certifying officer of each employing location. Only active members of the PERS may vote in the election of member-trustees of the Board of Trustees of the PERS.
 
(d) The following shall apply to nominating petitions:
 
1. Nominating petition forms shall be available from the Office of the Board Secretary of the PERS;
 
2. Nominating petitions shall be forwarded to each active or retired member who requests them after the Division verifies the member's eligibility to run for such election;
 
3. The petition forms shall explain that:
 
i. For State trustee, at least 500 active State members, who are eligible to vote for the position, are required to sign the petition for the candidate;
 
ii. For municipal trustee, at least 500 active municipal members, who are eligible to vote for the position, are required to sign the petition for the candidate; or
 
iii. For county trustee, at least 500 active county members, who are eligible to vote for the position, are required to sign the petition for the candidate;
 
4. Each petition form shall require the candidate's name, membership number and employer, as well as the petitioner's name, signature, employer, pension membership or Social Security number;
 
5. The form shall explain that an active member shall sign only one petition, with State members petitioning for a State candidate, municipal members petitioning for a municipal candidate and county members petitioning for a county candidate;
 
6. The dates for filing and returning the petitions shall be identified, as well as the approximate date that election packets shall be sent to employers for distribution to voters;
 
7. Candidates named on the petitions shall sign each petition in a designated space indicating their willingness to be a candidate; and
 
8. If only one candidate is nominated for a position, the candidate shall be deemed elected to the position without balloting. A notice to the certifying officers shall be distributed for posting at the employing locations, indicating no contest, since only one candidate was nominated by petition.
 
(e) The following applies to distribution of election packets:
 
1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to cast a ballot through one of the following:
 
i. (No change.)
 
ii. Internet access (electronic vote); or
 
iii. Paper ballot (postage-paid, self-seal return mailer);
 
2. For each eligible voter, there shall be forwarded to the certifying officer, individual member packets with instructions for balloting, which shall include the following information:
 
i.-iii. (No change.)
 
iv. Instructions on how to properly cast a vote, including notification that shall advise the member that mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined for whom the member intended to vote shall be declared invalid and not considered in the final election count;
 
v.-vi. (No change.)
 
vii. Notification that the candidate receiving a plurality of the legal votes cast shall be declared elected to the position;
 
viii. Notification that the first vote cast shall be counted as the official vote and subsequent votes will be rejected; and
 
ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting;
 
3. The ballot positions shall be determined by a drawing conducted at a time and place determined by the Board Secretary. All candidates may attend such drawing by contacting the Board Secretary; and
 
4. A notice shall be signed by each certifying officer acknowledging the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:15A-67 and 80.
 
(f) The Board may assess the percentage of returned votes after the conclusion of each respective election and determine based upon an analysis of the frequency of use of the paper ballots versus the cost of providing the paper ballots whether or not a paper ballot should continue to be incorporated in the election packet in future elections as denoted in (e) above. The Secretary shall notify the vendor handling the next election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots shall no longer be included in the initial election packet, then the following apply to the distribution of paper ballots upon member request:
 
1. Active members may contact the vendor handling the election to request a paper ballot if the voter is unable to cast a ballot through any of the other electronic methods mentioned in (e) above. Members shall provide the vendor with their proper ballot and pension number and home address;
 
2. Upon proper request by an eligible voter, the vendor shall mail a paper ballot to the voter's home address, together with instructions for casting the ballot, biographical information about the candidates and a postage-paid return envelope; and
 
3. Mutilated ballots, illegible ballots, ballots with a write-in vote, multiple votes or any ballot where it cannot be determined for whom the voter intended to vote shall be declared invalid and not considered in the final election count.
 
(g) The following shall apply to biographical information:
 
1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Secretary;
 
2. The Secretary shall inform each candidate that the biographical information will be included with the election packet;
 
3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet sent to employers for distribution; and
 
4. Endorsements are not permitted in the biographical information.
 
(h) The following shall apply to vote tabulation:
 
1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count;
 
2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be elected to the position;
 
3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count; and
 
4. The eligible candidates for the election shall be invited to the presentation of the final results of the election.
 
(i) The following shall apply to recount procedures:
 
1. Any candidate or member who shall have reason to believe that an error has been made in counting or declaring the vote may request, in writing, within 20 days of the certification of the results of the election, that the Board of Trustees, at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support their beliefs;
 
2. If a candidate or other interested party requests a recount, in writing, within the prescribed time, this request shall be reviewed and granted by the Board of Trustees, if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board of Trustees. If a recount is not requested within 20 days, the ballots may be destroyed; and
 
3. (No change.)
 
(j) In the event, the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the candidate who obtained the next highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up, the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a member-trustee's term begins upon the taking of the oath of office.
 
17:2-1.5 Certifying Officer (employer)
 
(a) (No change.)
 
(b) The Certifying Officer shall be responsible for the duties described by N.J.S.A. 43:15A-67 and 80 and any other section, which refers to the Department head.
 
(c)-(d) (No change.)
 
17:2-1.6 Records
 
(a) In addition to the provisions of N.J.A.C. 17:1-1.2, the approved 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) The annual report of the system's actuary shall not be released until it has been accepted by the Board of Trustees.
 
(c) Original documents, if available, shall only be viewed by appointment at the Division.
 
17:2-1.8 (Reserved)
 
17:2-1.13 Age determination
 
(a) For purposes of enrollment, the age assigned to the applicant is based on the applicant's age on the date of enrollment. However, if the applicant is six months or more past their birthday, the assigned age for enrollment will be their age on their next birthday.
 
(b) For purposes of purchasing additional service credit, the age used to determine the applicable actuarial factor is based on the applicant's age on the date the purchase request is received by the Division. However, if on that date the applicant is six months or more past their birthday, the purchase actuarial factor will be based upon their age on their next birthday.
 
(c) For purposes of calculating a retirement option selection, the age used to determine the applicable actuarial reduction factor is based upon the member and designated beneficiary(s) ages at the effective date of retirement. If on that date, either the member or the designated beneficiary(s) age is six months or more past their birthday, the age used for the option selection will be based upon their age on their next birthday.
 
(d) For purposes of calculating an Option 1 reserve balance upon the death of a retired member, when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary(s) age at the time of the member's death. If the beneficiary(s) age is six months or more past their birthday, the factor is based upon their age on their next birthday.
 
(e) For purposes of calculating the group life insurance benefits upon the death of an active employee when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's(s) age at the time of the member's death. The factor is based solely on the beneficiary(s) age at the time of the member's death; not rounded up to the next birthday.
 
SUBCHAPTER 1A. DEFINITIONS
 
17:2-1A.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, plus the value of maintenance, if applicable, 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 paid in regular, periodic installments in accordance with the payroll cycle of the employer.
 
"Board" means the Board of Trustees of the Public Employees' Retirement System, vested with the general responsibility for the proper operation of the System pursuant to N.J.S.A. 43:15A-17.
 
"Division" means the Division of Pensions and Benefits, Department of the Treasury, in the State of New Jersey.
 
"Extra compensation" means individual salary adjustments, which are granted primarily in anticipation of a member's retirement; or as additional remuneration for performing temporary duties beyond the regular work day or work year.
 
"System" or "PERS" means the Public Employees' Retirement System created pursuant to N.J.S.A. 43:15A-1 et seq.
 
"TPAF" means the Teachers' Pension and Annuity Fund, created pursuant to N.J.S.A. 18A:66-56.
 
"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 throughout the year and is compensated for each month.
 
SUBCHAPTER 2. ENROLLMENT
 
17:2-2.2 Multiple employment
 
(a) (No change.)
 
(b) Prior to July 1, 2007, an elected official must also enroll on the basis of such office, if the elected official was enrolled on the basis of other public employment. If the elected official was employed in the optional position first, the enrollment date for the optional position is established as the effective date of enrollment of the position that required the elected official to establish membership in the retirement system. If the individual had already established membership in the retirement system, the effective date of enrollment of the optional employment is established as the date of hire.
 
17:2-2.3 Ineligible persons
 
(a) The following classes of persons are ineligible for membership in the System:
 
1.-4. (No change.)
 
5. Any employee who is employed on a seasonal basis. Seasonal employment is a category of occasional employment in which the employer, consistent with past practices, does not expect to lead to permanent employment and is not a temporary position as defined under N.J.A.C. 17:2-2.4(d). To qualify as seasonal employment, work periods shall not extend beyond six consecutive months for locations that report contributions on a 12-month basis, or five consecutive months for locations that report contributions on a 10-month basis, and severance of the employer/employee relationship shall occur during breaks in employment; and such breaks shall exceed 30 consecutive days;
 
6.-9. (No change.)
 
10. Any retired member, as defined in (a)7 above, who returns to employment with an institution of higher education in a teaching position covered by the PERS pursuant to N.J.S.A. 43:15A-57.2;
 
11. Any retired member, as defined in (a)7 above, who becomes employed by the State Department of Education in a position of critical need as determined by the State Commissioner of Education, or becomes employed by a board of education in a position of critical need as determined by the superintendent of the district on a contractual basis for a term of not more than one year pursuant to N.J.S.A. 43:15A-57.2. The retired member so reemployed may renew a contract for one additional year, pursuant to N.J.S.A. 43:15A-57.2, provided that the total period of employment with any individual board of education does not exceed a two-year period. The cancellation, reenrollment and additional retirement allowance provisions and the compensation limitations shall apply if the retired member becomes employed within 120 days of retirement in a position with the employer from which the member retired;
 
12. Any official who commences service in a State or local elective public office on or after July 1, 2007, except for those who established membership in the PERS prior to July 1, 2007 based on service while continuously serving in the same elected office;
 
13. Any official who is directly appointed by the Governor as of July 1, 2007, to serve at the Governor's pleasure during his or her term of office; also, an official whose gubernatorial appointment requires the advice and consent of the Senate, or who is appointed in a substantially similar fashion by a local entity (county, municipality, etc.). A member who enrolled in the PERS prior to July 1, 2007, and whose membership has not expired pursuant to the provisions of N.J.S.A. 43:15A-7(e) or 8(a), shall continue as a PERS member while serving in that appointed position;
 
14. Any employee working under a Professional Services Contract as of January 1, 2008, as defined by N.J.S.A. 40A:11-5, 18A:18A-5, 18A:64A-25.5 and 43:15A-7.2; and
 
15. Any independent contractor as set forth in regulation or policy of the Federal Internal Revenue Service.
 
17:2-2.5 Optional enrollment
 
(a) Any employee, other than a veteran, who was considered an optional enrollee prior to July 1, 1966, under the previous rules of the board, shall continue to retain the option to enroll or not enroll if his employer does not change. This section shall not apply to elected officials upon the expiration of the term of office held as of June 30, 2007.
 
(b) (No change.)
 
17:2-2.6 Enrollment eligibility of professors and instructors employed on a temporary, provisional or adjunct basis by public institutions of higher education
 
(a) Prior to November 2, 2008, professors and instructors, employed on a temporary, provisional or adjunct basis by public institutions of higher education, who are not in regularly appointed teaching or administrative staff positions, in classified or unclassified positions with a Civil Service employer, or in regularly budgeted positions with a non-Civil Service employer, were eligible for enrollment if they:
 
1. Earned more than the minimum threshold salary required for enrollment;
 
2. Worked for the entire normal school year; and
 
3. Had their services renewed for the succeeding school year.
 
(b) Professors and instructors employed on a temporary, provisional or adjunct basis by public institutions of higher education who are not in regularly appointed teaching or administrative staff positions, in classified or unclassified positions with a Civil Service employer, or in regularly budgeted positions with a non-Civil Service employer, shall not be eligible for enrollment on the basis of any course they teach, which:
 
1. Provides less than three academic credits; or
 
2. (No change.)
 
17:2-2.7 Enrollment following deferred retirement
 
(a) For a member who has enrolled in the retirement system prior to November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 60 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:15A-7(e), or the longer period provided by N.J.S.A. 43:15A-8(a).
 
(b) Should a member who has enrolled in the retirement system prior to November 2, 2008, who elected a deferred retirement, resume regular service prior to age 60 after the period for continued membership stipulated by N.J.S.A. 43:15A-7(e) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.
 
(c) For a member who has enrolled in the retirement system on or after November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 62 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:15A-7(e), or the longer period provided by N.J.S.A. 43:15A-8(a).
 
(d) Should a member who has enrolled in the retirement system on or after November 2, 2008, and who elected a deferred retirement, resume regular service prior to age 62 after the period for continued membership stipulated by N.J.S.A. 43:15A-7(e) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.
 
(e) In the event that (b) or (d) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all PERS eligible employment.
 
17:2-2.8 (Reserved)
 
17:2-2.9 Eligibility and enrollment of employees of bi-state and multi-state agencies pursuant to P.L. 2003, c. 263 (N.J.S.A. 43:15A-73)
 
(a) For the purposes of the resolution to adopt the provisions of the PERS for a bi-state or multi-state agency, the "category of officers or employees who may enroll in the retirement system" shall be defined as those employees:
 
1.-2. (No change.)
 
3. Who meet the PERS eligibility requirements found at N.J.S.A. 43:15A-7 and 7.3.
 
(b) Those employees who do not meet the eligibility requirements found at N.J.S.A. 43:15A-7, or who are subject to professional services contracts as set forth in N.J.S.A. 43:15A-7.2 or who meet the eligibility requirements for the Defined Contribution Retirement Program found at N.J.S.A. 43:15C-2 are ineligible for membership in PERS.
 
Recodify existing (b) through (g) as (c) through (h) (No change in text.)
 
SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS
 
17:2-3.1 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 system. 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.)
 
17:2-3.6 Survivor benefits
 
(a)-(b) (No change.)
 
(c) In calculating an Option 1 reserve balance upon the death of a retired member, when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's age at the time of the member's death. If the beneficiary(s) age is six months or more past their birthday the factor is based upon their age on their next birthday.
 
(d) In calculating the group life insurance benefits upon the death of an active employee when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's age at the time of the member's death. The factor is based solely on the beneficiary(s) age at the time of the member's death and is not rounded up to the next birthday.
 
17:2-3.7 Withdrawal application; contributory insurance
 
A properly executed contributory insurance withdrawal application must be in the possession of the Division 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.
 
17:2-3.8 Withdrawal and return; contributory insurance
 
(a) Withdrawal from contributory insurance coverage shall apply only to the membership account under which the cancellation was exercised. Any person who has canceled his or her contributory insurance coverage and withdraws from membership in the System shall, upon his or her subsequent reenrollment in the System, be subject to the provisions of N.J.A.C. 17:2-3.1.
 
(b) If a member is covered by group life insurance during employment, the coverage shall cease 31 days subsequent to the member's termination date from employment, regardless of the cause of termination. A member may convert the life insurance at the member's expense as set forth in N.J.A.C. 17:2-3.13(b).
 
17:2-3.10 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 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. 43:15A-25.1.
 
17:2-3.12 Beneficiary designation; pension contributions
 
(a) 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.
 
(b) (No change.)
 
SUBCHAPTER 4. MEMBERSHIP
 
17:2-4.1 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 system shall be limited to base salary and shall not include extra compensation. Forms of compensation that have been identified as extra compensation include, but are not limited to:
 
Recodify existing i. through v. as 1. through 5. (No change in text.)
 
6. Sell-backs, trade-ins, waivers or voluntary returns of accumulated sick leave, holiday pay, vacation, overtime, compensatory time or any other payment or benefit in return for an increase in base salary. An example of a trade-in is compensation added to base salary or to salary in a new contract that correlates with compensation on an excluded item in an old contract (for example, clothing allowance);
 
Recodify existing vii. and viii. as 7. and 8. (No change in text.)
 
9. Compensation in the absence of services;
 
Recodify existing x. through xiii. as 10. through 13. (No change in text.)
 
(b)-(c) (No change.)
 
(d) With respect to all claims for benefits, the Division shall investigate increases in compensation reported for credit that exceed the reasonably anticipated annual compensation increases for members of the retirement system 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. The Division may also consider the averages of the regular increases in the employees' compensation preceding the periods in which the extra compensation was received or the average increases granted to employees in different bargaining units of the same employer. In those cases where a justification of an increase in salary is not substantiated, the Division may adjust the compensation accordingly.
 
(e) In connection with an investigation of an increase in compensation, the Division 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 retirement system;
 
2. Require an employer to provide any record or information it deems necessary for the investigation, including, but not limited to, collective bargaining agreements, employment contracts, ordinances, resolutions, minutes of public meetings (closed or open), job descriptions, salary histories, promotional lists or notices or any other record or information related to the increase in compensation; and
 
3. Refer any suspected submission of false information in violation of N.J.S.A. 43:15A-55, this chapter or other laws of the State of New Jersey to the Attorney General for review and initiation of criminal proceedings, if warranted.
 
(f) Failure to satisfactorily respond to a request by the Division for documents or information related to an increase in compensation may result in the denial of credit for the increase in compensation.
 
(g) A determination by the Division that a member's compensation for pension purposes includes extra compensation may result in:
 
1.-5. (No change.)
 
(h) Employer contributions shall not be revised or refunded because of a determination by the Division that a denial of credit for increases in compensation is warranted under this section.
 
17:2-4.3 School year members; 10 and 12 months
 
(a)-(c) (No change.)
 
(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 PERS 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 PERS for the period between the end of the previous contract and the new 12-month position.
 
17:2-4.5 (Reserved)
 
17:2-4.6 Minimum adjustment
 
In order to facilitate the reconciliation of a member's account 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.
 
17:2-4.9 Loans
 
(a) Only active contributing members of the System 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.
 
(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1 of each calendar year. An administrative fee in an amount set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 43:15A-34.
 
17:2-4.10 Waiver of retirement benefits upon withdrawal
 
Any member, who makes application for withdrawal from the System, who may otherwise be eligible to make application for a retirement benefit, shall be required to execute and file a statement with the System, setting forth the benefits the member is waiving in favor of withdrawal, before the member's application for withdrawal may be processed. If a member is eligible to begin receiving a monthly retirement allowance (age 60 or more, or 25 years or more of credited 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.
 
17:2-4.12 Deductions
 
(a) A full pension and contributory insurance deduction shall be taken for the PERS in any payroll period (monthly or biweekly) in which the member is paid a sufficient amount to make a full normal deduction, plus any other arrears or loan deductions then in effect.
 
(b) No deductions shall be taken, nor service credit given, in any pay period for employers who report on a biweekly basis or in any month, for employers who report on a monthly basis, in which the employee's salary is not sufficient to cover the required deductions for the PERS.
 
17:2-4.14 Continuance of membership; transfer
 
Once an employee establishes membership in the retirement system, a member who has maintained an active membership account is eligible to continue such active membership, should the member be temporarily employed in a position covered by the System.
 
17:2-4.17 Maximum compensation limit for pension contributions based upon annual maximum wage contribution base for Social Security
 
(a) Members who are enrolled on or after July 1, 2007 are subject to a maximum compensation limit for pension contributions. The maximum compensation limit is based on the annual maximum wage contribution base for Social Security, which is subject to change each calendar year. Compensation above the maximum will be subject to Defined Contribution Retirement Program (DCRP) rules.
 
(b) Members enrolled in PERS, who also participate in the DCRP based on (a) above will receive service credit in their corresponding PERS account, and will be eligible to retire under the rules of the PERS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.
 
SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE
 
17:2-5.1 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 purchase cost quotation 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 purchase request.
 
(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.
 
(d) 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 former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3c.
 
17:2-5.4 Compulsory contributions (back deductions)
 
(a) An employee who was required to enroll and whose application was filed beyond his or her compulsory date of enrollment will be required to make retroactive contributions to the date of compulsory enrollment. Contributions will be calculated on the basis of the member's current salary at the full pension rate of contribution assigned as of his or her compulsory date of enrollment with regular interest. For members enrolled on or after July 1, 2007, the member's salary for each calendar year will be limited by the maximum compensation as determined by N.J.A.C. 17:2-4.17.
 
(b) (No change.)
 
17:2-5.5 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 will 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, substitute service or intermittent service 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 provided the employment immediately precedes enrollment. Immediately preceding enrollment is defined as employment rendered during 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 works a minimum average of 10 days per month for each month of substitute service; and
 
(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; and
 
iii. Intermittent service, as defined by N.J.A.C. 17:2-2.3(a)8 must result without interruption in permanent employment with the same employer. The intermittent service must have been in a position which satisfied the job's requirement for experience needed to qualify for the permanent title;
 
4. Leaves of absence without pay:
 
i. The period of the leave for personal reasons, which does not exceed 93 days. Child care is considered leave for personal reasons. Union leave after January 12, 2007 is considered leave for personal reasons;
 
ii. (No change.)
 
iii. Maternity leave is considered personal illness. A certification from a physician that a member was disabled due to pregnancy and resulted in a disability for the period in excess of three months is required. Absent physician certification, three months is the maximum period of purchase for maternity leave. The birth of a child constitutes the start of child care leave of absence immediately following maternity; and
 
iv. A leave of absence shall be deemed to have ended upon resignation, termination or return to covered payroll;
 
5. Members may purchase continuous service subsequent to the date their employer adopted the retirement system, provided the service was with the same employer to the date of enrollment;
 
6. Non-veterans hired prior to July 1, 1966, whose employers have not adopted the retirement system and are otherwise eligible for enrollment, may enroll any time and purchase continuous service retroactive to July 1, 1966, provided the service was with the same employer to the date of enrollment;
 
7. Eligible out-of-State public employment, up to a total purchase of 10 years provided the member is not receiving or eligible to receive a retirement benefit from any other system for the same period of time.
 
i. As provided in N.J.S.A. 43:15A-42, out-of-State service cannot be used to qualify for an ordinary disability retirement.
 
ii. For purchase applications received November 1, 2008 or later, out-of-State purchases cannot be used to qualify for post-retirement medical benefits; and
 
8. Non-concurrent TPAF service if a dual member of TPAF and PERS pursuant to P.L. 2001, c. 6 (N.J.S.A. 43:15A-14). 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 through 3 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 shall then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 43:15A-73.1 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 cannot include periods of service of less than 30 days. It does not include 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. Members must serve a minimum of 17 days active duty within a month for that month to be eligible for purchase of service credit;
 
2. Employment with the Federal government, provided the member is not receiving or eligible to receive a retirement benefit from the Federal retirement system for the same period of time.
 
i. Pursuant to N.J.S.A. 43:15A-42, U.S. Government service cannot be used to qualify for an ordinary disability retirement;
 
ii. For purchase applications received November 1, 2008 or later, U.S. Government purchases cannot be used to qualify for post-retirement medical benefits; and
 
3. (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 not receiving nor is entitled to receive a retirement allowance for such service from any other public retirement system and provides proof to the Division that the member has withdrawn from such other system. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service.
 
(d) (No change.)
 
17:2-5.6 Methods of payment for purchase of service credit
 
(a) Methods of payment include the following:
 
1. (No change.)
 
2. Partial lump sum; balance by additional payroll deductions; or
 
3. Additional payroll 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 or transfer of tax-deferred contributions from financial plans that qualify under terms specified under I.R.C. §401(a)(31) (2007). All payments remitted to the Division must be accompanied by a properly completed direct rollover Transfer Request for the Purchase of 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.
 
17:2-5.11 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 U.S. Government or 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 public-administered retirement system at the time the service was rendered.
 
SUBCHAPTER 6. RETIREMENT
 
17:2-6.1 Applications
 
(a) Applications for retirement must be made on forms required by the System. Such forms must be completed in all respects and filed with the Division before the requested date of retirement. A member's retirement application becomes effective on the first of the month following receipt of application unless a future date is requested. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's PERS eligible employment has ended. Members enrolled in multiple PERS positions must retire from employment in all covered positions before a retirement shall become effective.
 
(b) Except for a disability retirement application, in the event a member files an incomplete application, all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to refile. This section shall not apply to information provided by the employer.
 
(c)-(d) (No change.)
 
(e) As to an application for disability retirement, the following shall apply:
 
1. An application for a physical disability retirement must be supported by at least two medical 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. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
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. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
3. 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; and
 
4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.
 
(f) Retired members, who return to public employment, shall have their previous retirement allowances cancelled and be reenrolled in the System pursuant to N.J.S.A. 43:15A-44, for those who retired on disability retirements, or N.J.S.A. 43:15A-57.2, for those who retired on early, service, veteran or deferred retirements.
 
(g) A member who previously retired pursuant to (a) through (d) above and is reenrolled pursuant to (f) above must file a new retirement application in order to initiate payment of the retirement allowance. Except in the case of disability retirement, the previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. The previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.
 
(h) (No change in text.)
 
17:2-6.3 Effective dates; change
 
(a) (No change.)
 
(b) If a member requests a change of retirement date or option selection before the member's retirement allowance becomes due and payable, said change will require approval of the Board and the revised retirement allowance shall not become due and payable until 30 days have elapsed following the effective date or the date the Board met and approved the change in the member's retirement application, whichever is later.
 
(c) A deferred retirement shall become effective on the first of the month following the member's 60th birthday, or 62nd birthday for those members enrolled on or after November 2, 2008. Should the member's 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. 17:2-6.1.
 
(d) 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.
 
17:2-6.11 Early retirement; reduction
 
(a) Retirement with 25 or more years of credited service before the first of the month in which a member attains age 60 or age 62 for a member who enrolled on or after November 2, 2008, shall be classified as "early" retirement.
 
(b) For members enrolled prior to July 1, 2007, the statutory reduction of one quarter of one percent applies to each month prior to the month in which the member attains age 55 and for the month in which the member attains age 55 if the member's 55th birthday occurs after the 15th day of the month.
 
(c) For members enrolled on or after July 1, 2007 and prior to November 2, 2008, if under the age of 60, the reduction will be one percent per year (1/12 of one percent per month) for each year under age 60 but over age 55; and three percent per year (1/4 of 1 percent per month) for each year under age 55.
 
(d) For members enrolled on or after November 2, 2008 if under the age of 62 the reduction will be one percent per year (1/12 of one percent per month) for each year under age 62 but over age 55; and three percent per year (1/4 of one percent per month) for each year under age 55.
 
17:2-6.12 Service retirement; eligibility
 
(a) A member enrolled prior to November 2, 2008 becomes eligible for "Service" retirement on the 1st of the month following the member's 60th birthday. If the member's 60th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:15A-47a, and requests that date.
 
(b) A member enrolled on or after November 2, 2008 becomes eligible for a "Service" retirement on the 1st of the month following the member's 62nd birthday. If the member's 62nd birthday falls on the first of the month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:15A-47a, and requests that date.
 
17:2-6.14 Disability retirant; annual report (employment, earnings, test and adjustment)
 
(a) Pursuant to N.J.S.A. 43:15A-44, if a disability retirant is engaged in gainful employment that does not require reenrollment in the PERS, 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, which 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 System's actuaries in each calendar year of retirement to the retirant's final year's salary.
 
2. (No change.)
 
(b) Earnings from employment in New Jersey shall be obtained through the New Jersey Department of Labor and Workforce Development. For all other earnings, the disability retirants shall be required to file a report with the System, which may include copies of the retirant's IRS 1040 forms and W-2 forms and any other proofs of employment requested of a specific retirant indicating the type of employment they are engaged in, if any, and the gross earned income realized therefrom as of December 31 of the prior year. The Division may also require the retirant to complete Federal Form 4506-T, Request for Transcript of Tax Return.
 
(c) If the Department of Labor and Workforce Development or a retirant reports employment and earnings, then the following tests shall be made by the Division:
 
1. If the retirant is engaged in employment, and the gross earned income for the preceding calendar year exceeds the sum of the pension portion of the retirement benefit and the salary the retirant would have been receiving had the retirant continued to work for the former employer, the retirant shall be billed for the amount of the excess earnings, limited to the pension portion of the retirement allowance. Further, the Division shall assume that the retirant continues to be employed at the same level of salary for the current year. Therefore, a dollar for dollar reduction shall be made in anticipation of excess earnings in the current year. After proof is submitted in the subsequent year, if it is determined that the salary earned in the previous year was higher, appropriate repayment to the System shall be requested by the Division. If the salary earned was less, then a refund shall be made minus any outstanding amounts owed. If the gainful employment ends, the retirant must notify the Division in order to have the amount of reduction recalculated.
 
2.-3. (No change.)
 
(d) (No change.)
 
17:2-6.15 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) (No change.)
 
17:2-6.26 Medical examination; physician
 
N.J.S.A. 43:15A-42 requires the Board to designate physicians to perform medical examinations. When an applicant provides sufficient medical documentation as set forth in N.J.A.C. 17:2-6.1 and the Medical Review Board concurs, then no further evaluation is necessary. However, if the medical documentation is not sufficient to establish total and permanent disability after a review by the Medical Review Board, then an independent medical evaluation shall be required.
 
SUBCHAPTER 7. TRANSFERS
 
17:2-7.1 Honorable services; interfund transfers; State-administered retirement systems
 
(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the renderings 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) (No change.)
 
(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 former 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 TPAF at the time of enrollment in the PERS may transfer the non-concurrent TPAF service if the member ceased to be an active contributing member of the TPAF three or less years from the date of enrollment in the PERS. The member must apply to transfer this service no more than two years from the date of the last contribution to the TPAF, unless the member is vested in the TPAF, or the member's TPAF account has not expired due to the provisions of N.J.S.A. 18A:66-8. 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. The account is inactive; that is, it has been more than two years from the date of the last contribution nor has the member's account remained active due to the provisions of N.J.S.A. 43:15A-8.
 
6. (No change.)
 
7. The member's original enrollment date established in the former system shall be transferred into the new system.
 
(d)-(e) (No change.)
 
17:2-7.2 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. (No change.)
 
2. It has not been more than two years since the date of the last contribution or the member's account has remained active due to the provisions of N.J.S.A. 43:15A-7e and 8; and
 
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.
 
(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 contributions were first certified, the employer shall be assessed a late enrollment employer liability penalty plus delayed appropriation costs.
 
SUBCHAPTER 8. PROSECUTORS PART
 
17:2-8.1 Definitions
 
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:
 
. . .
 
"Service" as a prosecutor as defined by N.J.S.A. 43:15A-155 shall include service as the following. For members employed as prosecutors on January 7, 2002, service shall also include any PERS service credited to a member's account on January 7, 2002. Pursuant to P.L. 2003, c. 140, for an individual nominated and appointed pursuant to Article VII, Section II, paragraph 1 of the New Jersey Constitution to the position of a county prosecutor after January 7, 2002, service shall also include regular PERS service credited as of the date of appointment.
 
1.-3. (No change.)
 
. . .
 
17:2-8.6 Purchase of service
 
(a)-(b) (No change.)
 
(c) An active member who wishes to purchase service credit shall file an application with the Division. The cost shall be calculated in accordance with N.J.A.C. 17:2-5.5. The member must pay into the annuity savings fund, the amount required by applying the factor, supplied by the actuary, to the member's age at the time of purchase and to the member's salary at that time or to the highest annual compensation for service in this State during any fiscal year, including a fiscal year for which credit is purchased, whichever is the highest. Such purchase may be made in regular installments, equal to at least one-half the full normal contribution to the retirement system over a maximum period of 10 years.
 
17:2-8.8 Vesting
 
(a) A prosecutor with service in both the Prosecutors Part and the regular PERS may use the combined noncurrent service in order to meet the 10-year vesting requirement found at N.J.S.A. 43:15A-38 for a member of the PERS.
 
(b) If the prosecutor begins receipt of a Prosecutors Part retirement benefit prior to the date of eligibility to receive a PERS retirement benefit, the Prosecutors Part service credit shall be subtracted from the member's active account and any credited regular PERS service would remain. A retired member of the Prosecutors Part who does not have 10 or more years of credited regular PERS service remaining in the active account after the Prosecutors Part service is subtracted, and whose regular PERS account will not be active pursuant to N.J.S.A. 43:15A-7e when the member attains the age of 60 or the age of 62 for those members who enroll on or after November 2, 2008, cannot collect a benefit based on that service. An application for return of contributions made on the basis of such other public service, if no part of the service was used in the calculation of a retirement allowance or to qualify for payment of health benefits, may be approved.
 
17:2-8.9 Withdrawal from Prosecutors Part or regular PERS service
 
(a) (No change.)
 
(b) If a prosecutor is a member of the PERS on the basis of other public service, no application for a return of contributions shall be approved until the prosecutor has terminated all service covered by the System and makes application for a return of all contributions made to the System. An application for return of contributions made on the basis of such other public service, if no part of the service was used in the calculation of a retirement allowance or to qualify for payment of health benefits, may be approved.
 
(c) (No change.)
 
17:2-8.12 Service retirement
 
(a) (No change.)
 
(b) A member who was employed as a prosecutor on January 7, 2002 may retire with 20 or more years of creditable Prosecutors Part service at any age by filing a retirement application, duly attested, stating at what time subsequent to the execution and filing thereof the member desires to be retired.
 
(c) A member who was not employed as a prosecutor on January 7, 2002 may retire at age 55 by filing a retirement application, duly attested, stating at what time subsequent to the execution and filing thereof the member desires to be retired.
 
(d) (No change.)
 
17:2-8.13 Eligibility for disability and accidental death retirement benefit
 
(a) A prosecutor who has a total of 10 years of nonconcurrent New Jersey service in the Prosecutors Part, regular PERS, or a combination thereof, may be eligible for an ordinary disability retirement allowance as provided by N.J.S.A. 43:15A-42. The benefit shall be the same as that provided by N.J.S.A. 43:15A-45.
 
(b)-(d) (No change.)
 
17:2-8.14 Retirement date for prosecutors having both regular and Prosecutors Part PERS service
 
(a) (No change.)
 
(b) A prosecutor who has both regular and Prosecutors Part PERS service may, after filing the necessary application, begin receipt of the Prosecutors Part benefit at age 55, or at any age with 20 or more years of service if the member was employed as a prosecutor as of January 7, 2002. The member may begin receipt of the remaining regular PERS benefit at age 60 or at age 62 for those members who enroll on or after November 2, 2008 based on the member's final average salary in the regular PERS covered position in accordance with the PERS retirement rules, so long as the member is vested in the regular PERS account, or the regular PERS account is still active pursuant to N.J.S.A. 43:15A-7e. The maximum amount of the PERS benefit shall be determined as of the effective date of retirement from the Prosecutors Part. Should a retired member of the Prosecutors Part return to employment prior to receipt of the regular PERS retirement benefit, that PERS benefit shall not increase and the provisions of N.J.A.C. 17:2-8.16 shall apply. If the member has 25 years or more of regular PERS service, the member may begin receipt of the regular PERS benefit at any age after filing the necessary application.
 
(c) (No change.)


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
GENERAL ADMINISTRATION

42 N.J.R. 2139(a)

Adopted New Rule: N.J.A.C. 17:1-2.18

Service and Salary Credit: Awards of Back Pay
 
Proposed: May 17, 2010 at 42 N.J.R. 896(a).
 
Adopted: August 4, 2010 by Florence Sheppard, Acting Director, Division of Pensions and Benefits.
 
Filed: August 5, 2010 as R.2010 d.187, without change.
 
Authority: N.J.S.A. 52:18A-96 et seq. and 52:14-15.1a (P.L. 1996, c. 8).
 
Effective Date: September 7, 2010.
 
Expiration Date: December 10, 2013.
 
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. 52:14-15.1a (P.L. 1996, c. 8) and 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 adoption follows:
 
SUBCHAPTER 2.    ACCOUNTING
 
17:1-2.18   Service and salary credit: awards of back pay
 
(a) A member who appeals the suspension or termination of the member's employment and who, by award or settlement, becomes entitled to full pay for all or a portion of that employment for the period of such suspension or termination shall receive service credit for the period covered by the award or settlement provided a full normal pension and, if applicable, the contributory group life insurance contribution is received from the member or is deducted from the value of the award. The member must receive full back pay, including normal salary increases before mitigation and the contributions will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. In the event that the amount of back payment, after mitigation, is insufficient to deduct the value of the normal pension contributions and, if applicable, the contributory group life insurance due, such contribution shall be paid by the member to the respective retirement system by certified check or money order.
 
(b) If a member waives an award of back pay, then the member cannot receive service or salary credit for the period of the award.
 
(c) 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, or provides service credit that entitles a member to file for retirement benefits to which they would not otherwise have qualified, the award or settlement shall be reviewed by the Division. If the Division 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 the various retirement systems, the Division shall determine the compensation and/or service credit to be used to calculate the retirement allowance, and the member shall have the pension contributions for the salaries based on the award refunded without interest.
 
(d) It is the responsibility of the certifying officer to provide to the Division a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document and all details pertaining to a mitigated award of back pay. Any resolution or legal document submitted to the Division must be fully executed by all parties to the agreement.
 
(e) When necessary, the Division shall request all supporting documentation regarding the award or settlement agreement from the employer. The Division has the ability to request proof of mitigation from the member.
 
(f) For those defined contribution retirement programs administered by the Division, the member is not entitled to the employer contributions for the period of the award unless the member receives an award equal to full back pay pursuant to N.J.A.C. 17:1-2.18.
 
(g) For those defined contribution retirement programs administered by the Division, the member is not entitled to investment gains or losses that the contribution would have been subject to had the member receiving the award of back pay been employed continuously during the period of the award.


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
ALTERNATE BENEFIT PROGRAM

42 N.J.R. 2141(a)

Adopted Repeal: N.J.A.C. 17:7-3.9

Awards of Back Pay
 
Proposed: May 17, 2010 at 42 N.J.R. 900(a).
 
Adopted: August 4, 2010 by Florence Sheppard, Acting Director, Division of Pensions and Benefits.
 
Filed: August 5, 2010 as R.2010 d.191, without change.
 
Authority: N.J.S.A. 18A:66-172.
 
Effective Date: September 7, 2010.
 
Expiration Date: September 8, 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. 18A:66-172 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 3.    MEMBERSHIP
 
17:7-3.9   (Reserved)


 
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