RULE CHANGES
1999

The Division of Pensions and Benefits posts proposed rules — new rules, amended rules and readoptions of existing rules — on this Web site to inform members, retirants, employers and other interested parties.

Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code.

If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. NJAC refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

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

Public Notices

There are no Public Notices for 1999.

Proposed Rules

There are no Proposed Rules for 1999.

Adoptions

Amendment: N.J.A.C. 17:3-6.4 Outstanding loans. [TPAF] Cite as 31 N.J. Reg. 4293(b)

Amendment: N.J.A.C. 17:3-2.6 Ineligible Positions; Interim Appointment to Boards of Education. [TPAF] Cite as 31 N.J. Reg. 4293(a)

Amendment: N.J.A.C. 17:2-4.7 Part-time Hourly, On-call or per diem Salary. [PERS] Cite as 31 N.J. Reg. 4292(a)

Amendment: N.J.A.C. 17:2-6.4 Outstanding Loans. [PERS] Adopted 11/15/99. (Cite as 31 N.J.R. 4119(a))

Amendments: N.J.A.C. 17:3-5.1, 5.5 and 5.8 Eligibility for Purchase, Optional Purchases of Eligible Service, Service Ineligible for Purchase. [TPAF] Adopted 11/15/99. (Cite as 31 N.J.R. 3741(a))

Amendment: N.J.A.C. 17:9-4.6 Local, Full-time Defined. [SHBP] Adopted 11/15/99. (Cite as 31 N.J.R. 3742(a).

New Rule: N.J.A.C. 17:9-6.9 State Health Benefits Program Eligibility for State Payment of Retiree Coverage Under P.L.1997, c.330. [SHBP] Adopted 9/30/99. Cite as 31 N.J. Reg. 3524(b).

Amendment NJAC 17:9-2.4 Coverage and Plan changes; exceptions. [SHBP] Adopted 9/99. (Cite as 31 N.J.R. 2758(a) ).

Amendment; N.J.A.C. 17:2-2.3 Ineligible persons. [PERS]. Adopted 8/16/99. (Cite as 31 NJR 458(a)).

Amendments; N.J.A.C. 17:2-5.1, 17:2-5.5 and 17:2-5.11 Eligibility for Purchase; Optional Purchases of Eligible Service; Service Ineligible for Purchase. [PERS] Adopted 8/16/99. (Cite as 31 NJR 458(a)).

Amendment: N.J.A.C. 17:2-4.1 Creditable Compensation [PERS] Adopted 8/16/99. (Cite as 31 NJR 458(a)).

New Rule: NJAC 17:1-4.39 Workers' Compensation: Employer's Obligation Regarding Employee Contributions Adopted 4/5/99. (Cite as 31 NJR 892(b)).

Amendment: N.J.A.C. 17:1-4.13 Purchases; Cancellation, Interest on Outstanding Purchases or Cash Discount Requested Adopted (Cite as 31 NJR 668(a))

New Rule; N.J.A.C. 17:2-2.6 Enrollment Eligibility of Professors and Instructors Employed on a Temporary, Provisional or Adjunct Basis by Public Institutions of Higher Education [PERS].Adopted (Cite as 31 NJR 668(b)).

New Rule: 17:2-6.15 Disability retirements; filing after discontinuance of service [PERS] Adopted 2/1/99. (Cite as 31 NJR 458(a)).

New Rule: 17:3-6.15 Disability retirements; filing after discontinuance of service [TPAF]. Adopted 2/1/99. (Cite as 31 NJR 459(a)).

TEACHERS' PENSION AND ANNUITY FUND

Amendment: N.J.A.C. 17:3-2.6

Summary

The Teachers' Pension and Annuity Fund Board of Trustees recently requested advice from the Attorney General's Office as to whether a consultant or independent contractor can fill a certificated interim position with a board of education under the pension statute. Their memorandum employed a detailed analysis using the 20 factors set forth in IRS Revenue Ruling 87-41, 1987-1 C.B. 296. These factors can be used as an aid to determine whether an individual is an employee under the "control test" which has been regularly used by the Division of Pensions and Benefits since 1993 to determine whether an individual meets its criteria for employee.

After applying these factors to the certificated interim position, the memorandum concluded that the interim position was not that of a consultant, but that of an employee. It added that public employers should not be permitted to skirt the statutes governing the retirement system by classifying their workers as independent contractors or consultants.

The Board of Trustees, in conjunction with the above mentioned memorandum, determined that a new rule is necessary to clarify when a certificated employee in an interim or temporary position with a board of education is ineligible for enrollment into the retirement system, and when enrollment is required.

Full text of the proposal follows:

17:3-2.6 Ineligible Positions; Interim Appointment to Boards of Education

Any person retired from the Teachers' Pension and Annuity Fund who is temporarily appointed to any position listed in N.J.A.C. 17:3-2.1 or the functional equivalent thereof shall be ineligible for enrollment in the retirement system if the total time for all interim appointments with one board of education does not exceed six months. If the total time for all the interim appointments with one board of education exceeds six months, the individual shall be declared an employee for pension purposes and shall be enrolled in the Fund effective the first day of the seventh month of service.

TEACHERS' PENSION AND ANNUITY FUND

Amendment: N.J.A.C. 17:3-6.4

Summary

Until recently, if a member retired with an outstanding loan balance, either that balance had to be paid in full at retirement, or the member's entire pension check was withheld until the loan was satisfied. The only way loan repayment at the same amount the member was paying as an active employee could be carried into retirement was if the member retired on a disability retirement allowance or retired on another type of benefit but was ill or disabled. Proof of the disability had to be provided before loan deductions could be carried into retirement.

P.L. 1999, c.132 changed the repayment method of outstanding loans at retirement. The new law provides that a member who retires with an outstanding loan will repay the loan through deductions from the retirement benefits payable in the same monthly amount that was deducted from the member's compensation immediately before retirement until the balance of the loan together with the interest is repaid. If the retiree dies before the loan with interest is repaid, the remaining loan balance will be repaid from the proceeds of any other benefits payable on the account of the retiree either in the form of monthly payments due to the beneficiaries or in the form of a lump sum payment from the pension or group life insurance. This proposed repeal and new rule will reflect this statutory change and will also correspond to the language in the other retirement systems regarding outstanding loans.

The proposed deletion of N.J.A.C. 17:3- 6.4(b) and (c) will eliminate any redundancies from this rule because the proposed amendment will make the repayment option available to all retirees regardless of disability.

The proposed amendment at N.J.A.C. 17:3-6.4(a)2i provides that withholding for New Jersey State income tax is an authorized deduction that will be taken prior to withholdings for a loan. P.L. 1989, c.328 permitted withholding State income tax from retirement allowances. The Division began implementing voluntary State income tax withholding in 1989 and proposes to update the rule to reflect this change.

Full text of the proposal follows:

17:3-6.4 Outstanding loan

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

1. In full before the retirement allowance becomes due and payable as provided in N.J.A.C. 17:3-6.3; [or]

2. By retention of retirement benefit payments, excluding authorized deductions, by the Fund until the loan balance, with interest, is repaid.. . .

i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding; or . . . .

3. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by P.L. 1999, c.132. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement. . . . .

(b) If a retirant dies before the loan balance, with interest, is repaid, the remaining balance is paid first from the group life insurance proceeds, and then from the proceeds of any other benefits payable on account of the retirant in the form of monthly payments or the balance of the Option I reserves or the balance of the retirant's accumulated deductions and regular interest that are due to the beneficiary or estate. If the retirant designated multiple beneficiaries to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which they are entitled to the benefits.

PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Amendment: N.J.A.C. 17:2-6.4

Cite as 31 N.J. Reg. 2519(a)

Summary

Until recently, if a member retired with an outstanding loan balance, either that balance had to be paid in full at retirement, or the member's entire pension check was withheld until the loan was satisfied. The only way loan repayment at the same amount the member was paying as an active employee could be carried into retirement was if the member retired on a disability retirement allowance or retired on another type of benefit but was ill or disabled. Proof of the disability had to be provided before loan deductions could be carried into retirement. P.L. 1999, c.132 changed the repayment method of outstanding loans at retirement. The new law provides that a member who retires with an outstanding loan will repay the loan through deductions from the retirement benefits payable in the same monthly amount that was deducted from the member's compensation immediately before retirement until the balance of the loan together with the interest is repaid. If the retiree dies before the loan with interest is repaid, the remaining loan balance will be repaid from the proceeds of any other benefits payable on the account of the retiree either in the form of monthly payments due to the beneficiaries or in the form of a lump sum payment from the pension or group life insurance. This proposed amendment will reflect this statutory change.

The proposed deletion of N.J.A.C. 17:2- 6.4(b) and (c) will eliminate any redundancies from this rule because the proposed amendment will make the repayment option available to all retirees regardless of disability. The proposed amendment at N.J.A.C. 17:2-6.4(a)2i provides that withholding for New Jersey State income tax is an authorized deduction that will be taken prior to withholdings for a loan. P.L. 1989, c.328 permitted withholding State income tax from retirement allowances. The Division began implementing voluntary State income tax withholding in 1989 and proposes to update the rule to reflect this change.

Full text of the proposal follows:

17:2-6.4 Outstanding loan

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

1. In full before the retirement allowance becomes due and payable as provided in N.J.A.C. 17:2-6.3; [or]

2. By retention of retirement benefit payments, excluding authorized deductions, by the [retirement system] Retirement System until the loan balance, with interest, is repaid.

i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding. [If the member does not request repayment in full, repayment is by retention of retirement benefits.]; or

3. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by P.L. 1999, c.132. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.

[(b) A member who retires on a disability pension or because of medical illness or disability as determined by the board of trustees with an outstanding loan balance may repay the balance as follows:]

[1. In the manner prescribed in (a) above; or]

[2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid.]

[i. If a member who retires on a disability pension does not request another repayment option, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.]

[(c) A member whose retirement is other than a disability retirement and who wants to establish that the retirement is necessitated by medical illness or disability shall submit an application acceptable to the retirement system together with a report of the member's personal or attending physician and all other physicians and all other physician's reports, hospital records or other medical evidence which the member can supply pertaining to

the illness or disability. The medical evidence shall be sufficient to show to the satisfaction of the board of trustees that the member is totally and permanently disabled and would qualify on a medical basis for ordinary disability retirement. The board may require the member to be examined by a physician designated by the retirement system, and may refer the medical evidence to the medical panel for its report on whether the member is totally and permanently disabled and retirement is necessitated by medical illness or disability.]

[(d)] (b) If a retirant dies before the loan balance, with interest, is repaid, the remaining balance is paid first from the group life insurance proceeds, and then from the proceeds of any other benefits payable on account of the retirant in the form of monthly payments or the balance of the Option I reserves or the balance of the retirant's accumulated deductions and regular interest that are due to the beneficiary or estate. If the retirant designated multiple beneficiaries to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which they are entitled to the benefits.

Amendment: N.J.A.C. 17:9-4.6

Cite as 31 N.J. Reg. 2300(a)

Summary

The proposed amendment to N.J.A.C. 17:9-4.6 would provide for continued coverage of core benefits for employees of local employers who participate in the SHBP and who elect to participate in their employers' voluntary furlough programs (as authorized by P.L. 1993, c.297 for State employees and extended to other employers through the rulemaking authority of the Department of Personnel found at N.J.S.A. 11A:2-6(e)).

This proposed amendment is similar to N.J.A.C. 17:9-4.2(b), which provides for coverage during voluntary furloughs for State employees.

17:9-4.6 Local; full-time defined

(No change.)

(b) Where an otherwise eligible employee elects a voluntary furlough, as authorized by P.L. 1993, c.297 for State employees and extended to local employers through the Department of Personnel's rulemaking authority (see N.J.A.C. 4A:6-1.23(b)), coverage shall continue with the employer paying the costs as if the member were an active employee, provided that the employee remits in advance to the employer the amount required, if any, as the employee's contribution for coverage.

STATE HEALTH BENEFITS PROGRAM
Eligibility for State Payment of Retiree Coverage Under P.L.1997, c.330

Proposed New Rule: N.J.A.C. 17:9-6.9

Cite as 31 N.J. Reg. 2300(b)

Summary

When the New Jersey State Health Benefits Commission becomes aware of a change in the laws, a court decision or an administrative decision that possibly could affect the State Health Benefits Program, the administrative rules are reviewed and, if changes therein are mandated or a new rule required, steps are taken to propose changes to those rules or to propose new rules to conform to the new statute, court decision, or administrative policy. This proposed new rule is necessary to better identify the retirees who are eligible and ineligible for coverage under P.L. 1997, c.330, codified as N.J.S.A. 52:14-17.32i, which provides for the partial State payment of health benefits for eligible retirees of the Police and Firemen's Retirement System (PFRS), the Consolidated Police and Firemen's Pension Fund (CPFPF) and the Public Employees' Retirement System (PERS). It sets forth the requirements to be eligible for participation under this statute. It also states when a retiree cannot participate, and the circumstances under which a retiree may later become eligible for participation.

In general, the proposed new rule revises the State Health Benefits Commission's interpretation of eligibility under the statute from employer- based (if the employer pays for anyone, everyone is ineligible) to retiree- based (a retiree is excluded only if the employer is paying something for that retiree).

17:9-6.9 Eligibility for State payment of retiree coverage under P.L. 1997, c.330

For the purposes of this section, "qualified retiree" means a person who:

1. Is a retiree from:

(a) The Police and Firemen's Retirement System of New Jersey (N.J.S.A. 43:16A-1 et seq.), hereinafter referred to as PFRS;

(b) The Consolidated Police and Firemen's Pensions Fund (N.J.S.A. 43:16-1 et seq.), hereinafter referred to as CPFPF; or

(c) The Public Employees' Retirement System of New Jersey (N.J.S.A. 43:15A-6 et seq.), hereinafter referred to as PERS, from a position included in the definition of "law enforcement officer" under section 1 of P.L. 1955, c.257 (N.J.S.A. 43:15A-97) or a position eligible for participation in PFRS as provided in section 9 of P.L. 1989, c.204 (N.J.S.A. 43:16A- 1.2);

2. Retired on a benefit based on 25 or more years of service credit or on disability retirement under PFRS, CPFPF, or PERS;

3. Was eligible to receive health benefits coverage at the expense of the employer immediately preceding retirement; and

4. Is not eligible for employer payment of health benefits coverage after retirement, regardless of whether the employer pays for health benefits coverage for other retirees.

Pursuant to P.L. 1997, c.330 (N.J.S.A. 52:14-17.32i et seq.), a qualified retiree and his or her eligible dependents, as defined in section 2 of P.L. 1961, c.49 (N.J.S.A. 52:14-17.26), but not survivors, are eligible to participate in the State Health Benefits Program (SHBP) in accordance with the laws and rules governing the program, regardless of whether the retiree's employer participated in the program, and for State payment of an amount of the premium or periodic charges for the category of coverage elected by the qualified retiree equal to 80 percent of the premium or periodic charges for that category of coverage under the State managed care plan or health maintenance organization which provides services in the 21 counties of the State and the lower premium or periodic charges.

The following persons are not eligible for benefits under N.J.S.A. 52:14-17.32i et seq.

1. A retired State employee whose premium or periodic charges for health benefits under the State Health Benefits Program are paid by the State pursuant to section 8 of P.L. 1961, c.49 (N.J.S.A. 52:14-17.32) or section 6 of P.L. 1996, c.8 (N.J.S.A. 52:14-17.28b);

2. A retiree of an employer other than the State for whom the employer pays premium or periodic charges for health benefits under the SHBP as authorized by section 7 of P.L. 1964, c.125 (N.J.S.A. 52:14-17.38) and pursuant to a collective negotiations agreement, ordinance, or resolution on June 1, 1998;

3. A retiree of an employer other than the State for whom the employer pays premium or periodic charges for health benefits as authorized by N.J.S.A. 40A:10-23 and pursuant to a collective negotiations agreement, ordinance, or resolution, for the life of the retiree, on June 1, 1998;

4. A retiree of an employer other than the State for whom the employer pays premium or periodic charges for health benefits as authorized by N.J.S.A. 40A:10-23, and pursuant to a collective negotiations agreement, ordinance, or resolution, for a period of time less than the life of the retiree while the employer is paying the amount of the premium or periodic charges, on June 1, 1998;

5. A retiree otherwise eligible for State payment of health benefits under the SHBP pursuant to N.J.S.A. 52:14-17.32i et seq. who is receiving health benefits coverage from an employer in connection with employment after retirement while the retiree is receiving the coverage; and

6. A retiree of an employer other than the State who would have been ineligible for State payment for health benefits under the SHBP pursuant to N.J.S.A. 52:14-17.32i et seq. because of employer payment for health benefits coverage after retirement for the collective negotiations unit, the employment classification or the category, of which the retiree was a member, under a negotiated agreement, ordinance, or resolution on June 1, 1998, and who otherwise meets the eligibility requirements for the benefit as a result of a change in the negotiated agreement, ordinance, or resolution after June 1, 1998.

A qualified retiree who is ineligible for benefits under N.J.S.A. 52:14-17.32i et seq. because of employer payment for retiree coverage under (c)4 above or receipt of health benefits coverage in connection with employment after retirement under (c)5 above shall be eligible for the benefits after termination of employer payment for retiree coverage or employer coverage if the retiree applies to the SHBP for the benefits within 60 days after the effective date of termination of employer payment or coverage.

Proposed Amendments: N.J.A.C. 17:3-5.1, 5.5 and 5.8

Summary

The proposed amendments to N.J.A.C. 17:3-5.1, 5.5 and 5.8 will clarify and better organize the rules dealing with the purchase of service by members of the Teachers' Pension and Annuity Fund. The proposed amendments to N.J.A.C. 17:3-5+.1 would delete the word "contributing," and thus eliminate the requirement that an active member also be on payroll to purchase service. This requirement has resulted in a number of people being placed on payroll for one pay period to be eligible to make a purchase. It makes more sense to allow the member to purchase time without having to return to payroll in order to do so. Payment for purchases by members not on active payroll would have to be by lump sum because they would not be on payrolls from which installment payments could be deducted. Another change would delete the word "temporary" and the one-year limitation of temporary service purchases from N.J.A.C. 17:3-5.1(b) as this limitation was removed by P.L. 1991, c.138. The changes to N.J.A.C. 17:3-5.1(c) would provide that the Board of Trustees may disallow the purchase of all or a portion of former service it deems dishonorable, as provided under N.J.S.A. 43:1-3.

The proposed amendments to N.J.A.C. 17:3-5.5 would categorize purchases into "shared-cost" and "full-cost" purchases. Existing subsection (a) would be deleted and temporary service would be addressed under the new paragraph (a)3. Language regarding the definition of shared-cost purchases and clarification that a member may purchase all or a portion of such time would be added. "Purchase" would be added before "factor." "His or her" would be replaced by "the member" and "highest fiscal year base salary" would be added after "current salary" to reflect Division practice. The word "all" would be deleted at the beginning of paragraphs (a)1 and 2 to indicate that not all eligible service must be purchased. Paragraph (a)2 would be amended to include the words "an optional" before "a compulsory basis." This amendment is necessary to allow optional employees, who fulfilled the eligibility requirements for membership, but who, as non-veteran elected officials did not have to be enrolled or were not enrolled in the retirement system from that position to purchase credit for their previous service. Paragraph (a)3 would become paragraph (a)4 and "without pay" would be added to clarify the types of leave it applies to. P.L. 1991, c.138 changed the two-month limitation of a leave for personal reasons to 93 days, and this change is reflected in the proposed amendments. Child care has been added to this section to clarify that it is classified for purchase by the Division as a leave for personal reasons. The Division may require proof of an illness. Under subparagraph (a)4ii, the proposed amendments would codify this practice. Paragraph (a)4 would become paragraph (a)5 and language regarding out-of-State purchases would be added. Subsection (b) would address full-cost purchases, and a paragraph regarding their definition and calculations would be added. The types of these purchases would be listed and clarification regarding the total amount of this type of service available to purchase would be added. An indication that this type of purchase cannot be used toward a disability retirement would also be added to these subsections. Subsection (c) would be added, the subject of which presently is addressed in N.J.A.C. 17:3-5.8 to clarify how much of certain types of out-of-State service could be purchased. Existing subsection (c) would become subsection (d), and "highest fiscal year base salary" would be added. "His" and "he" would be replaced by "the member."

The proposed amendments to N.J.A.C. 17:3-5.8(a)1 would delete all of paragraph (a)1 through "Federal service and," as well as all of paragraphs (a)2 and 3 and would rehead the section as "Ineligible purchases." These changes are necessary because Federal service may now be purchased and the remainder of this rule has been addressed under the provisions of proposed amended N.J.A.C. 17:3-5.5. "Creditable" would become "purchasable."

Full text of the proposal follows:

17:3-5.1 Eligibility for purchase

(a) Only active [contributing] members of the [system] Fund shall be eligible to make application for purchase of credit. Active members who are not currently contributing to the Fund shall purchase their requested service in a lump sum.

(b) In order to be eligible to purchase [temporary] service, a member must submit a written request to purchase [such] service [within one year from the date of his initial pension contributions are certified to begin] and such purchase must be authorized by the member before the expiration date indicated on the letter which quotes the terms of the purchase.

(c) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.

17:3-5.5 Optional purchases of eligible service

[(a) Members, who purchase temporary service, must purchase all such service immediately preceding enrollment. The purchase will be calculated on the basis of the member's current salary times the full percentage rate of contribution assigned at enrollment.]

[(b) The types of purchases indicated below will] (a) A shared- cost purchase is one in which the member pays only the employee's share and not the employer's share of the purchase. A member may purchase all or a portion of such eligible service. A shared-cost purchase shall be calculated on the basis of the actuarial purchase factor established for the member's age at the time of the purchase request times [his] 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. [All former] Former membership credit in [another] a State-administered retirement system;

2. [All former] Former service with any employer which was not certified for membership but which would have qualified on an optional or a compulsory basis at the time the service was rendered;

3. Continuous temporary or substitute service as a teacher immediately preceding enrollment with the same employer;

[3.] 4. Leaves of absence[s] without pay:

1. [All of the] The period of the leave for personal reasons [for a period of less than three months.] which does not exceed 93 days. Childcare is considered leave for personal reasons;

2. [All of the] The period of the leave up to two years for personal illness [or maternity]. The Division may require proof that the illness existed for the length of the leave;

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

1. Active duty military service prior to enrollment. Military service before enrollment cannot be used to qualify for an ordinary disability retirement; and

2. Employment with the Federal government. Pursuant to N.J.S.A. 18A:66-39(b) U.S. Government service cannot be used to qualify for an ordinary disability retirement.

(c) A member shall be eligible to purchase an aggregate of up to 10 years of out-of-State public employment, military service and Federal employment provided that the member is neither receiving nor entitled to receive a retirement allowance for such service from any other public retirement system and provides proof to the Division of Pensions and Benefits that the member has withdrawn from such other system. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service.

[(c)] (d) Rules concerning the purchase and/or conversion of Class A credit include the following:

1. The cost of Class B service credit is based on the actuarial factors and such factors provide a retirement benefit which is 1/6 greater than service credited as Class A. If Class A credit is purchased, the cost will be 6/7 of the amount computed for a Class B purchase. The computation is based on the member's present salary or highest fiscal year base salary multiplied by the actuarial purchase factor for the member's age at the time of purchase with regular interest.

17:3-5.8 [Eligible credit] Service ineligible for purchase

[(a) An active contributing member may purchase credit for:]

[1. Up to 10 years of out-of-State full-time teaching service rendered in a public school conducted under the order and superintendence, and wholly or partly at the expense of a State, local or district board of education, provided the member is not receiving nor is entitled to receive a retirement allowance for such service from any other public retirement system and proof is received that he has withdrawn from such other system. Federal service and service] 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, D.C. and the Canal Zone, is not [creditable] purchasable.

[2. Any previous, eligible full-time public school teaching service rendered in New Jersey.]

[3. Full-time and continuous substitute or temporary public school teaching service rendered in New Jersey for a period of not less than one full school semester, provided such service was immediately followed by an appointment to a regular full-time teaching position. Per diem or intermittent temporary or substitute service is not creditable.]

Part-Time Hourly, On-Call or Per Diem Salary

Proposed Amendment: N.J.A.C. 17:2-4.7

Cite as 31 N.J. Reg. 2297(a) [PERS]

Summary

At this time, the base salaries of part-time hourly, on-call and per diem employees are estimates of what the employees are expected to earn and are not intended to reflect actual salary earned. It is the responsibility of the employer to estimate the annual base salary on the basis of rate of pay and the normal work year. This estimate is often not reflective of actual salary earned, as part-time employees may change the hours that they work. This proposed amendment would require employers to use the actual creditable salary earned by employees and not estimated salary for part-time hourly, on- call and per diem employees, thus eliminating much of the guesswork that has been, but should not be, involved in the reporting of salaries.

Summary of Public Comment and Agency Response:

COMMENT: Glenn Roe, Director of Finance and County Treasurer for Morris County, commented on August 31, 1999 regarding the proposed amendment. The commenter voiced his concerns regarding the reporting of part-time employees on an actual earnings basis. He stated that "the pension earnings quarterly tape we send to the Division is estimated for the sixth pay of the quarter" and that "we would not be able to accurately estimate the earnings for part-time employees for the sixth pay." He adds that "our current pension calculation programs would need to be changed to meet the differences in reporting two classes of employees and additional employee system coding would be necessary. It is possible that the system changes cannot be made and manual effort would be required. This would be a tremendous burden to the office." He concludes that he is "not opposed to making pension calculations accurate, however, this change would increase the complexity of our pension deduction calculation programs."

RESPONSE: The Division of Pensions and Benefits thanks Mr. Roe for his comments, but believes that there are inherent savings to reporting actual salaries. Labor-intensive estimations are eliminated. Proper service credit is easier to determine using the new procedure. It will also be easier to track members making less than the required $1,500 for PERS membership. In response to the commenter's specific concerns, the sixth pay in a quarter is not an estimation. It is supposed to be actual pay, therefore, it should not be difficult to include earnings for part-time employees. The Division does not know the commenter's payroll process, and so cannot comment on the actual effort needed to implement changes. It would seem reasonable, though, to conclude that changes to the payroll process could be made to deduct actual salary as other types of payroll items are made in this manner.

Full text of the adoption follows:

17:2-4.7 [Hourly] Part-time hourly, on-call or per diem salary

1. Deductions from the salary of a member who is paid on [ an] a part-time hourly, on-call or per diem basis and who does not have an annual contractual base salary shall be calculated [on an average monthly or biweekly salary, which shall be certified to the system. This salary will continue for deduction purposes but will be subject to annual revision] using actual creditable salary earned. If a member's actual creditable salary should drop below one-twelfth of the minimum threshold salary required for enrollment into the PERS for 12- month employees or one-tenth of the minimum threshold salary required for enrollment into the PERS for 10-month employees, pension contributions shall not be deducted from that member's creditable salary, and pension credit shall not be earned, for that month.

2. A member's creditable salary shall be reviewed by the employer at the end of each calendar year. If the minimum threshold salary has not been met for the previous year, and is not expected to be met in the commencing year, the member's status shall become that of an inactive member.

Eligibility for Purchase;
Optional Purchases of Eligible Service; Service Ineligible for Purchase

Amendments; N.J.A.C. 17:2-5.1, 17:2-5.5 and 17:2-5.11

Cite as 31 NJR 1581(a).

The proposed amendments to N.J.A.C. 17:2-5.1, 17:2-5.5, and 17:2-5.11 are an attempt to clarify and better organize this section of Administrative Code, dealing with the purchase of service.

The proposed amendments to N.J.A.C. 17:2-5.1 would delete the word, "contributing". This requirement that an active member also be on payroll to purchase service has resulted in a number of people being placed on payroll for one pay period to be eligible to make a purchase. It seems to make more sense to allow these people to purchase time without having to make them return to payroll in order to do so. They would have to purchase their time in a lump sum, though, because the Division cannot schedule payroll deductions for someone who is not on payroll. N.J.A.C. 17:2-5.1(b) would be amended to delete the word "temporary" and the one year limitation of temporary purchases, as this limitation was removed by c. 138, P.L. 1991. N.J.A.C. 17:2-5.1(c) would add that, "The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of former service it deems to be dishonorable." This is Division practice, and is based on NJSA 43:1-3(a) and (b), but it has not appeared in Code.

The proposed amendments to NJAC 17:2-5.5 would categorize purchases into "shared-cost" and "full cost" purchases. Section (a) would be moved to #3 under the new (a), Shared-Cost Purchases. A sentence regarding the ability to purchase all or a portion of eligible service will be added. A review of the pertinent statutory provisions indicates that this change is permissible and appropriate. "Purchase" would be added before "factor". "His and her" would be replaced by 'the member' and the "highest fiscal year base salary " would be added after "current salary" to reflect Division practice. The word "all " would be deleted at the beginning of 1, 2 and 3 to indicate that not all eligible service must be purchased. Section 2 would be amended to include the words "an optional" before "a compulsory basis". This amendment is necessary to allow optional employees, who fulfilled the eligibility requirements for membership, but who, as non-veteran elected officials did not have to be enrolled or were not enrolled in the retirement system from that position to purchase credit for their previous service. Section 3 would become Section 4 and "without pay" would be added to clarify the types of leave it applies to. C 138, P.L. of 1991 changed the two month limitation of a leave for personal illness to 93 days, and this change is reflected in the proposed amendments. Child care has been added to this section to clarify that it is classified for purchase by the Division as a leave for personal reasons. The Division may require proof of an illness for extended leaves of absence. Under Section 4 (ii) the proposed amendments would put this practice into code. The words "or maternity" would be deleted because maternity is considered to be personal illness and not a separate category. Section 4 and 5 become 5 and 6, and the word "all" would be deleted before "continuous". Section 6 would become section 7 and the phrase "members who purchase all or a portion of their" would be deleted to better grammatically match the remainder of this rule. "Service" would become "public employment" to better define what service is eligible to purchase. The statutory limitation of 10 years would be added and the clarification that this type of service cannot be used to qualify for a disability retirement would also be added. A section 8 would be added to clarify what type of intermittent service may be eligible for purchase.

Section (b) would become full-cost purchases, and a paragraph regarding their calculations would be added. The types of these purchases would be listed and clarification regarding the total amount of this type of service available to purchase would be added. An indication that this type of purchase cannot be used toward a disability retirement would also be added to these subsections. Section (c) would be added which was formerly 17:2-5.11(a) to clarify how much of the above stated service could be purchased. Section c would become section d.

N.J.A.C. 17:2-5.11 would be changed to Ineligible service for purchases, and section (a) would be deleted because it was incorporated into N.J.A.C. 17:2-5.5 as section (c). The words "he" and "she" were also changed to "the member". N.J.A.C. 17:2-5.11(b) would be amended to delete (b) and the words "federal service" as this type of service is now eligible for purchase. The word "creditable" will be changed to "purchasable" to better reflect what this service is to be used for.

Eligibility for Purchase, Optional Purchases of Eligible Service, Service Ineligible for Purchase
Adopted Amendments: N.J.A.C. 17:2-5.1, 5.5 and 5.11 without change (Cite as 31 N.J. Reg. 2368(a))

Full text of the adoption follows:

17:2-5.1 Eligibility for purchase

Only active members of the System shall be eligible to make application for purchase of credit. Active members, who are not currently contributing to the Retirement System, shall purchase their requested service in a lump sum.

In order to be eligible to purchase service, a member must submit a written request to purchase service and such purchase must be authorized by the member before the expiration date indicated on the quotation letter.

1. The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3c.

17:2-5.5 Optional purchases of eligible service

A shared-cost purchase is one in which the member pays only the employee's share 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. Former membership credit with another State-administered retirement system;

2. Former service with any other employer which was not certified for membership but which would have qualified on an optional or a compulsory basis at the time the service was rendered;

3. Continuous temporary service immediately preceding enrollment with the same employer;

4. Leaves of absence without pay:

1. The period of the leave for personal reasons which does not exceed 93 days. Child care is considered leave for personal reasons;

2. The period of the leave up to two years for personal illness. The Division may require proof that the illness existed for the length of the leave;

5. Non-veterans 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, 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. As provided in N.J.S.A. 43:15A-42, out-of-State service cannot be used to qualify for an ordinary disability retirement; and

8. Intermittent service, as defined by N.J.A.C. 17:2-2.3(a)8, which resulted, without interruption, in permanent employment with the same employer. The intermittent service shall have been in a position which satisfied, in whole or in part, the job's requirement for experience needed to qualify for the permanent title.

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. Military service before enrollment cannot be used to qualify for an ordinary disability retirement;

2. Employment with the Federal government. Pursuant to N.J.S.A. 43:15A- 42, U.S. Government service cannot be used to qualify for an ordinary disability retirement;

3. Service established under a local municipal or county retirement system within the State of New Jersey.

A member shall be eligible to purchase an aggregate of up to 10 years of out-of-State public employment, military service and Federal employment provided that the member is not receiving nor is entitled to receive a retirement allowance for such service from any other public retirement system and provides proof to the Division of Pensions and Benefits that the member has withdrawn from such other system. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service.

Rules concerning the purchase and/or conversion of Class A credit include the following:

1. The cost of Class B service credit is based on the actuarial factors and such factors provide a retirement benefit which is one-sixth greater than service credited as Class A. If Class A credit is purchased, the cost will be six-sevenths of the amount computed for a Class B purchase. The computation is based on the member's present salary or highest fiscal year base salary multiplied by the actuarial purchase factor for the member's age at the time of purchase with regular interest.

2. If a Class A member converts to Class B, the member will contribute an additional one-sixth of the total contributions that would have been payable based on the member's full Class A contribution rate with regular interest.

17:2-5.11 Service ineligible for purchase

Service rendered outside of the United States, with the exception of eligible service rendered in certain instances in territories or possessions of the United States, Washington, DC and the Canal Zone, is not purchasable.

INELIGIBLE PERSONS

Amendment; N.J.A.C. 17:2-2.3

Cite as 31 NJR 1581(a)

Summary

The Board of Trustees proposes to amend NJAC 17:2-2.3(a)1 and 2 by adding the term, "non-state", before employee. State employees are eligible for membership in the retirement system. "Non-state" employees are not. The Board of Trustees proposes to amend (A)4 of this rule to replace "he or she" with "the employee", and to add that, "Breaks in service of less than 30 days do not negate the continuity of service". This proposed amendment is necessary due to the possible use of small breaks in service to negate eligibility requirements.

This proposed amendments will also attempt to clarify the period one must be retired to be covered by this rule under paragraph (a)7. It will also attempt to clarify the compensation to be used. Currently the rule states "annual compensation". The Division of Pensions and Benefits and the Public Employees' Retirement System Board of Trustees have received a number of inquiries as to whether we meant calendar year compensation, fiscal year compensation, or the compensation received in a 12 month period starting with the return to employment. To eliminate any ambiguities, the proposed amendment will state the "calendar year compensation" instead of "annual compensation". Chapter 23, P.L. 1997 which made retirees from the Public Employees' Retirement System (PERS) who, after being granted a retirement allowance, return to public employment in a position which earns less than $10,000.00, ineligible for reenrollment into the Retirement System did not include disability retirants in this exception. Therefore, we would like to amend the rule to indicate that this rule does not apply to disability retirements.

The Board also proposes to add a Section (8) to this rule to better define "intermittent employment", and to clarify the meaning of "seasonal employment" under Section (5). The Board was recently directed through a court decision to better define some of the terms we use, including intermittent, seasonal, etc. We would like at this time to do that.

Adopted Amendment: N.J.A.C. 17:2-2.3 without change (Cite as 31 N.J. Reg. 2366(a))

Full text of the adoption follows:

17:2-2.3 Ineligible persons

(a) The following classes of persons are ineligible for membership in the System:

1. Motor vehicle agents and their non-State employees;

2. Licensing agents of the Fish and Game Division and their non-State employees;

3. (No change.)

4. Any employee who is provisionally appointed to a Civil Service position is considered as an employee with temporary employment status and is ineligible to establish membership until the employee receives a regular Civil Service appointment, or has one year of continuous service. This does not apply to anyone who is already enrolled as a member. Breaks in service of less than 30 days do not negate the continuity of service;

5. Any employee who is employed on a seasonal basis. Seasonal employment is a category of occasional employment 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(c). 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. (No change.)

7. Any retired member who returns to a PERS eligible position for which the calendar year compensation is less than the calendar year compensation limit for exclusion from membership pursuant to N.J.S.A. 43:15A-57.2b. To determine if the calendar year compensation for employment received by a retired member is below the calendar year compensation limit, all of the calendar year compensation received from employment with the same employer shall be combined, and all of the calendar year compensation from employment with more than one employer shall be considered separately. For the purposes of this paragraph, a "retired member" is a former member who has terminated all employment covered by the retirement system, who has not received compensation from employment covered by the retirement system for at least 30 consecutive calendar days, who is not receiving a disability retirement allowance and whose retirement benefit has become due and payable as provided in N.J.A.C. 17:2-6.3; and

8. Any person who is employed in an intermittent title. The designation "intermittent" shall be used for those titles in the career service in which work responsibilities are characterized by unpredictable work schedules and which do not meet the normal criteria for regular, year-round, full-time or part-time assignments.

STATE HEALTH BENEFITS PROGRAM

Proposed Amendment

Cite as 31 NJR 1468(a)

N.J.A.C. 17:9-2.4 Coverage and Plan changes; exceptions

Social Impact

The proposed amendments will bring this rule into compliance with Federal HIPAA regulations and will clarify certain issues regarding when coverage or plan changes may be made. They effect only those participants of the State Health Benefits Program who require a change in their health insurance coverage due to a change in status or dependents.

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

17:9-2.4 Coverage and Plan changes; exceptions

(a) An employee may change [his or her] the employee's enrollment and the enrollment of [his or her] the employee's dependents to any type of coverage or plan [at any time] if such changes result from a change in family, dependency or employment status of the employee or [his or her] the employee's dependents, or if the employee moves out of the coverage area. Such changes will be permitted under the following conditions:

1. Marriage. Any employee who [has been enrolled for coverage and who subsequently] marries may enroll the employee, or the employee and the employee's spouse and eligible dependents, if any, for any appropriate type of coverage or plan by completing and forwarding a new enrollment form within the period beginning 60 days prior to the marriage and ending 60 days after such marriage. In the event that the spouse of such employee is already enrolled as an employee, the provisions of N.J.A.C. 17:9-3.9 shall apply to such spouse's enrollment.

2. Divorce; separation. Any employee who has been enrolled or has been covered as a dependent of an enrolled employee and is subsequently divorced may enroll in any plan, and delete from coverage or cover any eligible dependents by completing and forwarding a new enrollment form within 60 calendar days after the divorce of such employee or dependent of an employee who was covered previously under the spouse's contract. A change of enrollment of this nature [is optional] may also be made in the case of separation.

3. Death of spouse or dependent child. Any employee, who is enrolled as the dependent of another employee who dies, may thereupon enroll as an employee, and may enroll any eligible dependents, for any appropriate coverage or plan by completing and forwarding a new enrollment form within 60 days following the death. Any employee may, upon the death of a spouse or dependent child who is enrolled as a dependent, enroll [himself or herself] the employee and any other eligible dependents for any appropriate coverage or plan by completing and forwarding a new enrollment form within 60 days following the death.

4. Return from military leave. Any employee, upon return from any period of military leave without pay, may enroll [himself or herself] the employee and any eligible dependents for any appropriate coverage or plan by completing and forwarding an enrollment form within 60 days after the date of [his or her] the employee's return to active full-time employment. In the event a dependent of an employee is discharged from military service, the employee may enroll such dependent for any appropriate coverage within the time specified above.

5. [No minor children.] When last dependent child reaches age 23 or marries prior to that time . Any employee who shall have enrolled one or more dependent children as dependents may enroll for any coverage or plan at the time the last such dependent child reaches age 23 , [or] marries prior to that time or becomes otherwise ineligible, by completing and forwarding a new enrollment form.

6. An employee, spouse or dependent ceases to be [an employee] covered. [If two spouses, both of whom are also employees, are enrolled for any coverage and one of them ceases to be an employee or becomes ineligible for coverage as an employee, the other spouse may enroll for any appropriate coverage and may enroll all eligible dependents for that coverage by completing and forwarding a new enrollment form within 60 days after the change of status occurs.] If the employee, spouse or other dependent declined SHBP coverage due to other group health coverage, and then becomes ineligible for that other coverage due to qualifying events such as termination of employment, divorce, death, or reduction in hours worked, the individual may enroll in the SHBP provided that the employee submits a new enrollment application accompanied by proof of the prior coverage within 60 days of the qualifying event.

7. Birth, Adoption or guardian ship of dependent children. When an employee [with single coverage or husband and wife coverage ] acquires qualified dependents through birth, placement for adoption, [adopts] adoption [children], [becomes] legal guardianship of children, or [assumes] the assumption of direct support of children, [he or she] the employee may enroll the employee and any [such] eligible dependents for any appropriate type of coverage or plan by completing and forwarding a new enrollment form within the period beginning 60 days prior to and ending 60 days after the birth, placement for adoption, [completion of legal action involving the] adoption,[or] guardianship or assumption of direct support of children. Such application regarding placement for adoption, adoption, assumption of direct support of children, and guardianship must be accompanied by legal [papers] documentation stipulating the relationship.

8. Upon the divorce of a dependent child. An employee may enroll for any coverage or plan a child under age 23, who following a divorce, resides with the parent and is financially dependent upon the parent. The employee and child must enroll in the same plan. An application for coverage must be submitted within 60 days of the divorce in order to obtain coverage as of the date of the divorce. Otherwise, enrollment may occur only during an open enrollment.

[ 8 ]. 9.[Retirement or] COBRA enrollment. When an employee or dependent enrolls in the [retiree or] COBRA group, [he or she] the employee or dependent may, within 60 days of the qualifying event, select any plan. [other than the plan which covered the employee as an active employee.] In order for an employee or dependent to enroll in health benefit, dental or prescription coverage through COBRA, they must have had that coverage in the active group.

[ 9 ] 10 . Upon return to employment from an approved leave of absence. The employee may elect to change coverage or planto add the employee and any eligible dependent(s) who had been removed from this group coverage while the employee was on such leave.

(c) An employee who wishes to change [his or her] enrollment and the enrollment of [his or her] the employee's eligible dependents for any of the reasons included in (a) above , but who has failed to complete and forward the required enrollment form within the time limits which have been prescribed, may effect such change of enrollment only during the annual enrollment period or during a special open enrollment period. For provisions governing coverages and charges for 10-month employees, see N.J.A.C. 17:9-5.11(c).

WORKERS' COMPENSATION
Employer's Obligation Regarding Employee Contributions

Proposed New Rule: NJAC 17:1-4.39, cite as 31 NJR 265 (a)

Summary

The Division of Pensions and Benefits proposes to adopt the new rule Workers' Compensation: Employer's Obligation Regarding Employee Contributions which codifies specific rules regulating when continued pension contributions by the employers with employees who are receiving periodic awards of permanent disability benefits without pay are required.

The intent of this new rule is to protect both employers and employees by clarifying the issue. This proposed rule specifically lists the circumstances when an employer is obligated to make pension contributions for members receiving workers' compensation and when this obligation ceases.

NJAC 17:1-4.39 Workers' Compensation: Employer's Obligation Regarding Employee Contributions

(a) An employer is responsible for the payment of an employee's pension contributions while the employee is receiving periodic temporary disability benefits through workers' compensation in lieu of pay.

(b) An employer is responsible for the payment of an employee's pension contributions while the employee is receiving a periodic award of permanent disability benefits through workers' compensation without pay if:

(1) The employee is unable to perform the job functions of the former position,

(2) The employee is either forced to resign, or is terminated due to the employee's inability to perform the job functions of the former position, and

(3) The employee does not have sufficient credited service to be eligible to receive an ordinary disability retirement allowance.

(c) An employer is not responsible for the payment of an employee's pension contributions while the employee is receiving a periodic award of permanent disability benefits through workers' compensation without pay if:

(1) The employee has sufficient credited service to be eligible to receive an ordinary disability retirement allowance,

(2) The employee voluntarily resigns from the employment, or

(3) The employee is terminated by the employer for reasons unrelated to a workers' compensation award.

(d) If an employer ceases payment of employee pension contributions due to the reasons listed in (2) or (3) above, the employer shall notify the Division of Pensions

TEACHERS' PENSION AND ANNUITY FUND
Insurance and Death Benefits; Benefits payable under
Chapter 96, Laws of 1984, as amended by Chapter 221, Laws of 1995

Proposed New Rule: N.J.A.C 17:3-3.13

Summary

The purpose of this proposed new rule is to clarify the death benefits payable under the Teachers' Pension and Annuity Fund (TPAF) when beneficiaries request that retirements become effective under Chapter 221, Laws of 1995. This law amended Chapter 96 of the Laws of 1984 which first authorized beneficiaries to request that retirements become effective under certain circumstances where members died before retirements became effective. Prior to Chapter 96, a retirement was not effective until 30 days after the date specified by the member or the date of Board action on the retirement, whichever was later. Chapter 221 eliminated all the requirements for beneficiaries to be eligible to make such requests other than the requirement that a member file a retirement application.

Chapter 96 was interpreted by the Division of Pensions and Benefits as giving the beneficiaries of members who met the requirements of the law the option of receiving the death benefits payable on behalf of a member who died in active service (1 1/2 or 3 1/2 times final year salary) and the return of the member's contributions plus accrued interest, or a retirement allowance under an optional retirement benefit selection and the death benefits payable on behalf of a retiree (3/16 or 7/16 times final year salary). If a member took the steps necessary to convert the difference between the amount of active and retired death benefits, the beneficiary would also receive the converted death benefit.

After the enactment of Chapter 221, questions arose concerning the appropriate interpretation of these laws and the benefits which should be paid under them. Clarifying advice was requested from the Attorney General. The advice confirmed that the interpretation and practice of the Division was the correct application of the law.

The proposed new rule provides that the beneficiary designated for an optional settlement on a retirement application may request that the retirement take effect and that the optional settlement be made under Chapter 221. If there is no such beneficiary, the beneficiary designated to receive the return of contributions or unpaid benefits at the date of death may make the request.

If a beneficiary requests that a retirement become effective, the death benefits payable on behalf of the member shall be the benefits payable on behalf of a member who dies after retirement as provided under the laws governing the retirement system. If a member files the required application to convert some or all of the difference between the amount of active and retired death benefits and pays the initial premium, the amount of the converted death benefits shall be paid as claims under the group insurance policies for noncontributory and contributory death benefits.

The premiums paid shall be retained by the carrier and shall be applied to the premiums payable by the State and the retirement system for the group policies.

Full text of the proposed new rules follows:

17:3-3.13 Benefits payable under Chapter 96, Laws of 1984, as amended by Chapter 221, Laws of 1995

1. For the purposes of section 1 Chapter 96, Laws of 1984, as amended by section 2 of Chapter 221, Laws of 1995 (N.J.S.A. 18A:66-47), the person designated as the beneficiary for an optional settlement on the retirement application may request that a retirement become effective and that a selection of an optional settlement be made as authorized by the law. If there is no designated beneficiary for an optional settlement, the person designated as the beneficiary to receive the return of contributions or unpaid benefits due to a retiree at the date of death may make this request. If a beneficiary requests that an optional settlement be made, the death benefits payable on behalf of the member shall be the death benefits payable on behalf of a member who dies after retirement as otherwise provided in the Teachers' Pension and Annuity Fund Law, as amended and supplemented (N.J.S.A. 18A:66-1 through 93).

2. Where a beneficiary of a member requests that a retirement take effect and that a selection of an optional settlement be made as authorized under section 2 of Chapter 96 Laws of 1984, as amended by section 1 of Chapter 221, Laws of 1995, an additional amount of insurance, not to exceed the amount of insurance that could be converted under the group policies for noncontributory and contributory death benefits, shall be paid as claims under the group policies only if the member files an application for conversion of the insurance upon retirement as provided under N.J.S.A. 18A:66-79 and pays the initial premium for the converted insurance. The premiums paid for the converted insurance shall be retained by the carrier and be applied to the premiums payable by the State and the retirement system for benefits provided under the group policies.

PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Disability Retirements; Filing After Discontinuance of Service

Proposed New Rule: 17:2-6.15

Cite as 30 NJR 3375 (b)

(a) A member who discontinued service for more than two consecutive years and was otherwise eligible for disability retirement at the time service was discontinued may file for disability retirement if:

1. the Medical Board certifies that the member was physically or mentally incapacitated for the performance of duty at the time service was discontinued and continues to be so incapacitated at the time of filing; and,

2. the member factually demonstrates to the satisfaction of the Board of Trustees that service was discontinued because of the disability.

>(b) A disability retirement under this rule may take effect in accordance with the laws and rules applicable to effective dates for disability retirements after the date the application is filed.

(c) This rule shall be applicable to all current active and inactive members and retirees, but disability retirements under this rule shall not be effective prior to the effective date of the rule.

Summary

The rule will permit members to file for disability retirements after they have discontinued service for more than two consecutive years. Active membership in the retirement system ceases after discontinuance of service for two consecutive years. Under the current rules and operating procedures of the Division, members may not file for disability retirements if their active membership has ceased.

There have been several cases in recent years where members were clearly disabled and discontinued service because of their disabilities, but did not file for disability retirements within two years of the discontinuation of service.

This proposed rule would permit members to file for disability retirements after their active membership ceased if they were disabled at the time of discontinuance of service and their disability at that time and at the time of filing is certified by the Medical Board. In addition, the member would have to establish factually to the satisfaction of the Board of Trustees that service was discontinued because of the disability.

Disability retirements under this rule would not take effect until after this proposed rule is effective. Thereafter, they would be effective on or after the date of filing under this rule.

TEACHERS' PENSION AND ANNUITY FUND
Disability Retirements; Filing After Discontinuance of Service

Proposed New Rule: 17:3-6.15

Cite as 30 NJR 3377(a)

(a) A member who discontinued service for more than two consecutive years and was otherwise eligible for disability retirement at the time service was discontinued may file for disability retirement if:

1. the Medical Board certifies that the member was physically or mentally incapacitated for the performance of duty at the time service was discontinued and continues to be so incapacitated at the time of filing; and,

2. the member factually demonstrates to the satisfaction of the Board of Trustees that service was discontinued because of the disability.

(b) A disability retirement under this rule may take effect in accordance with the laws and rules applicable to effective dates for disability retirements after the date the application is filed.

(c) This rule shall be applicable to all current active and inactive members and retirees, but disability retirements under this rule shall not be effective prior to the effective date of the rule.

Summary

The rule will permit members to file for disability retirements after they have discontinued service for more than two consecutive years. Active membership in the retirement system ceases after discontinuance of service for two consecutive years. Under the current rules and operating procedures of the Division, members may not file for disability retirements if their active membership has ceased.

There have been several cases in recent years where members were clearly disabled and discontinued service because of their disabilities, but did not file for disability retirements within two years of the discontinuation of service.

This proposed rule would permit members to file for disability retirements after their active membership ceased if they were disabled at the time of discontinuance of service and their disability at that time and at the time of filing is certified by the Medical Board. In addition, the member would have to establish factually to the satisfaction of the Board of Trustees that service was discontinued because of the disability.

Disability retirements under this rule would not take effect until after this proposed rule is effective. Thereafter, they would be effective on or after the date of filing under this rule.

Proposed readoption of the subchapter Teachers' Pension and Annuity Fund.

Full text may be found in the New Jersey Administrative Code at N.J.A.C. 17:3.

(cite as 30 NJR 3376 (a))

Summary

The Division of Pensions and Benefits is constantly reviewing the administrative rules within N.J.A.C. 17:3 concerning the Teachers' Pension and Annuity Fund. When the Division becomes aware of a change in the laws or a court decision that possibly could affect the Teachers' Pension and Annuity Fund, the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division's staff to ascertain if the current rules are necessary and/or cost efficient. After careful scrutiny of the current rules in N.J.A.C. 17:3, the Division is satisfied that they are necessary and needed for the efficient operation of the Fund. Accordingly, the Division of Pensions and Benefits proposes to readopt the current rules within N.J.A.C 17:3, which expire on December 20, 1998. The current rules deal with the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects associated with the Teachers' Pension and Annuity Fund.

Purchases; Cancellation, Interest on Outstanding Purchases or Cash Discount Requested

Proposed Amendment: N.J.A.C. 17:1-4.13

Summary

The Division of Pensions and Benefits proposes to amend NJAC 17:1-4.13, Purchases; cancellation or cash discount requested so that the situations of members who are presently in covered service would not be negatively impacted by the implementation of a recent amendment to this rule. This amendment allows a purchase of service credit to remain in effect at the original purchase cost, if a member who authorized a purchase prior to the effective date of this proposed amendment, so chooses and exempts those members from the cancellation of the purchase as required in subsection c.

Currently, under section (e), only members who were not in covered service on the effective date of the rule were allowed to have their purchases remain outstanding after two years. Members who purchased their time under the old rules, but were active employees at the time of enactment, do not receive this benefit. This proposed amendment expands the number of participants eligible to have a purchase remain outstanding to those who made a purchase prior to the effective date of this amendment.

17:1-4.13 Purchases; cancellation, interest on outstanding purchases or cash discount requested

(a) through (d) (no change)

(e) For a member who has authorized a purchase of service credit [with an outstanding purchase who is not in covered service on the] prior to the effective date of this rule and who is inactive, or becomes inactive, the purchase shall remain outstanding. The outstanding balance on the purchase shall include additional regular interest beginning two years after the effective date of this rule, or the date of inactivity, whichever is later.

Cite as 30 NJR 4146(b)

PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Enrollment Eligibility of Professors and Instructors Employed on a Temporary,
Provisional or Adjunct Basis by Public Institutions of Higher Education

Proposed New Rule; N.J.A.C. 17:2-2.6

Summary

This proposed new rule clarifies the eligibility requirements for enrollment into the PERS of professors and instructors employed on a temporary, provisional or adjunct basis at institutions for higher education. Those not employed in regularly appointed teaching or administrative staff positions, or civil service or regularly budgeted positions who earn more than the minimum threshold salary, work for the normal school year and whose services are renewed for the succeeding school year will be eligible for enrollment. Those who teach courses which provide no academic credit and vary in length from the normal school year will not be eligible for enrollment, or service and salary credit on the basis of that course.

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). 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, and who:

1. earn more than the minimum threshold salary required for enrollment and,

2. work for the entire normal school year, and

3. whose services are renewed for the succeeding school year, are eligible for enrollment.

1. teach a course that provides no academic credit and

2. the course's length varies from the normal academic semester are not eligible for enrollment or salary and service credit on the basis of that course.

Cite as 30 NJR 4254 (a)

Please send your comments to: Division of Pensions and Benefits.

Last update: June 24, 2010