Bill Text: NJ A1793 | 2014-2015 | Regular Session | Introduced
Bill Title: Increases PFRS employee contribution rate; requires new members to be age 50 for special retirement; creates cap on PFRS retiree COLA; restructures PFRS board of trustees and gives it control over fund investments.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2015-11-09 - Withdrawn from Consideration [A1793 Detail]
Download: New_Jersey-2014-A1793-Introduced.html
STATE OF NEW JERSEY
216th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2014 SESSION
Sponsored by:
Assemblyman JASON O'DONNELL
District 31 (Hudson)
Assemblywoman BONNIE WATSON COLEMAN
District 15 (Hunterdon and Mercer)
SYNOPSIS
Increases PFRS employee contribution rate; requires new members to be age 50 for special retirement; creates cap on PFRS retiree COLA; restructures PFRS board of trustees and gives it control over fund investments.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning the benefits of members of the Police and Firemen's Retirement System and amending various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 16 of P.L.1964, c.241 (C.43:16A-11.1) is amended to read as follows:
16. a. Should a member resign after (1) having been a member of the retirement system on the effective date of P.L. , c. (pending before the Legislature as this bill) and established 25 years of creditable service or (2) having been enrolled as a member of the retirement system after that effective date, rendered 25 years of service while a member, and achieved age 50, he may elect "special retirement," provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent to the execution and filing thereof he desires to be retired. He shall receive, in lieu of the payment provided in section 11, a retirement allowance which shall consist of:
[(1) An] an annuity which shall be the actuarial equivalent of his aggregate contributions, and
[(2) A] a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 65% of his final compensation, plus 1% of his final compensation multiplied by the number of years of creditable service over 25 but not over 30; provided, however, that any member who has earned, prior to July 1, 1979, more than 30 years of creditable service, shall receive an additional 1% of his final compensation for each year of his creditable service over 30.
The board of trustees shall retire him at the time specified or at such other time within one month after the date so specified as the board finds advisable.
Upon the receipt of proper proofs of the death of such a retired member, there shall be paid to his beneficiary an amount equal to one-half of the final compensation received by the member.
b. The "special retirement" allowance payable under subsection a. of this section to any person who retired under the retirement system prior to December 20, 1989 shall be increased by an amount equal to 5% of the person's final compensation or by such lesser amount as would, if added to the allowance payable at the time of retirement, provide a total retirement allowance of 70% of final compensation, except that in the case of such a retirant who retired on or after July 1, 1979 and had earned prior to that date more than 30 years of creditable service, the amount of the increase shall be equal to 5% of the person's final compensation irrespective of the total retirement allowance which such an increase would provide. The provisions of this subsection shall not be construed either to require a reduction in the retirement allowance payable to any retirant or to provide for the payment of any adjustment in such an allowance with respect to any period of time prior to the first day of the month following that effective date.
(cf: P.L.2010, c.1, s.31)
2. Section 13 of P.L.1944, c.255 (C.43:16A-13) is amended to read as follows:
13. (1) Subject to the provisions of P.L.1955, c.70 (C.52:18A-95 et seq.), the general responsibility for the proper operation of the retirement system is hereby vested in a board of trustees. The board may, in its discretion and at such time and in such manner as the board determines, enhance any benefit set forth in P.L.1944, c.255 (C.43:16A-1 et seq.) as the board determines to be reasonable and appropriate.
(2) The board shall consist of [11] 12 trustees as follows:
(a) [Five members] Three trustees to be appointed by the Governor[, with the advice and consent of the Senate, who shall serve for a term of office of four years and until their successors are appointed and who shall be private citizens of the State of New Jersey who are neither an officer thereof nor an active or retired member of any police or fire department thereof. Of the four members initially appointed by the Governor pursuant to P.L.1992, c.125 (C.43:4B-1 et al.), one shall be appointed for a term of one year, one for a term of two years, one for a term of three years, and one for a term of four years. The member appointed by the Governor pursuant to the provisions of this amendatory act, P.L.1995, c.238, shall] who hold a management or supervisory position in the Executive Branch of State government at the level of division director or above and continue to hold such a position during the term of service on the board, for a term of [four] three years and until a successor is appointed.
(b) The State Treasurer or the deputy State Treasurer, when designated for that purpose by the State Treasurer.
(c) [Two policemen and two firemen who shall be active members of the system and who shall be elected by the active members of the system for a term of four years according to such rules and regulations as the board of trustees shall adopt to govern such election.] Deleted by amendment, P.L. , c. (pending before the legislature as this bill)
(d) [One retiree from the system who shall be elected by retirees from the system for a term of four years according to such rules and regulations as the board of trustees shall adopt to govern the election.] Deleted by amendment, P.L. , c. (pending before the legislature as this bill)
(e) One trustee, appointed by the Governor, who holds an elective public office as a mayor and continues to hold that office during the term of service on the board, for a term of office of three years and until a successor is appointed.
(f) One trustee, appointed by the Governor, who holds an elective public office as a member of a board of chosen freeholders and continues to hold that office during the term of service on the board, for a term of office of three years and until a successor is appointed.
(g) Six trustees appointed by the State heads of qualified unions in this State representing active members of the retirement system, for a term of three years and until a successor is appointed. The Director of the John J. Heldrich Center for Workforce Development at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, the State University shall allocate the appointments on an approximately proportional basis among those unions based on the ratio that the number of members of a union in the retirement system bears to the total number of members of all such qualified unions in the retirement system. Notwithstanding this allocation process and the definition of qualified union, the director shall ensure that at least two unions representing policemen and two unions representing firemen are eligible to make appointments. As used in this paragraph, a "qualified union" is a union that represents at least 15 percent of the total union members in the retirement system, and "union" means an employee representative for collective negotiations purposes. The director shall determine and verify as necessary the number of union members and of members of each union in the retirement system. The director shall allocate the appointments prior to the effective date of P.L. , c. (pending before the Legislature as this bill) and every three years thereafter prior to the expiration of the terms of the six trustees.
The trustees appointed on or after the effective date of P.L. , c. (pending before the Legislature as this bill) pursuant to paragraph (a) shall serve an initial term of one year, and the trustees appointed pursuant to paragraphs (e) and (f) shall serve an initial term of two years.
(3) Each trustee shall, after his appointment [or election], take an oath of office that, so far as it devolves upon him he will diligently and honestly fulfill his duties as a board member, and that he will not knowingly violate or willingly permit to be violated any of the provisions of the law applicable to the retirement system. Such oath shall be subscribed by the member making it, and certified by the officer before whom it is taken, and immediately filed in the office of the Secretary of State.
(4) If a vacancy occurs in the office of a trustee, the vacancy shall be filled in the same manner as the office was previously filled.
(5) The trustees shall serve without compensation, but they shall be reimbursed for all necessary expenses that they may incur through service on the board.
(6) Each trustee shall be entitled to one vote in the board. [Six] Seven trustees [must] shall be present at any meeting of said board for the transaction of its business.
(7) Subject to the limitations of this act, the board of trustees shall annually establish rules and regulations for the administration of the funds created by this act and for the transaction of its business. Such rules and regulations shall be consistent with those adopted by the other pension funds within the Division of Pensions and Benefits in order to permit the most economical and uniform administration of all such retirement systems.
(8) The board of trustees shall elect from its membership a chairman. The Director of the Division of Pensions and Benefits shall appoint a qualified employee of the division to be secretary of the board. The administration of the program shall be performed by the personnel of the Division of Pensions and Benefits under the direction of the board.
(9) The board of trustees shall keep a record of all of its proceedings which shall be open to public inspection. The retirement system shall publish annually a report showing the fiscal transactions of the retirement system for the preceding year, the amount of the accumulated cash and securities of the system, and the last balance sheet showing the financial condition of the system by means of an actuarial valuation of the assets and liabilities of the retirement system.
(10) The board may, in its discretion, select and employ or contract with legal counsel to advise and represent the board. If the board does not select and employ or contract with legal counsel, the Attorney General of the State of New Jersey shall be the legal adviser of the retirement system, except that if the Attorney General determines that a conflict of interest would affect the ability of the Attorney General to represent the board on a matter affecting the retirement system, the board may select and employ or contract with legal counsel to advise and represent the board on that matter.
(11) The State Treasurer shall designate a medical board after consultation with the Director of the Division of Pensions and Benefits, subject to veto by the board of trustees for valid reason. It shall be composed of three physicians who are not eligible to participate in the retirement system. The medical board shall pass upon all medical examinations required under the provisions of this act, shall investigate all essential statements and certificates by or on behalf of a member in connection with an application for disability retirement, and shall report in writing to the retirement system its conclusions and recommendations upon all matters referred to it.
(12) The actuary of the system shall be selected by the board pursuant to the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), except that if the board is unable to agree upon the selection of an actuary, the Retirement Systems Actuary Selection Committee established by P.L.1992, c.125 shall select the actuary. He shall be the technical adviser of the board of trustees on matters regarding the operation of the funds created by the provisions of this act, and shall perform such other duties as are required in connection therewith.
(13) At least once in each three-year period the actuary shall make an actuarial investigation into the mortality, service and compensation experience of the members and beneficiaries of the retirement system and, with the advice of the actuary, the board of trustees shall adopt for the retirement system such mortality, service and other tables as shall be deemed necessary and shall certify the rates of contribution payable under the provisions of this act.
(14) (Deleted by amendment, P.L.1970, c.57.)
(15) On the basis of such tables recommended by the actuary as the board of trustees shall adopt and regular interest, the actuary shall make an annual valuation of the assets and liability of the funds of the system created by this act.
(16) (Deleted by amendment, P.L.1987, c.330.)
(17) Each policeman or fireman member of the board of trustees shall be entitled to time off from his duty, with pay, during the periods of his attendance upon regular or special meetings of the board of trustees, and such time off shall include reasonable travel time required in connection therewith.
(cf: P.L.1995, c.238, s.1)
3. Section 14 of P.L.1944, c.255 (C.43:16A-14) is amended to read as follows:
14. (1) The board of trustees shall be and are hereby constituted trustees of the various funds and accounts established by this act [; provided, however, that all]. All functions, powers and duties relating to the investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities, of or for any fund or account established under this act, shall be exercised and performed by the board, and the Director of the Division of Investment shall act in accordance with the provisions of [chapter 270, of the laws of 1950] P.L.1950, c.270 (C.52:18A-79 et seq.) on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board. The secretary of the board of trustees shall determine from time to time the cash requirements of the various funds and accounts established by this act and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.
A member of the board of trustees to be designated by a majority vote thereof shall serve on the State Investment Council as a representative of said board of trustees, for a term of 1 year and until his successor is elected and qualified.
(2) The Treasurer of the State of New Jersey shall be the custodian of the several funds created by this act, shall select all depositories and custodians and shall negotiate and execute custody agreements in connection with the assets or investments of any of said funds. All payments from said funds shall be made by him only upon vouchers signed by the chairman and countersigned by the secretary of the board of trustees. No voucher shall be drawn, except upon the authority of the board duly entered in the records of its proceedings.
(3) (Deleted by amendment.)
(4) Except as otherwise herein provided, no trustee and no employee of the board of trustees shall have any direct interest in the gains or profits of any investments of the retirement system; nor shall any trustee or employee of the board directly or indirectly, for himself or as an agent in any manner use the moneys of the retirement system, except to make such current and necessary payments as are authorized by the board of trustees; nor shall any trustee or employee of the board of trustees become an endorser or surety, or in any manner an obligor for moneys loaned to or borrowed from the retirement system.
(5) A finance committee of the board of trustees shall be appointed on or before July 1 of each calendar year by the chairman of the board to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees shall consist of three members of the board, one of whom shall be the State Treasurer.
(6) (a) The board of trustees may elect, at the board's discretion, to establish a division or unit, and use external managers, for the administration and implementation of matters with regard to its functions, powers, and duties vested by law for, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of the board, consistent with applicable law and the policies, procedures, and regulations of the board. If the board makes such an election, the board shall consult and coordinate with the Division of Investment in the Department of the Treasury and the State Investment Council for such transfers as deemed necessary and appropriate and shall comply with applicable provisions of P.L.1950, c.270 (C.52:18A-79 et seq.) to the extent not inconsistent with this subsection.
(b) The board shall formulate and establish, and may from time to time amend, modify or repeal, such policies, objectives, or guidelines as it may deem necessary and proper that shall govern the decisions, actions, methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the division or unit or external managers. All actions and decisions of the division or unit or external managers shall be authorized by either general policies, objectives, or guidelines or specific orders, or by approval by the board or the finance committee of the board of a specific action or decision, as each board shall determine.
(c) The board shall review and take into consideration the determinations of the State Investment Council, and conform to those determinations generally or specifically when the board determines necessary and appropriate.
(cf: P.L.1970, c.57, s.11)
4. Section 15 of P.L.1944, c.255 (C.43:16A-15) is amended to read as follows:
15. (1) The contributions required for the support of the retirement system shall be made by members and their employers.
(2) [The] Prior to the effective date of P.L. , c. (pending before the Legislature as this bill), the uniform percentage contribution rate for members shall be 8.5% of compensation. On and after the effective date of P.L. , c. (pending before the Legislature as this bill), the uniform percentage contribution rate for members shall be 10% of compensation, except that the contribution rate for members of the retirement system on that effective date, commencing with the payroll period for which the payroll date occurs on or immediately following January 1, 2012, shall be 9% for members whose compensation is less than $100,000 and 9.5% for members whose compensation is $100,000 or more.
The board of trustees, 36 months after the effective date of P.L. , c. (pending before the Legislature as this bill), is authorized to adjust the contribution rate of each member set forth in this subsection to no less than 8.5%, as the board deems reasonable, necessary, and appropriate after consultation with and recommendation of the actuary of the system that such reduction in the contribution rates will not increase the unfunded accrued liability of the retirement system. Any adjustment to a contribution rate shall be made at such time and in such manner as the board shall determine.
(3) (Deleted by amendment, P.L.1989, c.204).
(4) Upon the basis of the tables recommended by the actuary which the board adopts and regular interest, the actuary shall compute annually, beginning as of June 30, 1991, the amount of contribution which shall be the normal cost as computed under the projected unit credit method attributable to service rendered under the retirement system for the year beginning on July 1 immediately succeeding the date of the computation. This shall be known as the "normal contribution."
(5) (Deleted by amendment, P.L.1989, c.204).
(6) (Deleted by amendment, P.L.1994, c.62.)
(7) Each employer shall cause to be deducted from the salary of each member the percentage of earnable compensation prescribed in subsection (2) of this section. To facilitate the making of deductions, the retirement system may modify the amount of deduction required of any member by an amount not to exceed 1/10 of 1% of the compensation upon which the deduction is based.
(8) The deductions provided for herein shall be made notwithstanding that the minimum salary provided for by law for any member shall be reduced thereby. Every member shall be deemed to consent and agree to the deductions made and provided for herein, and payment of salary or compensation less said deduction shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the service rendered by such person during the period covered by such payment, except as to the benefits provided under this act. The chief fiscal officer of each employer shall certify to the retirement system in such manner as the retirement system may prescribe, the amounts deducted; and when deducted shall be paid into said annuity savings fund, and shall be credited to the individual account of the member from whose salary said deduction was made.
(9) With respect to employers other than the State, upon the basis of the tables recommended by the actuary which the board adopts and regular interest, the actuary shall compute the amount of the accrued liability as of June 30, 1991 under the projected unit credit method, which is not already covered by the assets of the retirement system, valued in accordance with the asset valuation method established in this section. Using the total amount of this unfunded accrued liability, the actuary shall compute the initial amount of contribution which, if the contribution is increased at a specific rate and paid annually for a specific period of time, will amortize this liability. The [State Treasurer] board shall determine, upon the advice of the Director of the Division of Pensions and Benefits, the [board of trustees] State Treasurer and the actuary, the rate of increase for the contribution and the time period for full funding of this liability, which shall not exceed 40 years on initial application of this section as amended by this act, P.L.1994, c.62. This shall be known as the "accrued liability contribution." Any increase or decrease in the unfunded accrued liability as a result of actuarial losses or gains for the 10 valuation years following valuation year 1991 shall serve to increase or decrease, respectively, the unfunded accrued liability contribution. Thereafter, any increase or decrease in the unfunded accrued liability as a result of actuarial losses or gains for subsequent valuation years shall serve to increase or decrease, respectively, the amortization period for the unfunded accrued liability, unless an increase in the amortization period will cause it to exceed 30 years. If an increase in the amortization period as a result of actuarial losses for a valuation year would exceed 30 years, the accrued liability contribution shall be computed for the valuation year in the same manner provided for the computation of the initial accrued liability contribution under this section.
With respect to the State, upon the basis of the tables recommended by the actuary which the board adopts and regular interest, the actuary shall annually determine if there is an amount of the accrued liability, computed under the projected unit credit method, which is not already covered by the assets of the retirement system, valued in accordance with the asset valuation method established in this section. This shall be known as the "unfunded accrued liability." If there was no unfunded accrued liability for the valuation period immediately preceding the current valuation period, the actuary, using the total amount of this unfunded accrued liability, shall compute the initial amount of contribution which, if the contribution is increased at a specific rate and paid annually for a specific period of time, will amortize this liability. The [State Treasurer] board of trustees shall determine, upon the advice of the Director of the Division of Pensions and Benefits, the [board of trustees] State Treasurer and the actuary, the rate of increase for the contribution and the time period for full funding of this liability, which shall not exceed 30 years. This shall be known as the "accrued liability contribution." Thereafter, any increase or decrease in the unfunded accrued liability as a result of actuarial losses or gains for subsequent valuation years shall serve to increase or decrease, respectively, the amortization period for the unfunded accrued liability, unless an increase in the amortization period will cause it to exceed 30 years. If an increase in the amortization period as a result of actuarial losses for a valuation year would exceed 30 years, the accrued liability contribution shall be computed for the valuation year in the same manner provided for the computation of the initial accrued liability contribution under this section. The State may pay all or any portion of its unfunded accrued liability under the retirement system from any source of funds legally available for the purpose, including, without limitation, the proceeds of bonds authorized by law for this purpose.
After consultation with and recommendation of the actuary, the board shall require, for the valuation period commencing after the effective date of P.L. , c. (pending before the Legislature as this bill) and for each period thereafter, the acceleration of payments by all employers for the unfunded accrued liability over such a designated period of time as the board determines to be reasonable, necessary, and appropriate.
The value of the assets to be used in the computation of the contributions provided for under this section for valuation periods shall be the value of the assets for the preceding valuation period increased by the regular interest rate, plus the net cash flow for the valuation period (the difference between the benefits and expenses paid by the system and the contributions to the system) increased by one half of the regular interest rate, plus 20% of the difference between this expected value and the full market value of the assets as of the end of the valuation period. This shall be known as the "valuation assets." Notwithstanding the first sentence of this paragraph, the valuation assets for the valuation period ending June 30, 1995 shall be the full market value of the assets as of that date and, with respect to the valuation assets allocated to the State, shall include the proceeds from the bonds issued pursuant to the "Pension Bond Financing Act of 1997," P.L.1997, c.114 (C.34:1B-7.45 et seq.), paid to the system by the New Jersey Economic Development Authority to fund the unfunded accrued liability of the system. Notwithstanding the first sentence of this paragraph, the percentage of the difference between the expected value and the full market value of the assets to be added to the expected value of the assets for the valuation period ending June 30, 1998 for the State shall be 100% and for other employers shall be 57% plus such additional percentage as is equivalent to $150,000,000. Notwithstanding the first sentence of this paragraph, the amount of the difference between the expected value and the full market value of the assets to be added to the expected value of the assets for the valuation period ending June 30, 1999 shall include an additional amount of the market value of the assets sufficient to fund (1) the unfunded accrued liability for the supplementary "special retirement" allowances provided under subsection b. of section 16 of P.L.1964, c.241 (C.43:16A-11.1) and (2) the unfunded accrued liability for the full credit toward benefits under the retirement system for service credited in the Public Employees' Retirement System and transferred pursuant to section 1 of P.L.1993, c.247 (C.43:16A-3.8) and the reimbursement of the cost of any credit purchase pursuant to section 3 of P.L.1993, c.247 (C.43:16A-3.10) provided under section 1 of P.L.2001, c.201 (C.43:16A-3.14).
"Excess valuation assets" means, with respect to the valuation assets allocated to the State, the valuation assets allocated to the State for a valuation period less the actuarial accrued liability of the State for the valuation period, and beginning with the valuation period ending June 30, 1998, less the present value of the expected additional normal cost contributions attributable to the provisions of P.L.1999, c.428 (C.43:16A-15.8 et al.) payable on behalf of the active members employed by the State as of the valuation period over the expected working lives of the active members in accordance with the tables of actuarial assumptions applicable to the valuation period, and less the present value of the expected additional normal cost contributions attributable to the provisions of P.L.2003, c.108 as amending section 16 of P.L.1964, c.241 (C.43:16A-11.1) payable on behalf of the active members employed by the State as of the valuation period over the expected working lives of the active members in accordance with the tables of actuarial assumptions applicable to the valuation period, if the sum is greater than zero. "Excess valuation assets" means, with respect to the valuation assets allocated to other employers, the valuation assets allocated to the other employers for a valuation period less the actuarial accrued liability of the other employers for the valuation period, excluding the unfunded accrued liability for early retirement incentive benefits pursuant to P.L.1993, c.99 for the other employers, and beginning with the valuation period ending June 30, 1998, less the present value of the expected additional normal cost contributions attributable to the provisions of P.L.1999, c.428 (C.43:16A-15.8 et al.) payable on behalf of the active members employed by other employers as of the valuation period over the expected working lives of the active members in accordance with the tables of actuarial assumptions applicable to the valuation period, and less the present value of the expected additional normal cost contributions attributable to the provisions of P.L.2003, c.108 as amending section 16 of P.L.1964, c.241 (C.43:16A-11.1) payable on behalf of the active members employed by other employers as of the valuation period over the expected working lives of the active members in accordance with the tables of actuarial assumptions applicable to the valuation period, if the sum is greater than zero.
If there are excess valuation assets allocated to the State or to the other employers for the valuation period ending June 30, 1995, the normal contributions payable by the State or by the other employers for the valuation periods ending June 30, 1995, and June 30, 1996 which have not yet been paid to the retirement system shall be reduced to the extent possible by the excess valuation assets allocated to the State or to the other employers, respectively, provided that with respect to the excess valuation assets allocated to the State, the General Fund balances that would have been paid to the retirement system except for this provision shall first be allocated as State aid to public schools to the extent that additional sums are required to comply with the May 14, 1997 decision of the New Jersey Supreme Court in Abbott v. Burke.
If there are excess valuation assets allocated to the other employers for the valuation period ending June 30, 1998, the accrued liability contributions payable by the other employers for the valuation period ending June 30, 1997 shall be reduced to the extent possible by the excess valuation assets allocated to the other employers.
If there are excess valuation assets allocated to the State or to the other employers for a valuation period ending after June 30, 1998, the State Treasurer may reduce the normal contribution payable by the State or by other employers for the next valuation period as follows:
(1) for valuation periods ending June 30, 1996 through June 30, 2000, to the extent possible by up to 100% of the excess valuation assets allocated to the State or to the other employers, respectively;
(2) for the valuation period ending June 30, 2001, to the extent possible by up to 84% of the excess valuation assets allocated to the State or to the other employers, respectively;
(3) for the valuation period ending June 30, 2002, to the extent possible by up to 68% of the excess valuation assets allocated to the State or to the other employers, respectively; and
(4) for valuation periods ending June 30, 2003 through June 30, 2007, to the extent possible by up to 50% of the excess valuation assets allocated to the State or to the other employers, respectively.
Notwithstanding the discretion provided to the State Treasurer in the previous paragraph to reduce the amount of the normal contribution payable by employers other than the State, the State Treasurer shall reduce the amount of the normal contribution payable by employers other than the State by $150,000,000 in the aggregate for the valuation period ending June 30, 1998, and then the State Treasurer may reduce further pursuant to the provisions of the previous paragraph the normal contribution payable by such employers for that valuation period.
The normal and accrued liability contributions shall be certified annually by the retirement system and shall be included in the budget of the employer and levied and collected in the same manner as any other taxes are levied and collected for the payment of the salaries of members.
Notwithstanding the preceding sentence, the normal and accrued liability contributions to be included in the budget of and paid by the employer other than the State shall be as follows: for the payment due in the State fiscal year ending on June 30, 2004, 20% of the amount certified by the retirement system; for the payment due in the State fiscal year ending on June 30, 2005, a percentage of the amount certified by the retirement system as the State Treasurer shall determine but not more than 40%; for the payment due in the State fiscal year ending on June 30, 2006, a percentage of the amount certified by the retirement system as the State Treasurer shall determine but not more than 60%; and for the payment due in the State fiscal year ending on June 30, 2007, a percentage of the amount certified by the retirement system as the State Treasurer shall determine but not more than 80%.
The State Treasurer shall reduce the normal and accrued liability contributions payable by employers other than the State to 50 percent of the amount certified annually by the retirement system for payments due in the State fiscal year ending June 30, 2009. An employer that elects to pay the reduced normal and accrued liability contribution shall adopt a resolution, separate and apart from other budget resolutions, stating that the employer needs to pay the reduced contribution and providing an explanation of that need which shall include (1) a description of its inability to meet the levy cap without jeopardizing public safety, health, and welfare or without jeopardizing the fiscal stability of the employer, or (2) a description of another condition that offsets the long term fiscal impact of the payment of the reduced contribution. An employer also shall document those actions it has taken to reduce its operating costs, or provide a description of relevant anticipated circumstances that could have an impact on revenues or expenditures. This resolution shall be submitted to and approved by the Local Finance Board after making a finding that these fiscal conditions are valid and affirming the findings contained in the employer resolution.
An employer that elects to pay 100 percent of the amount certified by the retirement system for the State fiscal year ending June 30, 2009 shall be credited with such payment and any such amounts shall not be included in the employer's unfunded liability.
The actuaries for the retirement system shall determine the unfunded liability of the retirement system, by employer, for the reduced normal and accrued liability contributions provided under P.L.2009, c.19. This unfunded liability shall be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the State fiscal year ending June 30, 2012 and shall be adjusted by the rate of return on the actuarial value of assets.
The retirement system shall annually certify to each employer the contributions due to the contingent reserve fund for the liability under P.L.2009, c.19. The contributions certified by the retirement system shall be paid by the employer to the retirement system on or before the date prescribed by law for payment of employer contributions for basic retirement benefits. If payment of the full amount of the contribution certified is not made within 30 days after the last date for payment of employer contributions for basic retirement benefits, interest at the rate of 10% per year shall be assessed against the unpaid balance on the first day after the thirtieth day.
(10) The treasurer or corresponding officer of the employer shall pay to the State Treasurer no later than April 1 of the State's fiscal year in which payment is due the amount so certified as payable by the employer, and shall pay monthly to the State Treasurer the amount of the deductions from the salary of the members in the employ of the employer, and the State Treasurer shall credit such amount to the appropriate fund or funds, of the retirement system.
If payment of the full amount of the employer's obligation is not made within 30 days of the due date established by this act, interest at the rate of 10% per annum shall commence to run against the unpaid balance thereof on the first day after such 30th day.
If payment in full, representing the monthly transmittal and report of salary deductions, is not made within 15 days of the due date established by the retirement system, interest at the rate of 10% per annum shall commence to run against the total transmittal of salary deductions for the period on the first day after such 15th day.
(11) The expenses of administration of the retirement system shall be paid by the State of New Jersey. Each employer shall reimburse the State for a proportionate share of the amount paid by the State for administrative expense. This proportion shall be computed as the number of members under the jurisdiction of such employer bears to the total number of members in the system. The pro rata share of the cost of administrative expense shall be included with the certification by the retirement system of the employer's contribution to the system.
(12) Notwithstanding anything to the contrary, the retirement system shall not be liable for the payment of any pension or other benefits on account of the employees or beneficiaries of any employer participating in the retirement system, for which reserves have not been previously created from funds, contributed by such employer or its employees for such benefits.
(13) (Deleted by amendment, P.L.1992, c.125.)
(14) Commencing with valuation year 1991, with payment to be made in Fiscal Year 1994, the Legislature shall annually appropriate and the State Treasurer shall pay into the pension accumulation fund of the retirement system an amount equal to 1.1% of the compensation of the members of the system for the valuation year to fund the benefits provided by section 16 of P.L.1964, c.241 (C.43:16A-11.1), as amended by P.L.1979, c.109.
(15) If the valuation assets are insufficient to fund the normal and accrued liability costs attributable to P.L.1999, c.428 (C.43:16A-15.8 et al.) as provided hereinabove, the normal and unfunded accrued liability contributions required to fund these costs for the State and other employers shall be paid by the State.
(16) The savings realized as a result of the amendments to this section by P.L.2001, c.44 in the payment of normal contributions computed by the actuary for the valuation periods ending June 30, 1998 for employers other than the State shall be used solely and exclusively by a county or municipality for the purpose of reducing the amount that is required to be raised by the local property tax levy by the county for county purposes or by the municipality for municipal purposes, as appropriate. The Director of the Division of Local Government Services in the Department of Community Affairs shall certify for each year that each county or municipality has complied with the requirements set forth herein. If the director finds that a county or municipality has not used the savings solely and exclusively for the purpose of reducing the amount that is required to be raised by the local property tax levy by the county for county purposes or by the municipality for municipal purposes, as appropriate, the director shall direct the county or municipal governing body, as appropriate, to make corrections to its budget.
(17) Upon the request of the board of trustees, the actuary of the system shall make a recommendation in the annual valuation report with regard to the contribution rate or rates for members of the system, based on the valuation of the assets and liabilities and the funded ratio of the system, in order to attain and maintain the financial condition of the system that the board has determined to be reasonable, necessary, and appropriate. The board in making such a determination may consider the standards set or recommended by relevant national authorities for the financial condition of such similar systems and may consider the standards of the Governmental Accounting Standards Board for the purpose of valuing the assets and liabilities and calculating the funded ratio of the system.
(cf: P.L.2010, c.1, s.32)
5. Section 2 of P.L.1958, c.143 (C.43:3B-2) is amended to read as follows:
2. a. The monthly retirement allowance or pension originally granted to any retirant and the pension or survivorship benefit originally granted to any beneficiary shall be adjusted in accordance with the provisions of this act provided, however, that:
[a.] the maximum retirement allowance, without option, shall be considered the retirement allowance originally granted to any retirant who, at retirement, elected an Option I allowance pursuant to the provisions of the statutes stipulated in subsection b. of section 1 of this act (C.43:3B-1); and [b.] the minimum pension granted to any beneficiary stipulated in subsection d. (4) of section 1 of this act (C.43:3B-1), shall be considered the pension originally granted to such beneficiary.
b. Pension adjustments shall not be paid to retirants or beneficiaries who are not receiving their regular, full, monthly retirement allowances, pensions or survivorship benefits. The adjustment granted under the provisions of this act shall be effective only on the first day of a month, shall be paid in monthly installments, and shall not be decreased, increased, revoked or repealed except as otherwise provided in this act. No adjustment shall be due to a retirant or a beneficiary unless it constitutes a payment for an entire month; provided, however, that an adjustment shall be payable for the entire month in which the retirant or beneficiary dies.
c. Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and thereafter, adjustments to the monthly retirement allowance or pension granted to any member of the Police and Firemen's Retirement System, or the pension or survivorship benefit granted to a beneficiary of a member, which is less than or equal to the average benefit for service retirement of new healthy retirees as set forth in the most recent annual report of the actuary for the retirement system shall be paid in accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.), and adjustments to the monthly retirement allowance or pension granted to any member of the Police and Firemen's Retirement System, or the pension or survivorship benefit granted to a beneficiary of a member, which is more than the average benefit for service retirement of new healthy retirees as set forth in the most recent annual report of the actuary for the retirement system shall not be paid in accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.) but shall be in an amount equivalent to the adjustment to the monthly retirement allowance or pension granted to any member of the Police and Firemen's Retirement System, or pension or survivorship benefit granted to a beneficiary of a member, which is equal to the average benefit for service retirement of new healthy retirees as set forth in the most recent annual report of the actuary for the retirement system calculated in accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.).
(cf: P.L.1993,c.335,s.2)
6. Section 7 of P.L.1950, c.270 (C.52:18A-85) is amended to read as follows:
7. a. The functions, powers and duties vested by law in [the following enumerated agencies]:
The Board of Trustees of the Public Employees' Retirement System; the Board of Trustees of the State Police Retirement System; the Prison Officers' Pension Commission; the Board of Trustees of the Teachers' Pension and Annuity Fund; [the Board of Trustees of the Police and Firemen's Retirement System of New Jersey]; the State House Commission for the Judicial Retirement System; and the Consolidated Police and Firemen's Pension Fund Commission [;] , of, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of such [agencies] boards or commissions, are hereby transferred to and shall be exercised and performed for such [agencies] boards or commissions by the Director of the Division of Investment established hereunder.
b. The functions, powers, and duties vested by law in the Board of Trustees of the Police and Firemen's Retirement System of, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of such board, shall be exercised and performed by the board, and the Director of the Division of Investment shall act on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board.
(cf: P.L.1970, c.57, s.17)
7. Section 1 of P.L.1959, c.17 (C.52:18A-88.1) is amended to read as follows:
1. a. The Director of the Division of Investment, in addition to other investments, presently or from time to time hereafter authorized by law, shall have authority to invest and reinvest the moneys in, and to acquire for or on behalf of the funds of [the following enumerated agencies]:
The Consolidated Police and Firemen's Pension Fund Commission;
[The Police and Firemen's Retirement System of New Jersey;]
The Prison Officers' Pension Commission;
The Public Employees' Retirement System of New Jersey;
The State Police Retirement System;
The Teachers' Pension and Annuity Fund;
The State House Commission for the Judicial Retirement System of New Jersey;
The Trustees for the Support of Public Schools;
and all other funds in the custody of the State Treasurer, unless otherwise provided by law;
such investments which shall be authorized or approved for investment by regulation of the State Investment Council.
b. The Director of the Division of Investment, in addition to other investments, presently or from time to time hereafter authorized by law, shall have authority to invest and reinvest the moneys in, and to acquire for or on behalf of the funds of, the Board of Trustees of the Police and Firemen's Retirement System of New Jersey such investments which shall be authorized or approved for investment by the board of trustees, to the extent and in the manner authorized, approved, or directed by the board.
The board shall formulate and establish, and may from time to time amend, modify, or repeal, such policies, objectives or guidelines as it may deem necessary and proper that shall govern the decisions, actions, methods, practices, or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the director. The board may agree with any other board to formulate and establish the same policies, objectives, or guidelines in order to have the monies and funds under its control combined for these purposes. All actions and decisions of the director shall be authorized by either general policies, objectives, or guidelines or specific orders, or by approval by the board or the finance committee of the board of a specific action or decision, as each board shall determine. The board shall review and take into consideration the determinations of the State Investment Council, and conform to those determinations generally or specifically when the board determines necessary, reasonable, and appropriate.
The board shall consult from time to time with the State Investment Council regarding the work of the division and may consult with the council on other matters.
(cf: P.L.1997, c.26, s.25)
8. This act shall take effect January 1, 2012.
STATEMENT
This bill makes changes to the benefits of members of the Police and Firemen's Retirement System (PFRS). The bill increases the current uniform contribution rate of 8.5% of compensation for active PFRS members to 9% for those with compensation under $100,000 and to 9.5% for those with compensation of $100,000 or more. New PFRS members will pay a uniform 10% of compensation. Because the PFRS annual normal contribution is the sum of employee contributions and employer contributions, these increases in employee contributions will directly offset employer contributions and provide some fiscal relief to participating employers. The bill permits the PFRS Board of Trustees to reduce the employee contribution rate to no less than 8.5% when such reduction will not increase the unfunded accrued liability of the system.
The bill provides that new PFRS members will be eligible for the special retirement benefit only if they are age 50 or older and have rendered 25 or more years of service while a PFRS member. Currently, PFRS members are eligible for a special retirement benefit of 65% or more of compensation at any age with 25 or more years of PFRS credit, which can include purchased credit for prior military service.
The bill limits the amount of the automatic cost-living adjustment (COLA) for PFRS retirees to an amount equivalent to the adjustment to the retirement allowance or pension which is equal to the average benefit for service retirement of new healthy retirees as set forth in the most recent annual report of the actuary for the retirement system. PFRS retirees and beneficiaries whose benefit is less than that average benefit will receive a COLA calculated in the usual way.
In addition, the bill changes the membership of the PFRS board of trustees to ensure that there are an equal number of trustees representing public employers and an equal number representing public employees. The trustees representing public employees will be appointed by the heads of pubic employee unions in this State and the Director of the John J. Heldrich Center for Workforce Development at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, the State University will allocate the number of trustees to be appointed by each union head. Election of trustees is eliminated.
Under the bill, the PFRS board the board of trustees may, in its discretion and at such time and in such manner as it determines, enhance any PFRS benefit. The bill vests with the PFRS board of trustees all the functions, powers, and duties for, or relating to, investment or reinvestment of moneys, and purchase, sale or exchange of any investments or securities, of or for any funds or accounts under the control and management of each board. These functions, powers, and duties are currently performed by the Division of Investment in the Department of the Treasury. The bill authorizes the director of that division to administer all the activities and implement all the decisions of the board to the extent and in the manner authorized, approved, or directed by the board. Alternatively, the bill allows the PFRS board to establish a division or unit, and use external managers, for the administration and implementation of matters with regard to its functions, powers, and duties vested by law for, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of the board, consistent with applicable law and the policies, procedures, and regulations of the board.
