Bill Text: NJ A4494 | 2018-2019 | Regular Session | Introduced
Bill Title: Changes definition of final compensation for benefit calculation to include highest compensation in any year of membership for certain members.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2018-09-24 - Introduced, Referred to Assembly State and Local Government Committee [A4494 Detail]
Download: New_Jersey-2018-A4494-Introduced.html
Sponsored by:
Assemblyman BOB ANDRZEJCZAK
District 1 (Atlantic, Cape May and Cumberland)
Assemblyman R. BRUCE LAND
District 1 (Atlantic, Cape May and Cumberland)
Assemblyman VINCENT MAZZEO
District 2 (Atlantic)
Co-Sponsored by:
Assemblyman Armato
SYNOPSIS
Changes definition of final compensation for benefit calculation to include highest compensation in any year of membership for certain members.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the calculation of benefits in the Police and Firemen's Retirement System for members and beneficiaries and amending P.L.1944, c.255.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1944, c.255 (C.43:16A-1) is amended to
read as follows:
1. As used in this act:
(1) "Retirement system" or "system" shall mean the Police and Firemen's Retirement System of New Jersey as defined in section 2 of this act.
(2) (a) "Policeman" shall mean a permanent, full-time employee of a law enforcement unit as defined in section 2 of P.L.1961, c.56 (C.52:17B-67) or the State, other than an officer or trooper of the Division of State Police whose position is covered by the State Police Retirement System, whose primary duties include the investigation, apprehension or detention of persons suspected or convicted of violating the criminal laws of the State and who:
(i) is authorized to carry a firearm while engaged in the actual performance of his official duties;
(ii) has police powers;
(iii) is required to complete successfully the training requirements prescribed by P.L.1961, c.56 (C.52:17B-66 et seq.) or comparable training requirements as determined by the board of trustees; and
(iv) is subject to the physical and mental fitness requirements applicable to the position of municipal police officer established by an agency authorized to establish these requirements on a Statewide basis, or comparable physical and mental fitness requirements as determined by the board of trustees.
The term shall also include an administrative or supervisory employee of a law enforcement unit or the State whose duties include general or direct supervision of employees engaged in investigation, apprehension or detention activities or training responsibility for these employees and a requirement for engagement in investigation, apprehension or detention activities if necessary, and who is authorized to carry a firearm while in the actual performance of his official duties and has police powers.
(b) "Fireman" shall mean a permanent, full-time employee of a firefighting unit whose primary duties include the control and extinguishment of fires and who is subject to the training and physical and mental fitness requirements applicable to the position of municipal firefighter established by an agency authorized to establish these requirements on a Statewide basis, or comparable training and physical and mental fitness requirements as determined by the board of trustees. The term shall also include an administrative or supervisory employee of a firefighting unit whose duties include general or direct supervision of employees engaged in fire control and extinguishment activities or training responsibility for these employees and a requirement for engagement in fire control and extinguishment activities if necessary. As used in this paragraph, "firefighting unit" shall mean a municipal fire department, a fire district, or an agency of a county or the State which is responsible for control and extinguishment of fires.
(3) "Member" shall mean any policeman or fireman included in the membership of the retirement system pursuant to this amendatory and supplementary act, P.L.1989, c.204 (C.43:16A-15.6 et al.).
(4) "Board of trustees" or "board" shall mean the board provided for in section 13 of this act.
(5) "Medical board" shall mean the board of physicians provided for in section 13 of this act.
(6) "Employer" shall mean the State of New Jersey, the county, municipality or political subdivision thereof which pays the particular policeman or fireman.
(7) "Service" shall mean service as a policeman or fireman paid for by an employer.
(8) "Creditable service" shall mean service rendered for which credit is allowed as provided under section 4 of this act.
(9) "Regular interest" shall mean interest as determined by the State Treasurer, after consultation with the actuary. It shall bear a reasonable relationship to the percentage rate of earnings on investments based on the market value of assets but shall not exceed the assumed percentage rate of increase applied to salaries plus 3%, provided however that the board of trustees shall not set the average percentage rate of increase applied to salaries below 6%. This rate shall be distinct from any internally targeted rates used for developing investment policy by the board of trustees pursuant to section 13 of P.L.1944, c.255 (C.43:16A-13).
(10) "Aggregate contributions" shall mean the sum of all the amounts, deducted from the compensation of a member or contributed by him or on his behalf, standing to the credit of his individual account in the annuity savings fund.
(11) "Annuity" shall mean payments for life derived from the aggregate contributions of a member.
(12) "Pension" shall mean payments for life derived from contributions by the employer.
(13) "Retirement allowance" shall mean the pension plus the annuity.
(14) "Earnable compensation" shall mean the full rate of the salary that would be payable to an employee if he worked the full normal working time for his position. In cases where salary includes maintenance, the retirement system shall fix the value of that part of the salary not paid in money which shall be considered under this act.
(15) "Average final compensation" shall mean final compensation.
(16) "Retirement" shall mean the termination of the member's active service with a retirement allowance granted and paid under the provisions of this act.
(17) "Annuity reserve" shall mean the present value of all payments to be made on account of any annuity or benefit in lieu of any annuity computed upon the basis of such mortality tables recommended by the actuary as shall be adopted by the board of trustees, and regular interest.
(18) "Pension reserve" shall mean the present value of all payments to be made on account of any pension or benefit in lieu of any pension computed upon the basis of such mortality tables recommended by the actuary as shall be adopted by the board of trustees, and regular interest.
(19) "Actuarial equivalent" shall mean a benefit of equal value when computed upon the basis of such mortality tables recommended by the actuary as shall be adopted by the board of trustees, and regular interest.
(20) "Beneficiary" shall mean any person receiving a retirement allowance or other benefit as provided by this act.
(21) "Child" shall mean a deceased member's or retirant's unmarried child (a) under the age of 18, or (b) 18 years of age or older and enrolled in a secondary school, or (c) under the age of 24 and enrolled in a degree program in an institution of higher education for at least 12 credit hours in each semester, provided that the member died in active service as a result of an accident met in the actual performance of duty at some definite time and place, and the death was not the result of the member's willful misconduct, or (d) of any age who, at the time of the member's or retirant's death, is disabled because of an intellectual disability or physical incapacity, is unable to do any substantial, gainful work because of the impairment and his impairment has lasted or can be expected to last for a continuous period of not less than 12 months, as affirmed by the medical board.
(22) "Parent" shall mean the parent of a member who was receiving at least one-half of his support from the member in the 12-month period immediately preceding the member's death or the accident which was the direct cause of the member's death. The dependency of such a parent will be considered terminated by marriage of the parent subsequent to the death of the member.
(23) (a) "Widower," for employees of the State, means the man to whom a member or retirant was married, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), on the date of her death and who has not since remarried or established a domestic partnership. In the event of the payment of accidental death benefits, pursuant to section 10 of P.L.1944, c.255 (C.43:16A-10), the restriction concerning remarriage or establishment of a domestic partnership shall be waived.
(b) Subject to the provisions of paragraph (c) of this subsection, "widower," for employees of public employers other than the State, means the man to whom a member or retirant was married on the date of her death and who has not remarried.
(c) A public employer other than the State may adopt a resolution providing that the term "widower" as defined in paragraph (b) of this subsection shall include domestic partners as provided in paragraph (a) of this subsection.
(24) (a) "Widow," for employees of the State, means the woman to whom a member or retirant was married, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), on the date of his death and who has not since remarried or established a domestic partnership. In the event of the payment of accidental death benefits, pursuant to section 10 of P.L.1944, c.255 (C.43:16A-10), the restriction concerning remarriage or establishment of a domestic partnership shall be waived.
(b) Subject to the provisions of paragraph (c) of this subsection, "widow," for employees of public employers other than the State, means the woman to whom a member or retirant was married on the date of his death and who has not remarried.
(c) A public employer other than the State may adopt a resolution providing that the term "widow" as defined in paragraph (b) of this subsection shall include domestic partners as provided in paragraph (a) of this subsection.
(25) "Fiscal year" shall mean any year commencing with July 1, and ending with June 30, next following.
(26) (a) "Compensation" shall mean the base salary, for services as a member as defined in this act, which is in accordance with established salary policies of the member's employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement or additional remuneration for performing temporary duties beyond the regular workday.
(b) In the case of a person who becomes a member of the retirement system on or after the effective date of P.L.2010, c.1, "compensation" means the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act, for services as a member as defined in this act, which is in accordance with established salary policies of the member's employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement or additional remuneration for performing temporary duties beyond the regular workday.
(27) "Department" shall mean any police or fire department of a municipality or a fire department of a fire district located in a township or a county police or park police department or the appropriate department of the State or instrumentality thereof.
(28) (a) "Final compensation" means the compensation received by the member in the last 12 months of creditable service preceding his retirement or death or, for members other than those specified in paragraph (b) of this subsection who retire on or after the effective date of P.L. , c. (pending before the Legislature as this bill), the highest compensation received by the member in any fiscal year of creditable service preceding retirement or death.
(b) In the case of a person who becomes a member of the retirement system on or after the effective date of P.L.2010, c.1, "final compensation" means the average annual compensation for service for which contributions are made during any three fiscal years of membership providing the largest possible benefit to the member or the member's beneficiary.
(29) (Deleted by amendment, P.L.1992, c.78).
(30) (Deleted by amendment, P.L.1992, c.78).
(31) (a) "Spouse," for employees of the State, means the husband or wife, or domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), of a member.
(b) Subject to the provisions of paragraph (c) of this subsection, "spouse," for employees of public employers other than the State, means the husband or wife of a member.
(c) A public employer other than the State may adopt a resolution providing that the term "spouse" as defined in paragraph (b) of this subsection shall include domestic partners as provided in paragraph (a) of this subsection.
(cf: P.L.2018, c.55, s.7)
2. This act shall take effect immediately.
STATEMENT
This bill changes the definition of "final compensation" that is used to calculate various benefits in the Police and Firemen's Retirement System (PFRS) for certain members and beneficiaries
Current law defines "final compensation" to mean the compensation received by the member in the last 12 months of service before retirement or death. This bill changes the definition to allow for the use of the highest compensation received by the member in any fiscal year of service. This would provide certain PFRS members or their beneficiaries the largest possible benefit in the event that a member's last year of service before retirement or death was not the member's highest paid year.
This change only applies to members of the PFRS who were enrolled before May 21, 2010. For members who were enrolled in the PFRS on or after May 21, 2010, current law defines "final compensation" to mean the average annual compensation paid for service during any three fiscal years of membership providing the largest possible benefit to the member or the member's beneficiary.
