S1212

An Act concerning the membership of business administrators in the Public Employees’ Retirement System and amending P.L.2007, c.92 and supplementing P.L.1954, c.84 (C.43:15A-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.2007, c.92 (C.43:15C-2) is amended to read as follows:

2. a. The following persons shall be eligible and shall participate in the Defined Contribution Retirement Program:

(1) A person who commences service on or after the effective date of this section of P.L.2007, c.92 (C.43:15C-1 et al.) in an elective public office of this State or of a political subdivision thereof, except that it shall not include a person who holds elective public office on the effective date of this section and is enrolled in the Public Employees' Retirement System while that person continues to hold that elective public office or, for an elected official specified in section 5 of P.L.2017, c.344 (C.43:15A-7.5), another elective public office, without a break in service. Service in the Legislature shall be considered a single elective public office.

(2) A person who commences service on or after the effective date of this section in an employment, office or position of the State or of a political subdivision thereof, or an agency, board, commission, authority or instrumentality of the State or of a subdivision, pursuant to an appointment by the Governor that requires the advice and consent of the Senate, or pursuant to an appointment by the Governor to serve at the pleasure of the Governor only during his or her term of office. This paragraph shall not be deemed to include a person otherwise eligible for membership in the State Police Retirement System or the Judicial Retirement System.

(3) A person who commences service on or after the effective date of this section in an employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, pursuant to an appointment by an elected public official or elected governing body, that requires the specific consent or approval of the elected governing body of the political subdivision that is substantially similar in nature to the advice and consent of the Senate for appointments by the Governor of the State as that similarity is determined by the elected governing body and set forth in an adopted ordinance or resolution, pursuant to guidelines or policy that shall be established by the Local Finance Board in the Department of Community Affairs or the Department of Education, as appropriate to the elected governing body. This paragraph shall not be deemed to include a person otherwise eligible for membership in the Teachers' Pension and Annuity Fund or the Police and Firemen's Retirement System, or a person who is employed or appointed in the regular or normal course of employment or appointment procedures and consented to or approved in a general or routine manner appropriate for and followed by the political subdivision, or the agency, board, commission, authority or instrumentality of a subdivision, or a person who commences service on or after the effective date of P.L. , c. (pending before the Legislature as this bill) upon employment or appointment as a business administrator, as defined in section 2 of P.L. , c. (pending before the Legislature as this bill), or a person who holds a professional license or certificate to perform and is performing as a certified health officer, tax assessor, tax collector, municipal planner, chief financial officer, registered municipal clerk, construction code official, licensed uniform subcode inspector, qualified purchasing agent, or certified public works manager.

(4) A person who is granted a pension or retirement allowance under any pension fund or retirement system established under the laws of this State and elects to participate pursuant to section 1 of P.L.1977, c.171 (C.43:3C-3) upon being elected to public office.

(5) A member of the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System for whom compensation is defined as the amount of base or contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act, for contribution and benefit purposes of those retirement systems, for whom participation in this retirement program shall be with regard to any excess over the maximum compensation only.

(6) A person in employment, office or position for which the annual salary or remuneration is less, or the hours of work per week are fewer, than that which is required to become a member of the Teachers' Pension and Annuity Fund or the Public Employees' Retirement System, or to make contributions to those systems as a member on the basis of any such employment, office or position, after November 1, 2008.

b. No person shall be eligible to participate in the retirement program with respect to any public employment, office, or position if:

(1) the base salary for that employment, office, or position is less than $5,000 per year;

(2) the person is, on the basis of service in that employment, office, or position, eligible for membership or enrolled as a member of another State or locally-administered pension fund or retirement system established under the laws of this State including the Alternate Benefit Program, except as otherwise specifically provided in subsection a. of this section;

(3) the person is receiving a benefit as a retiree from any other State or locally-administered pension fund or retirement system established under the laws of this State, except as provided in section 1 of P.L.1977, c.171 (C.43:3C-3); or

(4) the person is an officer or employee of a political subdivision of this State or of a board of education, or of any agency, authority or instrumentality thereof, who is ineligible for membership in the Public Employees' Retirement System pursuant to section 20 of P.L.2007, c.92 (C.43:15A-7.2).

c. A person eligible and required to participate in the retirement program pursuant to paragraph (5) of subsection a. of this section may elect to waive participation with regard to that employment, office, or position by filing, when first eligible, on a form required by the division, a written waiver with the Division of Pensions and Benefits that waives all rights and benefits that would otherwise be provided by the retirement program. Such a person may thereafter elect to participate in the retirement program by filing, on a form required by the division, a written election to participate in the retirement program and participation in the retirement program pursuant to such election shall commence on the January 1 next following the filing of the election to participate.

d. Service credited to a participant in the Defined Contribution Retirement Program shall not be recognized as service credit to determine eligibility for employer-paid health care benefits in retirement pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.), N.J.S.40A:10-16 et seq., P.L.1979, c.391 (C.18A:16-12 et al.) or any other law, rule or regulation.

(cf: P.L.2017, c.344, s.3)

2. (New section) a. A business administrator who, as of the effective date of this act, P.L. , c. (pending before the Legislature as this bill), is employed by a political subdivision of the State, or an agency, board, commission, authority, or instrumentality of a subdivision, and participating in the Defined Contribution Retirement Program on the basis of service in that position shall be enrolled as a member of the Public Employees’ Retirement System if the employee requests the enrollment in writing within 90 days following the effective date of this act and if the employee meets the eligibility requirements for membership in the retirement system at the time of enrollment that would apply to an employee who commences service on or after the effective date of this act. The retirement system shall notify in writing, within 15 days following the effective date of this act, all eligible employees of the availability of enrollment pursuant to this section. Before the retirement system approves a written request for enrollment, the employee and the employee’s employer shall be provided with an estimate of contributions or costs for service credit that may be payable pursuant to subsection b. of this section.

If an eligible employee fails to request the enrollment in writing within 90 days of the effective date of this act, the employee shall remain a participant of the program for the time during which the employee continues to serve in the position of business administrator held on the effective date of this act.

b. An employee may elect to receive service credit in the retirement system, upon enrollment pursuant to subsection a. of this section, for the time during which the employee was a participant of the program as a business administrator with any employer by waiving, within 90 days following enrollment, all rights and benefits that would otherwise be provided by the Defined Contribution Retirement Program. If an employee elects to receive service credit in the retirement system, the funds in the program shall be transferred to the retirement system in accordance with the provisions of law and regulation governing the retirement system and program with regard to transfers between qualified plans. In the event that the value of the funds to be transferred to the retirement system from the program is less than the total value of funds that is required by the retirement system to provide the transferred member with full credit for service as a business administrator while a participant in the program, the retirement system shall inform the employee and the employer of their liability for an amount equal to the difference between these two values.

The employee shall receive full credit toward the benefits provided by the retirement system for the service performed during participation in the program if the employee agrees in writing to pay any employee contributions or costs required by the retirement system for the benefits provided as a result of the enrollment pursuant to this section. If there are contributions or costs required to be paid by the employer of that employee for the service credit and the employer declines in writing to make the payment or any portion thereof, the employee shall pay the contributions or costs not paid by the employer as a condition of receiving full credit toward the benefits provided by the retirement system. Payments shall be made under such terms and conditions as the retirement system shall require.

c. As used in this section, “business administrator” means the executive and administrative officer of any political subdivision of the State, or any agency, board, commission, authority, or instrumentality of the State or of a subdivision serving in a position with the title of business administrator, municipal or county administrator, municipal or county manager, city manager, town manager, village manager, borough manager, township manager, or any functional equivalent, as the case may be.

3. This act shall take effect immediately.

STATEMENT

This bill will make business administrators serving in local governments eligible for membership in the Public Employees’ Retirement System (PERS). Since July 1, 2007, business administrators have been required to participate in the Defined Contribution Retirement Program (DCRP).

The bill also provides for the transfer to the PERS of a business administrator who is participating in the DCRP as of the bill’s effective date. A business administrator who transfers to the DCRP may elect to receive credit in the PERS for service as a business administrator during participation in the DCRP. To receive full PERS credit for that service, the business administrator and the administrator’s employer will have to pay the contributions and costs required by the PERS for the benefits provided by the retirement system. If the employer does not make the payment, the employee will have to make the employer’s payment.

The bill also defines the term “business administrator” to include municipal or county administrators, municipal or county managers, city managers, town managers, village managers, borough managers, township managers, or any functional equivalent.