S3522

An Act concerning the board of trustees for the Local Part of the Public Employees’ Retirement System and amending various parts of the statutory law 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. (New section) a. (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 Local Part of the Public Employees’ Retirement System is hereby vested in a board of trustees of the Local Part, and, as specified, the committees established pursuant to subsection e. of this section.

The board may with the approval of at least four members of the board, in its discretion and at such time and in such manner as the board determines, enhance any benefit set forth in P.L.1954, c.84 (C.43:15A-1 et seq.) as the board determines to be reasonable and appropriate or modify any such benefit as an alternative to an increase in the member contribution rate, which increase the board determines to be reasonable, necessary, and appropriate, or reinstate, when appropriate, such reduced benefit to the statutory level without an additional contribution by the member, so long as an actuarial certification provided by the actuary of the Local Part demonstrates that such change will not result in an increased employer contribution in the current year and that such change will not impact the long term viability of the fund. The board shall act exclusively on behalf of the contributing employers, active members, and retired members of the Local Part of the retirement system, as the fiduciary of the system. The primary obligation of the board shall be to direct policies and investments to achieve and maintain the full funding and continuation of the Local Part of the retirement system for the exclusive benefit of its members.

(2) The board of trustees of the Local Part shall consist of seven trustees as follows.

(a) Three trustees, to be appointed by the Governor, who shall serve staggered terms and who either hold, or have held, an elective public office as a mayor, member of a municipal council, or member of a board of chosen freeholders or are employed, or have been employed, by a municipal or county government as an administrator, manager, or chief financial officer, to represent the interests of local government employers. The Governor shall appoint trustees pursuant to this subparagraph from among a list of names submitted by the New Jersey League of Municipalities and the New Jersey Association of Counties. Two trustees appointed by the Governor

pursuant to this subparagraph shall serve for an initial term of two years and one trustee shall serve for an initial term of four years. Following their first term, all trustees appointed pursuant to this subparagraph shall serve for a term of four years.

(b) Three trustees, appointed by the Governor, who shall serve staggered terms, from among recommendations by the Public Employee Committee of the AFL-CIO, with each trustee to represent a different collective bargaining unit that represents active members of the Local Part of the retirement system having union membership. Two trustees appointed by the Governor pursuant to this subparagraph shall serve for an initial term of three years and one trustee shall serve for an initial term of four years. Following their first term, all trustees appointed pursuant to this subparagraph shall serve for a term of four years.

(c) One trustee who is an active member of the Local Part of the retirement system, to be appointed in a manner prescribed by the board of trustees. The trustee appointed pursuant to this subparagraph shall serve for a term of four years.

(3) Each trustee shall, after appointment, take an oath of office that, so far as it devolves upon the trustee, the trustee will diligently and honestly fulfill the duties as a board member, and that the trustee will not knowingly violate or willingly permit to be violated any of the provisions of the law applicable to the Local Part of the retirement system. Such oath shall be subscribed by the trustee making it, and certified by the officer before whom it is taken, and immediately filed in the office of the Secretary of State. The board may remove a trustee, upon a majority vote of the trustees, for violating the trustee's oath of office. Any trustee who is absent, without an official excuse approved by a majority vote of the trustees, for more than three of the board's meetings in any calendar year shall be removed from the board and the trustee's position shall be filled in the same manner as the position was previously filled. The board shall adopt standards to define unexcused absences.

A trustee shall be permitted to participate in meetings of the board by teleconference.

(4) (a) 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. A vacancy shall not last more than 60 days. If a vacancy lasts for more than 60 days, then the board shall appoint, upon a majority vote of the trustees then serving, a person qualified pursuant to subparagraph (a) or (b) of paragraph (2) of this subsection to fill the vacancy until a new trustee is appointed in the manner set forth in paragraph (2) of this subsection.

(b) A trustee serving pursuant to subparagraph (c) of paragraph (2) of this subsection who retires from active service may remain a trustee until a successor is appointed.

(c) Trustees appointed pursuant to paragraph (2) of this subsection shall serve at the pleasure of the official who appointed the trustee, but may be removed pursuant to paragraph (3) of this subsection.

(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. Four trustees shall be present at any meeting of the board for the transaction of its business.

(7) Subject to the limitations of this act, P.L. , c. (C. )(pending before the Legislature as this bill), the board of trustees shall annually establish rules and regulations for the administration of the funds created by law and for the transaction of the board's business.

(8) (a) The board of trustees shall elect from its membership a chair and vice chair. The chair, or vice chair in the chair's absence, shall serve as the primary contact with board staff, shall coordinate and approve meeting agendas, and shall have the power to authorize any special staff action necessary to execute any of the board's duties. The chair and vice chair shall not have the authority to discipline or discharge an employee of the board unless authorized to take such action by a majority of the trustees at a public meeting. The board shall appoint a secretary of the board. The administration of the program shall be performed by personnel selected by the board in accordance with this section. The board shall hold an initial meeting on the first business day of the seventh month following the date of enactment of P.L. , c. (pending before the Legislature as this bill). At the initial meeting of the board, the board shall contract with the Division of Pensions and Benefits for the division to perform the administrative tasks that the division performed prior to the enactment of P.L. , c. (pending before the Legislature as this bill) and such other tasks as the board may require. The division shall receive compensation from the board for the performance of the administrative tasks that the division performed prior to the enactment of P.L. , c. (pending before the Legislature as this bill) in an amount equal to the cost the division incurred for the performance of those administrative tasks prior to the enactment of that act. At the expiration of the term of the contract negotiated by the board with the division pursuant to this paragraph, the board may contract with the division or with a private entity, pursuant to the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), to perform administrative tasks that the board determines to be necessary or convenient for its operation.

(b) A majority of the authorized membership of the board shall constitute a quorum for the transaction of business.

(9) The board of trustees shall keep a record of all of its proceedings which shall be open to public inspection. The Local Part of the retirement system shall publish annually a report showing the fiscal transactions of the Local Part 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 Local Part of the retirement system.

(10) The board of trustees may, in its discretion, select and employ, or contract with, legal counsel with demonstrated expertise in the law governing retirement systems for public or private sector employees 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 Local Part of the retirement system, except if the Attorney General determines that a conflict of interest would affect the ability of the Attorney General to represent the board or the committees on a matter affecting the retirement system.

(11) The board of trustees shall designate a medical board. It shall be composed of a minimum of three physicians who are not eligible to participate in the Local Part of the retirement system. The medical board shall pass upon all medical examinations required under the provisions of P.L.1954, c.84 (C.43:15A-1 et seq.), 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 Local Party of 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 of trustees. The actuary shall be the technical adviser of the board of trustees on matters regarding the operation of the funds created by law, and shall perform such other duties as are required in connection therewith. The actuary shall be an independent contractor retained by the board. The actuary shall have demonstrated experience in providing actuarial services to defined benefit retirement systems for public employees and be a fellow with the Society of Actuaries and an active member of the American Academy of Actuaries.

(13) The board of trustees, in consultation with the actuary, shall establish actuarial funding policies for the Local Part of the retirement system. 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 Local Part of the retirement system and, with the advice of the actuary, the board of trustees shall adopt for the Local Part of 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 P.L.1954, c.84 (C.43:15A-1 et seq.). The board of trustees shall retain an independent actuary, as selected by the State Treasurer, with demonstrated experience in providing actuarial services to retirement systems for public or private sector employees to review prior investigations into the mortality, service, and compensation experience of the members and beneficiaries of the Local Part of the retirement system and to review the three prior actuarial valuations to certify that the actuary of the retirement system conducted the investigations and valuations in accordance with generally accepted actuarial standards.

(14) 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 Local Part of the system created by this act, P.L. , c. (pending before the Legislature as this bill).

(15) Each public employee who is a trustee of the board of trustees or the committees shall be entitled to time off from duty, with pay, during the periods of the trustee’s attendance upon regular or special meetings of the board of trustees or the committees, and such time off shall include reasonable travel time required in connection therewith.

(16) The board of trustees shall have a minimum of one meeting each calendar month.

(17) The board of trustees shall have authority to formulate and establish, amend, modify or repeal such policies as it may deem necessary or proper, which shall govern the methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the Division of Investment. The board may also review and approve agreements which may be necessary or convenient for the management of the investments of the Local Part of the retirement system. The board shall also have the authority to inspect and audit the respective accounts and funds administered by the Division of Investment, or a successor entity, and take appropriate action as necessary to effectuate the long term viability of the Local Part of the retirement system. The Director of the Division of Investment and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council by P.L. 2017, c. 98 (C.5:9-22.5 et seq.).

(20) (a) The board of trustees shall select and employ an executive director, who shall be responsible for recommending and implementing the strategic direction of the board from an operational perspective. The executive director shall provide strategic direction, planning, and leadership to the board; organize, develop, and supervise a management team to provide optimal results; maintain oversight of administrative operations conducted by the board; develop an annual budget and a salary and compensation guide for any managerial positions that are not subject to Title 11A, Civil Service, of the New Jersey Statutes; arrange board agendas with the approval of the board's chair; appoint administrative staff; execute contracts on behalf of the board; and perform any other responsibilities designated to the executive director by the board. The person employed by the board to hold the position of executive director shall have, at a minimum upon commencement of employment, a bachelor's degree from an accredited institution of higher education, and at least five years of management experience in accounting, finance, public administration, government pension and retirement planning, investment banking, financial consulting, money management, or a similar field. The person shall meet all other requirements for employment as shall be set forth in a standard adopted by the board. No member, retiree, or other beneficiary of the Local Part of the retirement system shall be eligible to hold the position of executive director.

The executive director shall serve without a term but may be removed from office, upon notice and opportunity to be heard at a public hearing, subject to an affirmative vote of the majority of all authorized members of the board of trustees. Any vacancy occurring shall be filled in the same manner as the original appointment. The executive director shall devote the director’s entire time and attention to the duties of the office and shall not be engaged in any other occupation or profession. The executive director shall act as a fiduciary to the Local Part of the retirement system and shall be under a duty to perform the obligations set forth herein according to the interest of the beneficiaries of the retirement system.

(b) The board of trustees shall have the authority to retain other administrative and professional staff as required to implement the duties and responsibilities required to ensure the smooth transition of responsibilities and authority from the division to the board pursuant to this act, P.L. , c. (pending before the Legislature as this bill). The board shall not employ a trustee and may employ a former trustee only if the former trustee has not held the position of trustee for more than two years.

(c) The board of trustees shall be authorized to access operating funds from the Local Part of the retirement system necessary for the management of the fund and to employ staff immediately upon their appointment, provided that the qualified status of the Local Part of the retirement system under federal law is maintained.

(21) (a) The board of trustees shall select and employ a chief investment officer, who shall oversee the development of the methods, practices and procedures for investment, in coordination with the Investment Committee. The Division of Investment and the Director of the Division of Investment and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council by P.L.2017, c.98 (C.5:9-22.5 et seq.). The chief investment officer, in coordination with the Investment Committee, shall establish and maintain a policy to monitor and evaluate the effectiveness of investments made on behalf of the board. The chief investment officer shall report to the executive director.

The person employed by the board to hold the position of chief investment officer shall have, at a minimum upon commencement of employment, a bachelor's degree from an accredited institution of higher education, and at least five years of management experience, in addition to accounting, finance, public administration, government pension and retirement planning, investment banking, financial consulting, money management, or a similar field. The person shall also have experience in the direct management, analysis, supervision or investment of assets. The person shall meet all other requirements for employment as shall be set forth in a standard adopted by the board. No member, retiree, or other beneficiary of the Local Part of the retirement system shall be eligible to hold the position of chief investment officer. The chief investment officer shall be precluded from outside employment or other occupation.

(b) The board of trustees may make and execute agreements pursuant to the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), which may be necessary or convenient for the management of the investments of the Local Part of the retirement system. The board shall also have the authority to inspect and audit the respective accounts and funds administered by the Division of Investment, or a successor entity, and take appropriate action as necessary to effectuate the long term viability of the Local Part of the retirement system.

(22) The board of trustees shall select and employ an ombudsman, who shall provide individual death and disability consultation and information to plan members and their dependents; answer questions from, and provide information to, members related to the process of applying for retirement and retirement benefits; coordinate with other State and local agencies on behalf of members; maintain federal, State, and local death and disability benefit resources; recommend policy changes to the board; conduct educational presentations for employers on death and disability benefit options for members; and publish information about the organization of the board for members, employers, and the public.

(23) All members of the board of trustees and of the Investment Committee shall participate in annual investment training as directed by the board's executive director. In addition to the ethics training required by paragraph (2) of subsection c. of this section, the board shall adopt a policy requiring annually not less than 16 hours of continuing education in matters relating to the administration of defined benefit retirement systems for public employees and the fiduciary duty the board and its employees have to the beneficiaries of the Local Part of the retirement system.

b. The board of trustees shall have the discretionary authority to:

(1) modify the: member contribution rate; cap on creditable compensation; formula for calculation of final compensation; age at which a member may be eligible for and the benefits for service or special retirement; and standards for approval, medical review policies, and benefits provided for disability retirement; and

(2) subject to the provisions of P.L. , c. (pending before the Legislature as this bill), activate the application of the "Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.), for retirees and modify the basis for the calculation of the adjustment and set the duration and extent of the activation. The board of trustees, after consultation with the actuary, may apply an adjustment to the monthly retirement allowance or pension originally granted to any member.

The board of trustees shall have the discretionary authority to modify the conditions and standards for the purchase of service credit for death benefits. The board of trustees shall not have the authority to change the years of creditable service required for vesting.

At least five votes of the authorized membership of the board shall be required to approve any enhancement or reduction of a member benefit, including the activation of the application of the "Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.), for retirees, or to approve any increase or decrease in the employer contribution that is more than what is recommended by the actuary for the Local Part of the retirement system for the purpose of the annual funding requirements of the Local Part of the retirement system. An actuarial certification shall be provided by the actuary prior to any enhancement or reduction of a member benefit, including the activation of the application of the "Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.), showing that such change will not result in an increased employer contribution in the current year and that such change will not impact the long term viability of the fund.

The board of trustees may consider a matter described in this subsection and render a decision notwithstanding that the provisions of the statutory law may set forth a specific requirement on that matter.

The board of trustees may consider a matter described in this subsection and render a decision notwithstanding that the provisions of the statutory law do not set forth a specific requirement on the considered aspect of that matter or address that matter at all.

A final action of the board of trustees under this subsection shall be made by the adoption of a regulation that shall identify the modifications to the system by reference to statutory section. The regulations shall also specify the effective date of the modification and the Local Part retirement system members, including beneficiaries and retirees, to whom the modification applies. Regulations of the board of trustees shall be considered to be part of the plan document for the retirement system. A regulation adopted by the board of trustees may be modified by regulation in order to comply with the requirements of this section.

c. (1) No member of the board or a committee of the board, employee of the board, or employee of the Division of Pensions and Benefits in the Department of the Treasury shall accept from any person, whether directly or indirectly and whether by the member or the member’s spouse or any member of the member’s family, or through any partner or associate, any gift, favor, service, employment or offer of employment, or any other thing of value, including contributions to the campaign of a member or employee as a candidate for elective public office, which the member knows or has reason to believe is offered to the member with intent to influence the member in the performance of the member’s public duties and responsibilities. As used in this subsection, "person" means an (1) individual or business entity, or officer or employee of such an entity, who is seeking, or who holds, or who held within the prior three years, a contract with the board; (2) an active or retired member, or beneficiary, of the retirement system; or (3) an entity, or officer or employee of such an entity, in which the assets of the retirement system have been invested. A board or committee member or employee violating this prohibition shall be guilty of a crime of the third degree.

(2) The board shall adopt an ethics policy either identical to the provisions of the "New Jersey Conflicts of Interest Law," P.L.1971, c.182 (C.52:13D-12 et seq.), or more restrictive, but not less restrictive. All trustees, officers, and employees of the board shall participate in annual ethics training on the board's policy, the New Jersey Conflicts of Interest Law, and any other applicable law, rule, or standard of conduct relating to the area of ethics as directed by the board's executive director.

d. The board of trustees shall have the authority to establish a process for the review, approval, and appeal of applications for retirement.

e. The board of trustees shall establish three committees as follows:

(1) (a) An Audit Committee of no less than three members to assist in the oversight of the financial reporting and audit processes of the board of trustees. At least two of the members shall be members of the board of trustees. At least one of the Audit Committee members shall have accounting, governmental auditing, or related financial expertise. If the board of trustees does not have sufficient members qualified or available to serve on the Audit Committee, or wishes to broaden the expertise on the Audit Committee, the board of trustees may request that the State Treasurer recommend one or more qualified individuals to serve on the committee.

(b) The Audit Committee shall assist the board of trustees in retaining an independent auditor to conduct an audit of the retirement system's financial statements by making a recommendation to the board of trustees after engaging in an auditor selection process. The auditor selection process shall be based upon public, competitive bidding principles and shall take place no less than once every five years.

(c) In carrying out its duties, the Audit Committee shall proactively assist the board of trustees in overseeing the integrity and quality of the retirement system's finances and investments. The Audit Committee shall:

(i) review and evaluate audit fees;

(ii) when the committee believes that the auditor's performance is not adequate in quality or independence, recommend such steps as may be necessary to elicit appropriate performance, including replacement of the auditor;

(iii) at least once every three years, obtain and review a report of the independent auditor describing for the preceding year: the independent auditor's internal quality control procedures; any material issues raised by the most recent internal quality control peer review, or by reviews conducted by governmental or professional authorities; and steps taken by the auditor to address such issues;

(iv) regularly review with the independent auditor any audit problems, any risks of material statements due to fraud, and difficulties involving restrictions or attempts to restrict the auditor's activities and restrictions on access to information;

(v) review the audited financial statements and interim statements and discuss them with the board of trustees. These discussions shall include a review of particularly sensitive accounting estimates, reserves and accruals, judgmental areas, audit adjustments, whether recorded or not, and any other matters the Audit Committee or independent auditor shall deem appropriate;

(vi) review internal control functions such as the planned scope of internal audit reviews, adequacy of staffing, actions to be taken as a result of internal audit findings, the effectiveness of electronic data processing procedures, and controls and related security programs;

(vii) recommend policies with respect to risk assessment and risk management; and

(viii) establish a permanent position of internal auditor, who shall be supervised by the executive director, but who may be discharged only by an affirmative vote of the majority of the board.

(2) An Actuary Committee of no less than three members to assist in the selection and oversight of the actuary appointed by the board of trustees. The Actuary Committee shall review the performance of the actuary appointed by the board of trustees. If the performance of the actuary is not adequate in quality, the committee shall recommend such steps as may be necessary to elicit appropriate performance, including replacement of the actuary.

(3) An Investment Committee of no less than three members to assist in the oversight of the investment policies selected by the board of trustees. The Investment Committee shall consist of two members of the board of trustees, and one member who shall be the chief investment officer of the board, and shall oversee investments and make recommendations on investments to the board of trustees. A majority of the Investment Committee members, one of which may be the Chief Investment Officer, shall be qualified by training, experience or long-term interest in the direct management, analysis, supervision or investment of assets and this training, experience or long-term interest shall have been supplemented by academic training in the fields of economics, business, law, finance or actuarial science or by actual employment in those fields. If the board of trustees does not have sufficient members qualified or available to serve on the Investment Committee, or determines to broaden the expertise of the Investment Committee, the board of trustees may request that the State Treasurer recommend one or more qualified individuals to serve on the committee.

f. At the end of six years following the enactment date of this act, P.L. , c. (pending before the Legislature as this bill), the board of trustees shall conduct a review of the performance and funding levels of the Local Part of the retirement system, as compared to available market data including but, not limited to, the performance of the State Investment Council and Division of Investment with regard to the investment of other State-administered retirement systems or funds and other appropriate benchmarks, and may, based on a majority vote of the authorized membership of the board, petition the Legislature to consider legislation that reverts control of the Local Part of the retirement system from the board of trustees to the State Investment Council and the Division of Investment.

g. All of the present functions, powers, and duties relating for the Local Part of the Public Employees’ Retirement System in the Division of Pensions and Benefits in the Department of the Treasury are hereby transferred to the Board of Trustees of the Local Part of the Public Employees’ Retirement System, except that the board of trustees of the Local Part may contract with the Division of Pensions and Benefits in the Department of the Treasury to effectuate the goals of this act, P.L. , c. (pending before the Legislature as this bill). The Department of the Treasury and the Division of Investment shall retain all functions, powers, duties, equipment and records relating to Common Pension Fund L assigned to the Department of the Treasury and the Division of Investment by P.L.2017, c.98 (C.5:9-22.5 et seq.). Copies of records relating to the Local Part of the retirement system in the Division of Pensions and Benefits in the Department of the Treasury and the Division of Investment shall be made available to the board of trustees of the Local Part of the Public Employees’ Retirement System upon request.

For the purposes of the group life insurance provided in accordance with P.L.1954, c.84 (C.43:15A-1 et seq.) for members and retirees of the Local Part of the Public Employees’ Retirement System, the responsibilities of the State Treasurer specified in statute or regulation shall be transferred to and exercised by the board of trustees of the Local Part.

2. Section 2 of P.L.1958, c.143 (C.43:3B-2) is amended to read as follows:

2. 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] 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.

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.

Commencing with the effective date of P.L.2011, c.78 and thereafter, no further adjustments to the monthly retirement allowance or pension originally granted to any retirant and the pension or survivorship benefit granted to any beneficiary shall be made in accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.), unless the adjustment is reactivated as permitted by law. This provision shall not reduce the monthly retirement benefit that a retirant or a beneficiary is receiving on the effective date of P.L.2011, c.78 when the benefit includes an adjustment granted prior to that effective date. The Board of Trustees of the Police and Firemen's Retirement System and the Board of Trustees of the Local Part of the Public Employees’ Retirement System may adjust the monthly retirement allowance or pension of its retired members in accordance with subsection b. of section 13 of P.L.1944, c.255 (C.43:16A-13) or subsection b. of section 1 of P.L. , c. (C. )(pending before the Legislature as this bill), as appropriate.

(cf: P.L.2018, c.55, s.1)

3. Section 5 of P.L.1997, c.113 (C.43:3C-9.5) is amended to read as follows:

5. a. For purposes of this section, a "non-forfeitable right to receive benefits" means that the benefits program, for any employee for whom the right has attached, cannot be reduced. The provisions of this section shall not apply to post-retirement medical benefits which are provided pursuant to law.

b. Vested members of the Teachers' Pension and Annuity Fund, the Judicial Retirement System, the Prison Officers' Pension Fund, the Public Employees' Retirement System, the Consolidated Police and Firemen's Pension Fund, the Police and Firemen's Retirement System, and the State Police Retirement System, upon the attainment of five years of service credit in the retirement system or fund or on the date of enactment of this bill, whichever is later, shall have a non-forfeitable right to receive benefits as provided under the laws governing the retirement system or fund upon the attainment of five years of service credit in the retirement system or fund or on the effective date of this act, whichever is later. This subsection shall not be applicable to a person who becomes a member of these systems or funds on or after the effective date of P.L.2010, c.1, except that such person shall not include a person who at the time of enrollment in the retirement system or fund on or after that effective date transfers service credit, as permitted, from another State-administered retirement system or fund of which the person was a member immediately prior to the effective date and continuously thereafter, but shall include a former member of the retirement system or fund who has been granted a retirement allowance and is reenrolled in the retirement system or fund on or after that effective date after becoming employed again in a position that makes the person eligible to be a member of the retirement system.

c. (1) The State and all other applicable employers shall make their annual normal contribution to each system or fund as determined by the applicable board of trustees in consultation with the system's or fund's actuary. The State and all other applicable employers shall also make their annual unfunded accrued liability contribution to each system or fund as determined by the applicable board in consultation with the system's or fund's actuary, pursuant to standard actuarial practices authorized by law, unless: (1) there is no existing unfunded accrued liability contribution due to the system or fund at the close of the valuation period applicable to the upcoming fiscal year; or (2) there are excess valuation assets in excess of the actuarial accrued liability of the system or fund at the close of the valuation period applicable to the upcoming fiscal year. The annual normal contribution plus the annual unfunded accrued liability contribution shall together be the annual required contribution, provided, however, that for the State, section 38 of P.L.2010, c.1 (C.43:3C-14) shall apply with regard to the State's annual required contribution. The amount of the State's annually required contributions shall be included in all annual appropriations acts as a dedicated line item.

(2) Each member of the Teachers' Pension and Annuity Fund, the Judicial Retirement System, the Prison Officers' Pension Fund, the Public Employees' Retirement System, the Consolidated Police and Firemen's Pension Fund, the Police and Firemen's Retirement System, and the State Police Retirement System shall have a contractual right to the annual required contribution amount being made by the member's employer or by any other public entity. The contractual right to the annual required contribution means that the employer or other public entity shall make the annual required contribution on a timely basis to help ensure that the retirement system is securely funded and that the retirement benefits to which the members are entitled by statute and in consideration for their public service and in compensation for their work will be paid upon retirement. The failure of the State or any other public employer to make the annually required contribution shall be deemed to be an impairment of the contractual right of each employee. The Superior Court, Law Division shall have jurisdiction over any action brought by a member of any system or fund or any board of trustees to enforce the contractual right set forth in this subsection. The State and other public employers shall submit to the jurisdiction of the Superior Court, Law Division and shall not assert sovereign immunity in such an action. If a member or board prevails in litigation to enforce the contractual right set forth in this subsection, the court may award that party their reasonable attorney's fees.

d. This act shall not be construed to preclude forfeiture, suspension or reduction in benefits for dishonorable service.

e. Except as expressly provided herein and only to the extent so expressly provided, nothing in this act shall be deemed to (1) limit the right of the State to alter, modify or amend such retirement systems and funds, or (2) create in any member a right in the corpus or management of a retirement system or pension fund. The rights reserved to the State in this subsection shall not diminish the contractual rights of employees established by subsections a., b., and c. of this section.

f. Nothing in the provisions of [P.L.2015] P.L.2018, c.55 or in the provisions of P.L , c. (C. )(pending before the Legislature as this bill) shall be interpreted to diminish the non-forfeitable right to benefits provided to any member of the Police and Firemen's Retirement System or of the Local Part of the Public Employees’ Retirement System under State law or affirmed by a ruling or holding of a court in the Judiciary Branch of State government.

(cf: P.L.2018, c.55, s.2)

4. Section 33 of P.L.2011, c.78 (C.43:3C-17) is amended to read as follows:

33. Whenever a committee of the State Part of the Public Employees' Retirement System, the Teachers' Pension and Annuity Fund, or the State Police Retirement System fails to render a decision on a matter before the committee because it has not received a vote of the majority of the committee members after 60 days have passed following the initial consideration of the matter, the committee shall utilize a super conciliator, randomly selected from a list developed by the New Jersey Public Employment Relations Commission. The super conciliator shall assist the committee based upon procedures and subject to qualifications established by the commission pursuant to regulation.

The super conciliator shall promptly schedule investigatory proceedings. The purpose of the proceedings shall be to:

Investigate and acquire all relevant information regarding the committee's failure to render a decision;

Discuss with the members of the committee their differences, and utilize means and mechanisms, including but not limited to requiring 24-hour per day negotiations, until a voluntary settlement is reached, and provide recommendations to resolve the members' differences; and

Institute any other non-binding procedures deemed appropriate by the super conciliator.

If the actions taken by the super conciliator fail to resolve the dispute, the super conciliator shall issue a final report, which shall be provided to the committee promptly and made available to the public within 10 days thereafter.

The super conciliator, while functioning in a mediatory capacity, shall not be required to disclose any files, records, reports, documents, or other papers classified as confidential which are received or prepared by him or to testify with regard to mediation conducted by him under this section. Nothing contained herein shall exempt an individual from disclosing information relating to the commission of a crime.

(cf: P.L.2018, c.55, s.3)

5. Section 60 of P.L.2011, c.78 (C.43:3C-18) is amended to read as follows:

60. a. Notwithstanding any law, rule or regulation to the contrary, the Teachers' Pension and Annuity Fund, established pursuant to N.J.S.18A:66-1 et seq., the Judicial Retirement System, established pursuant to P.L.1973, c.140 (C.43:6A-1 et seq.), the Prison Officers' Pension Fund, established pursuant to P.L.1941, c.220 (C.43:7-7 et seq.), the Public Employees' Retirement System, established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), the Consolidated Police and Firemen's Pension Fund, established pursuant to R.S.43:16-1 et seq., the Police and Firemen's Retirement System, established pursuant to P.L.1944, c.255 (C.43:16A-1 et seq.), and the State Police Retirement System, established pursuant to P.L.1965, c.89 (C.53:5A-1 et seq.), are established as qualified governmental defined benefit plans pursuant to sections 401(a) and 414(d) of the federal Internal Revenue Code of 1986 (26 U.S.C. ss.401(a) and 414(d)), as amended, or such other provision of the federal Internal Revenue Code, as applicable, regulations of the U.S. Treasury Department, and other guidance of the federal Internal Revenue Service.

b. Notwithstanding any law, rule or regulation to the contrary, the Alternate Benefit Program, established pursuant to P.L.1969, c.242 (C.18A:66-167 et seq.), and the Defined Contribution Retirement Program, established pursuant to P.L.2007, c.92 (C.43:15C-1 et seq.) are established as qualified governmental defined contribution plans pursuant to sections 401(a) and 414(d) of the federal Internal Revenue Code of 1986 (26 U.S.C. ss.401(a) and 414(d)), as amended, or such other provision of the federal Internal Revenue Code, as applicable, regulations of the U.S. Treasury Department, and other guidance of the federal Internal Revenue Service.

c. Notwithstanding the provisions of any law, rule or regulation to the contrary, the Director of the Division of Pensions and Benefits in the Department of the Treasury, and in the case of the Police and Firemen's Retirement System and of the Local Part of the Public Employees’ Retirement System, the board of trustees of [that system] those systems, shall be authorized to modify the provisions of the foregoing retirement plans, when a modification is required to maintain the qualified status of the retirement plans under the Internal Revenue Code of 1986, applicable regulations of the U.S. Treasury Department or other guidance of the federal Internal Revenue Service. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), the director, and in the case of the Police and Firemen's Retirement System or of the Local Part of the Public Employees’ Retirement System, the board, may modify the provisions of the foregoing retirement plans, when a modification is required to maintain the qualified status of the retirement plans by promulgating a rule or regulation which shall be effective upon filing with the Office of Administrative Law.

(cf: P.L.2018, c.55, s.4)

6. Section 1 of P.L.2015, c.180 (C.43:3C-25) is amended to read as follows:

1. The Division of Pensions and Benefits in the Department of the Treasury shall provide for the prompt notification in writing of any member or retiree of the Teachers' Pension and Annuity Fund, established pursuant to N.J.S.18A:66-1 et seq., the Judicial Retirement System, established pursuant to P.L.1973, c.140 (C.43:6A-1 et seq.), the Public Employees' Retirement System, established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), the State Police Retirement System, established pursuant to P.L.1965, c.89 (C.53:5A-1 et seq.), the Alternate Benefit Program, established pursuant to P.L.1969, c.242 (C.18A:66-167 et seq.), and the Defined Contribution Retirement Program, established pursuant to P.L.2007, c.92 (C.43:15C-1 et seq.), when the member or retiree submits a change to the designation of beneficiary for contributory and non-contributory group life insurance available to the member or retiree through the system, that there is on file a judgment, court order, decree, or other legal document for that member or retiree specifically designating the beneficiary of such life insurance. The Board of Trustees of the Police and Firemen's Retirement System or of the Local Part of the Public Employees’ Retirement System, as appropriate, or its designee shall provide for the prompt notification in writing of any member or retiree of the Police and Firemen's Retirement System, established pursuant to P.L.1944, c.255 (C.43:16A-1 et seq.), or the Local Part of the Public Employees’ Retirement System, established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), as appropriate, when the member or retiree submits a change to the designation of beneficiary for contributory and non-contributory group life insurance available to the member or retiree through the system, that there is on file a judgment, court order, decree, or other legal document for that member or retiree specifically designating the beneficiary of such life insurance. The notification requirement shall apply only when there is a valid judgment, court order, decree, or other legal document that has been filed with the division or, in the case of the Police and Firemen's Retirement System or the Local Part of the Public Employees’ Retirement System, as appropriate, the board of trustees or its designee pursuant to the division's or board's determination to accept and honor such a judgment, court order, decree, or document and that has been reviewed, approved, or classified as qualified by the division or the board or the board's designee.

(cf: P.L.2018, c.55, s.5)

7. Section 19 of P.L.1992, c.125 (C.43:4B-1) is amended to read as follows:

19. There is hereby established the Retirement Systems Actuary Selection Committee which shall consist of the State Treasurer, and the directors of the Divisions of Pensions and Benefits and Investment, and Office of Management and Budget, or their designated representatives, and one member designated by each of the boards of trustees of the State Part of the Public Employees' Retirement System established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.) and the Teachers' Pension and Annuity Fund established pursuant to N.J.S.18A:66-1 et seq. The committee shall select the actuary or actuaries for the State retirement systems in accordance with the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), provided, however, that the boards shall have the power to veto the selection of the actuary for valid reason.

(cf: P.L.2018, c.55, s.6)

8. Section 6 of P.L.1954, c.84 (C.43:15A-6) is amended to read as follows:

6. As used in this act:

a. "Accumulated deductions" means the sum of all the amounts, deducted from the compensation of a member or contributed by or on behalf of the member, standing to the credit of the member's individual account in the annuity savings fund.

b. "Annuity" means payments for life derived from the accumulated deductions of a member as provided in this act.

c. "Annuity reserve" means the present value of all payments to be made on account of any annuity or benefit in lieu of an annuity, granted under the provisions of this act, computed on the basis of such mortality tables recommended by the actuary as the board of trustees adopts, with regular interest.

d. "Beneficiary" means any person receiving a retirement allowance or other benefit as provided in this act.

e. "Child" means a deceased member's unmarried child either (1) under the age of 18 or (2) of any age who, at the time of the member'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 the 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.

f. "Parent" shall mean the parent of a member who was receiving at least 1/2 of the parent's 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.

g. (1) "Widower," for employees of the State, means the man to whom a member was married, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), at least five years before the date of her death and to whom she continued to be married or a domestic partner until the date of her death and who was receiving at least 1/2 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 widower will be considered terminated by marriage of, or establishment of a domestic partnership by, the widower subsequent to the death of the member. In the event of the payment of an accidental death benefit, the five-year qualification shall be waived.

(2) Subject to the provisions of paragraph (3) of this subsection, "widower," for employees of public employers other than the State, means the man to whom a member was married at least five years before the date of her death and to whom she continued to be married until the date of her death and who was receiving at least 1/2 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 widower shall be considered terminated by marriage of the widower subsequent to the death of the member. In the event of the payment of an accidental death benefit, the five-year qualification shall be waived.

(3) A public employer other than the State may adopt a resolution providing that the term "widower" as defined in paragraph (2) of this subsection shall include domestic partners as provided in paragraph (1) of this subsection.

h. (1) "Final compensation" means the average annual compensation for which contributions are made for the three years of creditable service in New Jersey immediately preceding the member's retirement or death, or it shall mean the average annual compensation for New Jersey service for which contributions are made during any three fiscal years of his or her membership providing the largest possible benefit to the member or the member's beneficiary.

(2) 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 which contributions are made for the five years of creditable service in New Jersey immediately preceding the member's retirement or death, or it shall mean the average annual compensation for New Jersey service for which contributions are made during any five fiscal years of his or her membership providing the largest possible benefit to the member or the member's beneficiary.

i. "Fiscal year" means any year commencing with July 1 and ending with June 30 next following.

j. "Medical board" shall mean the board of physicians provided for in section 17 of P.L.1954, c.84 (C.43:15A-17) or section 1 of P.L. , c. (C. )(pending before the Legislature as this bill).

k. "Pension" means payments for life derived from appropriations made by the employer as provided in this act.

l. "Pension reserve" means the present value of all payments to be made on account of any pension or benefit in lieu of a pension granted under the provisions of this act, computed on the basis of such mortality tables recommended by the actuary as the board of trustees adopts, with regular interest.

m. "Public Employees' Retirement System of New Jersey," hereinafter referred to as the "retirement system" or "system," is the corporate name of the arrangement for the payment of retirement allowances and other benefits under the provisions of this act including the several funds placed under said system. By that name all of its business shall be transacted, its funds invested, warrants for money drawn, and payments made and all of its cash and securities and other property held.

n. "Regular interest" shall mean interest as determined by the State Treasurer for the State Part of the Public Employees’ Retirement System, after consultation with the Directors of the Divisions of Investment and Pensions, the board of trustees and the actuary, and as determined by the State Treasurer for the Local Part of the Public Employees’ Retirement System, 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 the 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 of the Local Part pursuant to section 1 of P.L. , c. (C. )(pending before the Legislature as this bill).

o. "Retirement allowance" means the pension plus the annuity.

p. "Veteran" means any honorably discharged officer, soldier, sailor, airman, marine or nurse who served in any Army, Air Force or Navy of the Allies of the United States in World War I, between July 14, 1914, and November 11, 1918, or who served in any Army, Air Force or Navy of the Allies of the United States in World War II, between September 1, 1939, and September 2, 1945, and who was inducted into such service through voluntary enlistment, and was a citizen of the United States at the time of such enlistment, and who did not, during or by reason of such service, renounce or lose United States citizenship, and any officer, soldier, sailor, marine, airman, nurse or army field clerk, who has served in the active military or naval service of the United States and has or shall be discharged or released therefrom under conditions other than dishonorable, in any of the following wars, uprisings, insurrections, expeditions, or emergencies, and who has presented to the retirement system evidence of such record of service in form and content satisfactory to said retirement system:

(1) The Indian wars and uprisings during any of the periods recognized by the War Department of the United States as periods of active hostility;

(2) The Spanish-American War between April 20, 1898, and April 11, 1899;

(3) The Philippine insurrections and expeditions during the periods recognized by the War Department of the United States as of active hostility from February 4, 1899, to the end of 1913;

(4) The Peking relief expedition between June 20, 1900, and May 27, 1902;

(5) The army of Cuban occupation between July 18, 1898, and May 20, 1902;

(6) The army of Cuban pacification between October 6, 1906, and April 1, 1909;

(7) The Mexican punitive expedition between March 14, 1916, and February 7, 1917;

(8) The Mexican border patrol, having actually participated in engagements against Mexicans between April 12, 1911, and June 16, 1919;

(9) World War I, between April 6, 1917, and November 11, 1918;

(10) World War II, between September 16, 1940, and December 31, 1946, who shall have served at least 90 days in such active service, exclusive of any period of assignment (1) for a course of education or training under the Army Specialized Training Program or the Navy College Training Program which course was a continuation of a civilian course and was pursued to completion, or (2) as a cadet or midshipman at one of the service academies any part of which 90 days was served between said dates; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 90-day service as herein provided;

(11) Korean conflict on or after June 23, 1950, and on or prior to January 31, 1955, who shall have served at least 90 days in such active service, exclusive of any period of assignment (1) for a course of education or training under the Army Specialized Training Program or the Navy College Training Program which course was a continuation of a civilian course and was pursued to completion, or (2) as a cadet or midshipman at one of the service academies, any part of which 90 days was served between said dates; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 90-day service as herein provided; and provided further, that any member classed as a veteran pursuant to this paragraph prior to August 1, 1966, shall continue to be classed as a veteran whether or not that person completed the 90-day service between said dates as herein provided;

(12) Lebanon crisis, on or after July 1, 1958, who has served in Lebanon or on board any ship actively engaged in patrolling the territorial waters of that nation for a period, continuous or in the aggregate, of at least 14 days commencing on or before November 1, 1958 or the date of termination of that conflict, as proclaimed by the President of the United States or Congress, whichever date of termination is the latest, in such active service; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(13) Vietnam conflict on or after December 31, 1960, and on or prior to May 7, 1975, who shall have served at least 90 days in such active service, exclusive of any period of assignment (1) for a course of education or training under the Army Specialized Training Program or the Navy College Training Program which course was a continuation of a civilian course and was pursued to completion, or (2) as a cadet or midshipman at one of the service academies, any part of which 90 days was served between said dates; and exclusive of any service performed pursuant to the provisions of section 511(d) of Title 10, United States Code, pursuant to an enlistment in the Army National Guard or as a reserve for service in the Army Reserve, Naval Reserve, Air Force Reserve, Marine Corps Reserve, or Coast Guard Reserve; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 90 days' service as herein provided;

(14) Lebanon peacekeeping mission, on or after September 26, 1982, who has served in Lebanon or on board any ship actively engaged in patrolling the territorial waters of that nation for a period, continuous or in the aggregate, of at least 14 days commencing on or before December 1, 1987 or the date of termination of that mission, as proclaimed by the President of the United States or Congress, whichever date of termination is the latest, in such active service; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(15) Grenada peacekeeping mission, on or after October 23, 1983, who has served in Grenada or on board any ship actively engaged in patrolling the territorial waters of that nation for a period, continuous or in the aggregate, of at least 14 days commencing on or before November 21, 1983 or the date of termination of that mission, as proclaimed by the President of the United States or Congress, whichever date of termination is the latest, in such active service; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(16) Panama peacekeeping mission, on or after December 20, 1989 or the date of inception of that mission, as proclaimed by the President of the United States or Congress, whichever date of inception is earliest, who has served in Panama or on board any ship actively engaged in patrolling the territorial waters of that nation for a period, continuous or in the aggregate, of at least 14 days commencing on or before January 31, 1990 or the date of termination of that mission, as proclaimed by the President of the United States or Congress, whichever date of termination is the latest, in such active service; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(17) Operation "Desert Shield/Desert Storm" mission in the Arabian peninsula and the Persian Gulf, on or after August 2, 1990 or the date of inception of that operation, as proclaimed by the President of the United States or Congress, whichever date of inception is earliest, who has served in the Arabian peninsula or on board any ship actively engaged in patrolling the Persian Gulf for a period, continuous or in the aggregate, of at least 14 days commencing on or before the date of termination of that mission, as proclaimed by the President of the United States or Congress, whichever date of termination is the latest, in such active service; provided, that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(18) Operation Northern Watch and Operation Southern Watch, on or after August 27, 1992, or the date of inception of that operation, as proclaimed by the President of the United States, Congress or United States Secretary of Defense, whichever date of inception is earliest, who served in the theater of operation, including in the Arabian peninsula and the Persian Gulf, and in direct support of that operation for a period, continuously or in the aggregate, of at least 14 days in such active service, commencing on or before the date of termination of that operation, as proclaimed by the President of the United States, Congress or United States Secretary of Defense, whichever date of termination is the latest; provided, that any person receiving an actual service-incurred injury or disability while engaged in such service shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided;

(19) Operation "Restore Hope" in Somalia, on or after December 5, 1992, or the date of inception of that operation as proclaimed by the President of the United States or Congress, whichever date is earliest, who has served in Somalia or on board any ship actively engaged in patrolling the territorial waters of that nation for a period, continuously or in the aggregate, of at least 14 days in such active service commencing on or before March 31, 1994; provided that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person has completed the 14-day service as herein provided;

(20) Operations "Joint Endeavor" and "Joint Guard" in the Republic of Bosnia and Herzegovina, on or after November 20, 1995, who served in such active service in direct support of one or both of the operations for at least 14 days, continuously or in the aggregate, commencing on or before June 20, 1998 and (1) was deployed in that nation or in another area in the region, or (2) was on board a United States naval vessel operating in the Adriatic Sea, or (3) operated in airspace above the Republic of Bosnia and Herzegovina; provided that any person receiving an actual service-incurred injury or disability shall be classed as a veteran whether or not that person completed the 14-day service requirement;

(21) Operation "Enduring Freedom", on or after September 11, 2001, who served in a theater of operation and in direct support of that operation for a period, continuously or in the aggregate, of at least 14 days in such active service commencing on or before the date the President of the United States or the United States Secretary of Defense designates as the termination date of that operation; provided, that any person receiving an actual service-incurred injury or disability while engaged in such service shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided; and

(22) Operation "Iraqi Freedom", on or after the date the President of the United States or the United States Secretary of Defense designates as the inception date of that operation, who served in Iraq or in another area in the region in direct support of that operation for a period, continuously or in the aggregate, of at least 14 days in such active service commencing on or before the date the President of the United States or the United States Secretary of Defense designates as the termination date of that operation; provided, that any person receiving an actual service-incurred injury or disability while engaged in such service shall be classed as a veteran whether or not that person has completed the 14 days' service as herein provided.

"Veteran" also means any honorably discharged member of the American Merchant Marine who served during World War II and is declared by the United States Department of Defense to be eligible for federal veterans' benefits.

q. (1) "Widow," for employees of the State, means the woman to whom a member was married, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), at least five years before the date of his death and to whom he continued to be married or a domestic partner until the date of his death and who was receiving at least 1/2 of her 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 widow will be considered terminated by the marriage of, or establishment of a domestic partnership by, the widow subsequent to the member's death. In the event of the payment of an accidental death benefit, the five-year qualification shall be waived.

(2) Subject to the provisions of paragraph (3) of this subsection, "widow," for employees of public employers other than the State, means the woman to whom a member was married at least five years before the date of his death and to whom he continued to be married until the date of his death and who was receiving at least 1/2 of her 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 widow shall be considered terminated by the marriage of the widow subsequent to the member's death. In the event of the payment of an accidental death benefit, the five-year qualification shall be waived.

(3) A public employer other than the State may adopt a resolution providing that the term "widow" as defined in paragraph (2) of this subsection shall include domestic partners as provided in paragraph (1) of this subsection.

r. (1) "Compensation" means the base or contractual salary, for services as an employee, 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 or extracurricular duties beyond the regular workday or the regular work year.

(2) In the case of a person who becomes a member of the retirement system on or after July 1, 2007, "compensation" means 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 services as an employee, 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 or extracurricular duties beyond the regular workday or the regular work year. This paragraph shall not apply to a person who at the time of enrollment in the retirement system on or after July 1, 2007 transfers service credit from another State-administered retirement system pursuant to section 14 of P.L.1954, c.84 (C.43:15A-14), but shall apply to a former member of the retirement system who has been granted a retirement allowance and is reenrolled in the retirement system on or after July 1, 2007 pursuant to section 27 of P.L.1966, c.217 (C.43:15A-57.2) after becoming employed again in a position that makes the person eligible to be a member of the retirement system.

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.

For the period of July 1, 2009 through June 30, 2011, "contractual salary" for State employees shall include across the board negotiated wage increases under a collective negotiations agreement that were payable to all State employees covered by that agreement notwithstanding that, by amendment to that collective negotiations agreement, the effective date of the contractual increase has been deferred. For the purpose of this paragraph, "State employee" means an employee in the Executive Branch or the Judicial Branch of State government of New Jersey or an employee of the State University authorized to participate in the system under subsection b. of section 73 of P.L.1954, c.84 (C.43:15A-73), but shall not include employees of agencies authorized to participate in the system under subsections a., c., d., e., f., and g. of section 73 of P.L.1954, c.84 (C.43:15A-73) or under P.L.1990, c.25 (C.43:15A-73.2 et al.).

For the period of July 1, 2009 through June 30, 2011, "contractual salary" for county and municipal employees shall include across the board negotiated wage increases under a collective negotiations agreement that were payable to all county or all municipal employees covered by that agreement notwithstanding that, by amendment to that collective negotiations agreement which has been filed with the Division of Pensions and Benefits, the effective date of the contractual increase has been deferred. For the purpose of this paragraph, "county and municipal employees" means all persons employed by a county or municipality in this State.

(cf: P.L.2010, c.50, s.71)

9. Section 7 of P.L.1954, c.84 (C.43:15A-7) is amended to read as follows:

7. There is hereby established the Public Employees' Retirement System of New Jersey in the Division of Pensions and Benefits of the Department of the Treasury.

Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill), the retirement system shall be comprised of two separate parts. The parts shall be the State Part and the Local Part, and each part shall be governed by a separate board of trustees as established in accordance with section 1 of P.L. , c. (C. )(pending before the Legislature as this bill) and section 17 of P.L.1954, c.84 (C.43:15A-17). The membership of the State Part shall include those members of the retirement system who are employed by the State or any independent board, commission, authority, or instrumentality thereof. The membership of the Local Part shall include those members of the retirement system who are employed by an employer other than the State. Any reference in P.L.1954, c.84 (C.43:15A-1 et seq.) or any other law, rule, regulation, contract, document, judicial or administrative proceeding, or otherwise to the Public Employees’ Retirement System, shall be a reference to both the board of trustees of the State Part and the board of trustees of the Local Part unless otherwise specified by law or by the context within which reference is made.

The membership of the retirement system shall include:

a. The members of the former "State Employees' Retirement System of New Jersey" enrolled as such as of December 30, 1954, who shall not have claimed for refund their accumulated deductions in said system as provided in this section;

b. Any person becoming an employee of the State or other employer after January 2, 1955 and every veteran, other than a retired member who returns to service pursuant to subsection b. of section 27 of P.L.1966, c.217 (C.43:15A-57.2) and other than those whose appointments are seasonal, becoming an employee of the State or other employer after such date, including a temporary employee with at least one year's continuous service. The membership of the retirement system shall not include those persons appointed to serve as described in paragraphs (2) and (3) of subsection a. of section 2 of P.L.2007, c.92 (C.43:15C-2), except a person who was a member of the retirement system prior to the effective date of sections 1 through 19 of P.L.2007, c.92 (C.43:15C-1 through C.43:15C-15, C.43:3C-9, C.43:15A-7, C.43:15A-75 and C.43:15A-135) and continuously thereafter; and

c. Every employee veteran in the employ of the State or other employer on January 2, 1955, who is not a member of any retirement system supported wholly or partly by the State.

d. Membership in the retirement system shall be optional for elected officials other than veterans, and for school crossing guards, who having become eligible for benefits under other pension systems are so employed on a part-time basis. Elected officials commencing service on or after the effective date of sections 1 through 19 of P.L.2007, c.92 (C.43:15C-1 through C.43:15C-15, C.43:3C-9, C.43:15A-7, C.43:15A-75 and C.43:15A-135) shall not be eligible for membership in the retirement system based on service in the elective public office, except that an elected official enrolled in the retirement system as of that effective date who 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 shall be eligible to continue membership in the retirement system under the terms and conditions of enrollment. Service in the Legislature shall be considered a single elective public office. Any part-time school crossing guard who is eligible for benefits under any other pension system and who was hired as a part-time school crossing guard prior to March 4, 1976, may at any time terminate his membership in the retirement system by making an application in writing to the board of trustees of the retirement system. Upon receiving such application, the board of trustees shall terminate his enrollment in the system and direct the employer to cease accepting contributions from the member or deducting from the compensation paid to the member. State employees who become members of any other retirement system supported wholly or partly by the State as a condition of employment shall not be eligible for membership in this retirement system. Notwithstanding any other law to the contrary, all other persons accepting employment in the service of the State shall be required to enroll in the retirement system as a condition of their employment, regardless of age.

(1) Before or on November 1, 2008, no person in employment, office or position, for which the annual salary or remuneration is fixed at less than $1,500.00, shall be eligible to become a member of the retirement system.

(2) After November 1, 2008, a person who was a member of the retirement system on that date and continuously thereafter shall be eligible to be a member of the retirement system in employment, office or position, for which the annual salary or remuneration is fixed at $1,500 or more.

(3) After November 1, 2008 and before or on the effective date of P.L.2010, c.1, a person who was not a member of the retirement system on November 1, 2008, or who was a member of the retirement system on that date but not continuously thereafter, and who is in employment, office or position, for which the annual salary or remuneration is certified by the applicable public entity at $7,500 or more, shall be eligible to become a member of the retirement system. The $7,500 minimum annual salary or remuneration amount shall be adjusted annually by the Director of the Division of Pensions and Benefits, by regulation, in accordance with changes in the Consumer Price Index but by no more than 4 percent. "Consumer Price Index" means the average of the annual increase, expressed as a percentage, in the consumer price index for all urban consumers in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor.

(4) After the effective date of P.L.2010, c.1, no person in an employment, office or position of the State, or an agency, board, commission, authority or instrumentality of the State, for which the hours of work are fixed at fewer than 35 per week shall be eligible to become a member of the retirement system; and no person in employment, office or position with a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a political subdivision of the State, for which the hours of work are fixed by an ordinance or resolution of the political subdivision, or agency, board, commission, authority or instrumentality thereof, at fewer than 32 per week shall be eligible to become a member of the retirement system. Any hour or part thereof, during which the person does not work due to the person's participation in a voluntary or mandatory furlough program shall not be deducted in determining if a person's hours of work are fixed at fewer than 35 or 32 per week, as appropriate, for the purpose of eligibility and the person's service credit as a member of the system or fund shall include the period of mandatory or voluntary furlough provided the person continues to make contributions based on the person's base salary or compensation. If the pay of a furloughed person is insufficient to withhold the entirety of the person's regular contributions, then the person shall remit the entirety of the regular contribution which was not withheld from the person's pay to the Division of Pensions and Benefits in the Department of the Treasury in a manner determined by the division, except that no deduction for the payment of such contributions shall be made from the unemployment compensation benefits of the employee.

e. Membership of any person in the retirement system shall cease if he shall discontinue his service for more than two consecutive years.

f. The accumulated deductions of the members of the former "State Employees' Retirement System" which have been set aside in a trust fund designated as Fund A as provided in section 5 of this act and which have not been claimed for refund prior to February 1, 1955 shall be transferred from said Fund A to the Annuity Savings Fund of the Retirement System, provided for in section 25 of this act. Each member whose accumulated deductions are so transferred shall receive the same prior service credit, pension credit, and membership credit in the retirement system as he previously had in the former "State Employees' Retirement System" and shall have such accumulated deductions credited to his individual account in the Annuity Savings Fund. Any outstanding obligations of such member shall be continued.

g. Any school crossing guard electing to terminate his membership in the retirement system pursuant to subsection d. of this section shall, upon his request, receive a refund of his accumulated deductions as of the date of his appointment to the position of school crossing guard. Such refund of contributions shall serve as a waiver of all benefits payable to the employee, to his dependent or dependents, or to any of his beneficiaries under the retirement system.

h. A temporary employee who is employed under the federal Workforce Investment Act shall not be eligible for membership in the system. Membership for temporary employees employed under the federal Job Training Partnership Act, Pub.L.97-300 (29 U.S.C.s.1501) who are in the system on September 19, 1986 shall be terminated, and affected employees shall receive a refund of their accumulated deductions as of the date of commencement of employment in a federal Job Training Partnership Act program. Such refund of contributions shall serve as a waiver of all benefits payable to the employee, to his dependent or dependents, or to any of his beneficiaries under the retirement system.

i. Membership in the retirement system shall be optional for a special service employee who is employed under the federal Older American Community Service Employment Act, Pub.L.94-135 (42 U.S.C.s.3056). Any special service employee employed under the federal Older American Community Service Employment Act, Pub.L.94-135 (42 U.S.C.s.3056), who is in the retirement system on the effective date of P.L.1996, c.139 may terminate membership in the retirement system by making an application in writing to the board of trustees of the retirement system. Upon receiving the application, the board shall terminate enrollment in the system and the member shall receive a refund of accumulated deductions as of the date of commencement of employment in a federal Older American Community Service Employment Act program. This refund of contributions shall serve as a waiver of all benefits payable to the employee, to any dependent or dependents, or to any beneficiary under the retirement system.

j. An employee of the South Jersey Port Corporation who was employed by the South Jersey Port Corporation as of the effective date of P.L.1997, c.150 (C.34:1B-144 et al.) and who shall be re-employed within 365 days of such effective date by a subsidiary corporation or other corporation, which has been established by the Delaware River Port Authority pursuant to subdivision (m) of Article I of the compact creating the Delaware River Port Authority (R.S.32:3-2), as defined in section 3 of P.L.1997, c.150 (C.34:1B-146), shall be eligible to continue membership while an employee of such subsidiary or other corporation.

k. An employee of a renaissance school project established pursuant to P.L.2011, c.176 (C.18A:36C-1 et seq.) upon commencement of employment.

(cf: P.L.2018, c.129, s.2)

10. Section 17 of P.L.1954, c.84 (C.43:15A-17) is amended to read as follows:

17. a. (1) Subject to the provisions of P.L.1955, c.70 the general responsibility for the proper operation of the State Part of the Public Employees' Retirement System shall be vested in the board of trustees for the State Part, and, as specified, the committees established pursuant to subsection b. of this section. The general responsibility for the proper operation of the Local Part of the Public Employees' Retirement System shall be vested in the board of trustees for the Local Part as established in accordance with section 1 of P.L. , c. (C. )( pending before the Legislature as this bill). The provisions of this section shall apply to the State Part of the retirement system. Subject to the limitations of the law, the board of the State Part shall annually establish rules and regulations for the administration and transaction of the board's and committees' business and for the control of the funds created by this subtitle. 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. The committees shall adopt such regulations as provided in subsection b. of this section.

(2) (a) The membership of the board of the State Part shall consist of the following:

[(a)] Two trustees appointed by the Governor, with the advice and consent of the Senate, who shall serve for a term of office of three years and until their successors are appointed, who shall be private citizens of the State of New Jersey and who are neither an officer thereof nor active or retired members of the system. Of the two trustees initially appointed by the Governor pursuant to P.L.1992, c.41 (C.43:6A-33.1 et al.), one shall be appointed for a term of two years and one for a term of three years.

[(b)] The State Treasurer or the Deputy State Treasurer, when designated for that purpose by the State Treasurer.

[(c) Three] Four trustees elected for a term of three years by the member employees of the State Part from among the active or retired State members of the retirement system in a manner prescribed by the board of trustees.

[(d) One trustee elected for a term of three years by the member employees of counties from among the active or retired county members of the retirement system and the same method of holding an election from time to time used for the State employees' representatives shall be followed in elections held for county representatives.

(e) Two trustees elected for a term of three years by the member employees of municipalities from among the active or retired municipal members of the retirement system and the same method of holding an election from time to time used for the State employees' representatives shall be followed in elections held for municipal representatives.

(3) ] Within five days following the effective date of P.L. , c. (pending before the Legislature as this bill), the Governor shall appoint one trustee from among the active or retired State members of the State Part of the retirement system to serve until an election for one such trustee is held and the elected trustee is determined and takes the oath of office.

A vacancy occurring in the board of trustees shall be filled by the appointment or election of a successor in the same manner as his predecessor.

Each member of the board shall, upon appointment or election, take an oath of office that, so far as it devolves upon him, he will diligently and honestly administer the board's affairs, and that he will not knowingly violate or willfully permit to be violated any provision of law applicable to this act. The oath shall be subscribed to by the member making it, certified by the officer before whom it is taken and filed immediately in the office of the Secretary of State.

Each trustee shall be entitled to one vote in the board and a majority of all the votes of the entire board shall be necessary for a decision by the board of trustees at a meeting of the board. The board shall keep a record of all its proceedings, which shall be open to public inspection.

The members of the board shall serve without compensation but shall be reimbursed for any necessary expenditures. No employee shall suffer loss of salary or wages through the serving on the board.

(4) 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 of the State Part 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 State Part of the retirement system its conclusions and recommendations upon all matters referred to it.

b. There [are] is established [two committees] a committee, to be composed of eight members [each] as follows[, one for the State employees part of the retirement system and one for the part of the retirement system with employees of employers other than the State].

[Each] The committee shall have four members who shall be appointed by the Governor as representatives of public employers whose employees are enrolled in the State Part of the retirement system, and four members who shall be appointed by the Public Employee Committee of the AFL-CIO with the four appointments to be allocated among the unions representing members of the State Part of the retirement system having union membership in a manner that results in the unions representing a greater number of members receiving more appointments than the unions representing fewer members. The members of the [committees] committee shall not be appointed until [that part] the State Part of the system attains the target funded ratio.

The members of [each] the committee shall serve for a term of three years and until a successor is appointed and qualified. [For each committee, of] Of the initial appointments by the Governor, two members shall serve for two years and until a successor is appointed and qualified, and one shall serve for one year and until a successor is appointed and qualified. [For each committee, of] Of the initial appointments by the Public Employee Committee of the AFL-CIO, one member shall serve for two years and until a successor is appointed and qualified, and one shall serve for one year and until a successor is appointed and qualified.

[For each committee, the] The members of the committee shall select a chairperson from among the members, who shall serve for a term of one year, with no member serving more than one term until all the members of that committee have served a term in a manner alternating among the employer representatives and employee representatives, unless the committee determines otherwise with regard to this process.

The provisions of paragraph (3) of subsection a. of this section, and section 36 of P.L.1954, c.84 (C.43:15A-36), shall apply to [each] the committee and its members[, as appropriate].

Upon the convening of any meeting of a committee, the members shall consider a motion to assume the authority provided in this subsection and shall proceed only if a majority of the members of the committee vote in the affirmative on that motion.

[Each] The committee may contract with such actuaries or consultants, or both, in accordance with the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), as the committee may deem necessary to perform its duties, when [that part] the State Part of the system has met the target funded ratio.

When [a part] the State Part of the system has attained the target funded ratio as defined in section 27 of P.L.2011, c.78 (C.43:3C-16), the committee for that part shall have the discretionary authority for that part to (1) modify the: member contribution rate; formula for calculation of final compensation; the fraction of compensation applied to service credited after the modification; age at which a member may be eligible for and the benefits for service or early retirement; and benefits provided for disability retirement; and (2) activate the application of the "Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.) for retirees for the period that the part is at or above the target funded ratio and modify the basis for the calculation of the adjustment and set the duration and extent of the activation. [A] The committee shall give priority consideration to subparagraph (2) of this paragraph. [A] The committee shall not have the authority to change the years of creditable service required for vesting.

[Each] The committee may consider a matter described above and render a decision notwithstanding that the provisions of the statutory law may set forth a specific requirement on that matter.

[Each] The committee may consider a matter described above and render a decision notwithstanding that the provisions of the statutory law do not set forth a specific requirement on the considered aspect of that matter or address that matter at all.

The members of [each] the committee shall have the same duty and responsibility to the State Part of the retirement system as do the members of the board of trustees. No decision of [a] the committee shall be implemented if the direct or indirect result of the decision will be that the funded ratio of that part falls below the target funded ratio in any valuation period during the 30 years following the implementation of the decision. The actuary of the fund shall make a determination of the result in that regard and submit that determination in a written report to the committee and the board prior to the implementation of the decision.

If any matter before [a] the committee receives at least five votes in the affirmative, the board of trustees shall approve and implement the committee's decision.

If any matter regarding benefits before [a] the committee receives four votes in the affirmative and four votes in the negative or [a] the committee otherwise reaches an impasse on a decision, the provisions of section 33 of P.L.2011, c.78 (C.43:3C-17) shall be followed.

A final action of the committee shall be made by the adoption of a regulation that shall identify the modifications to the system by reference to statutory section. The regulations shall also specify the effective date of the modification and the system members, including beneficiaries and retirees, to whom the modification applies. Regulations of the committee are considered to be part of the plan document for the system. A regulation adopted by the committee may be modified by regulation in order to comply with the requirements of this section.

c. No member of the board, committee, employee of the board, or employee of the Division of Pensions and Benefits in the Department of the Treasury shall accept from any person, whether directly or indirectly and whether by himself or through his spouse or any member of his family, or through any partner or associate, any gift, favor, service, employment or offer of employment, or any other thing of value, including contributions to the campaign of a member or employee as a candidate for elective public office, which he knows or has reason to believe is offered to him with intent to influence him in the performance of his public duties and responsibilities. As used in this subsection, "person" means an (1) individual or business entity, or officer or employee of such an entity, who is seeking, or who holds, or who held within the prior three years, a contract with the board; (2) an active or retired member, or beneficiary, of the retirement system; or (3) an entity, or officer or employee of such an entity, in which the assets of the retirement system have been invested. A board or committee member or employee violating this prohibition shall be guilty of a crime of the third degree.

(cf: P.L.2011, c.78, s.3)

11. Section 24 of P.L.1954, c.84 (C.43:15A-24) is amended to read as follows:

24. The contingent reserve fund shall be the fund in which shall be credited contributions made by the State and other employers.

a. 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 March 31, 1992, 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."

b. With respect to employers other than the State, upon the basis of the tables recommended by the actuary which the board of the Local Part adopts and regular interest, the actuary shall compute the amount of the accrued liability of the retirement system as of March 31, 1992 under the projected unit credit method, excluding the liability for pension adjustment benefits for active employees funded pursuant to section 2 of P.L.1990, c.6 (C.43:15A-24.1), 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 paid annually in level dollars for a specific period of time, will amortize this liability. The [State Treasurer] board of trustees of the Local Part shall determine, upon the advice of the [Director of the Division of Pensions and Benefits, the board of trustees and the] actuary, 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 1992 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. Beginning with the July 1, 2019 actuarial valuation, the accrued liability contribution shall be computed so that if the contribution is paid annually in level dollars, it will amortize this unfunded accrued liability over a closed 30-year period. Beginning with the July 1, 2029 actuarial valuation, when the remaining amortization period reaches 20 years, 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 20 years. If an increase in the amortization period as a result of actuarial losses for a valuation year would exceed 20 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 commission adopts and regular interest, the actuary shall annually determine if there is an amount of the accrued liability of the retirement system, 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 paid annually in level dollars for a specific period of time, will amortize this liability. The State Treasurer shall determine, upon the advice of the Director of the Division of Pensions and Benefits, the commission and the actuary, 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. Beginning with the July 1, 2019 actuarial valuation, the accrued liability contribution shall be computed so that if the contribution is paid annually in level dollars, it will amortize this unfunded accrued liability over a closed 30-year period. Beginning with the July 1, 2029 actuarial valuation, when the remaining amortization period reaches 20 years, 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 20 years. If an increase in the amortization period as a result of actuarial losses for a valuation year would exceed 20 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.

The value of the assets, excluding the special asset value set forth in section 38 of P.L.2010, c.1 (C.43:3C-14), 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 March 31, 1996 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 valuation assets for the valuation period ending June 30, 1999 shall be the full market value of the assets as of that date.

"Excess valuation assets" for a valuation period means, with respect to the valuation assets allocated to the State:

(1) the valuation assets allocated to the State; less

(2) the actuarial accrued liability of the State for basic benefits and pension adjustment benefits under the retirement system; less

(3) the contributory group insurance premium fund, created by section 4 of P.L.1955, c.214 (C.43:15A-91), as amended by section 4 of P.L.1960, c.79; less

(4) the post retirement medical premium fund, created pursuant to section 2 of P.L.1990, c.6 (C.43:15A-24.1), as amended by section 8 of P.L.1994, c.62; less

(5) the present value of the projected total normal cost for pension adjustment benefits in excess of the projected total phased-in normal cost for pension adjustment benefits for the State authorized by section 2 of P.L.1990, c.6 (C.43:15A-24.1) over the full phase-in period, determined in the manner prescribed for the determination and amortization of the unfunded accrued liability of the system, if the sum of the foregoing items is greater than zero.

"Excess valuation assets" for a valuation period means, with respect to the valuation assets allocated to other employers:

(1) the valuation assets allocated to the other employers; less

(2) the actuarial accrued liability of the other employers for basic benefits and pension adjustment benefits under the retirement system, excluding the unfunded accrued liability for early retirement incentive benefits pursuant to P.L.1991, c.229, P.L.1991, c.230, P.L.1993, c.138, and P.L.1993, c.181, for employers other than the State; less

(3) the contributory group insurance premium fund, created by section 4 of P.L.1955, c.214 (C.43:15A-91), as amended by section 4 of P.L.1960, c.79; less

(4) the present value of the projected total normal cost for pension adjustment benefits in excess of the projected total phased-in normal cost for pension adjustment benefits for the other employers authorized by section 2 of P.L.1990, c.6 (C.43:15A-24.1) over the full phase-in period, determined in the manner prescribed for the determination and amortization of the unfunded accrued liability of the system, if the sum of the foregoing items is greater than zero.

If there are excess valuation assets allocated to the State or to the other employers for the valuation period ending March 31, 1996, the normal contributions payable by the State or by the other employers for the valuation periods ending March 31, 1996 and March 31, 1997 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 State or to the other employers for a valuation period ending after March 31, 1996, the State Treasurer may reduce the normal contribution payable by the State or by the other employers for the next valuation period as follows:

(1) for valuation periods ending March 31, 1997 through March 31, 2001, 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 March 31, 2002, 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 March 31, 2003, 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 March 31, 2004 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.

For calendar years 1998 and 1999, the rate of contribution of members of the retirement system under section 25 of P.L.1954, c.84 (C.43:15A-25) shall be reduced by 1/2 of 1% from excess valuation assets and for calendar years 2000 and 2001, the rate of contribution shall be reduced by 2% from excess valuation assets. Thereafter, through calendar year 2007, the rate of contribution of members of the retirement system under that section for a calendar year shall be reduced equally with normal contributions to the extent possible, but not by more than 2%, from excess valuation assets if the State Treasurer determines that excess valuation assets shall be used to reduce normal contributions by the State and local employers for the fiscal year beginning immediately prior to the calendar year, or for the calendar year for local employers whose fiscal year is the calendar year, and excess valuation assets above the amount necessary to fund the reduction for that calendar year in the member contribution rate plus an equal reduction in the normal contribution shall be available for the further reduction of normal contributions, subject to the limitations prescribed by this subsection.

If there are excess valuation assets after reductions in normal contributions and member contributions as authorized in the preceding paragraphs for a valuation period beginning with the valuation period ending June 30, 1999, an amount of excess valuation assets not to exceed the amount of the member contributions for the fiscal year in which the normal contributions are payable shall be credited to the benefit enhancement fund. The amount of excess valuation assets credited to the benefit enhancement fund shall not exceed the present value of the expected additional normal contributions attributable to the provisions of P.L.2001, c.133 payable on behalf of the active members over the expected working lives of the active members in accordance with the tables of actuarial assumptions for the valuation period. No additional excess valuation assets shall be credited to the benefit enhancement fund after the maximum amount is attained. Interest shall be credited to the benefit enhancement fund as provided under section 33 of P.L.1954, c.84 (C.43:15A-33).

The normal contribution for the increased benefits for active employees under P.L.2001, c.133 shall be paid from the benefit enhancement fund. If assets in the benefit enhancement fund are insufficient to pay the normal contribution for the increased benefits for a valuation period, the State shall pay the amount of normal contribution for the increased benefits not covered by assets from the benefit enhancement fund.

c. The retirement system shall certify annually the aggregate amount payable to the contingent reserve fund in the ensuing year, which amount shall be equal to the sum of the amounts described in this section.

The State Treasurer shall reduce the normal and accrued liability contributions payable by employers other than the State, excluding the contribution payable from the benefit enhancement fund, 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.

The State shall pay into the contingent reserve fund during the ensuing year the amount so determined. The death benefits, payable as a result of contribution by the State under the provisions of this chapter upon the death of an active or retired member, shall be paid from the contingent reserve fund.

d. The disbursements for benefits not covered by reserves in the system on account of veterans shall be met by direct contributions of the State and other employers.

(cf: P.L.2017, c.98, s.24)

12. Section 25 of P.L.1954, c.84 (C.43:15A-25) is amended to read as follows:

25. a. The annuity savings fund shall be the fund in which shall be credited accumulated deductions and contributions by members or on their behalf to provide for their allowances. A single account shall be established in this fund for each person who is or shall become a member and all contributions deducted from each such member's compensation shall be credited to this single account.

b. (1) Members enrolled in the retirement system on or after July 1, 1994 shall contribute 5% of compensation to the system. Members enrolled in the system prior to July 1, 1994 shall contribute 5% of compensation to the system effective with the payroll period for which the beginning date is closest to July 1, 1995, provided, however, that any member enrolled before July 1, 1994, whose full contribution rate under the system prior to the revisions by this act was less than 6%, shall pay 4% of compensation to the system effective with the payroll period for which the beginning date is closest to July 1, 1995, and 5% of compensation to the system effective with the payroll period for which the beginning date is closest to July 1, 1996.

(2) Members enrolled in the retirement system on or after July 1, 2007 who are:

employees of the State, other than employees of the Judicial Branch;

employees of an independent State authority, board, commission, corporation, agency or organization;

employees of a local school district, regional school district, county vocational school district, county special services school district, jointure commission, educational services commission, State-operated school district, charter school, county college, any officer, board, or commission under the authority of the Commissioner of Education or of the State Board of Education, and any other public entity which is established pursuant to authority provided by Title 18A of the New Jersey Statutes; or

employees of a State public institution of higher education shall contribute 5.5% of compensation to the system, and all such members described above enrolled in the system prior to July 1, 2007 shall contribute 5.5% of compensation to the system effective with the payroll period for which the beginning date is closest to July 1, 2007.

Members enrolled in the retirement system on or after July 1, 2008, other than those described in the paragraph above, shall contribute 5.5% of compensation to the system. Members enrolled in the system prior to July 1, 2008, other than those described in the paragraph above, shall contribute 5.5% of compensation to the system effective with the payroll period that begins immediately after July 1, 2008.

(3) Members of the retirement system shall contribute 6.5% of compensation to the system on and after the effective date of P.L.2011, c.78, with an additional contribution of 1% to be phased in in equal increments over a period of seven years commencing with the first year following that effective date.

(4) The board of trustees of the Local Part is authorized to make an adjustment to the uniform contribution rate of the members of the Local Part set forth in this subsection as the board deems reasonable, necessary, and appropriate with the approval of at least five members of the board of trustees of the Local Part after consultation with, and the recommendation of, the actuary. Any adjustment to a contribution rate shall be made at such time and in such manner as the board shall determine upon certification by the actuary that such change will not result in an increased employer contribution in the current year and that such change will not impact the long term viability of the fund.

c. The retirement system shall certify to each State department or subdivision thereof, and to each branch of the State service not included in a State department, and to every other employer, the proportion of each member's compensation to be deducted and to facilitate the making of deductions the retirement system may modify the deduction required by a member by such an amount as shall not exceed 1/10 of 1% of the compensation upon the basis of which the deduction is to be made.

If payment in full, representing the monthly or biweekly 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 6% per annum shall commence to run against the total transmittal of salary deductions for the period on the first day after such fifteenth day.

d. Every employee to whom this act applies shall be deemed to consent and agree to any deduction from his compensation required by this act and to all other provisions of this act. Notwithstanding any other law, rule or regulation affecting the salary, pay, compensation, other perquisites, or tenure of a person to whom this act applies, or shall apply, and notwithstanding that the minimum salary, pay, or compensation or other perquisites provided by law for him shall be reduced thereby, payment, less such deductions, shall be a full and complete discharge and acquittance of all claims and demands for service rendered by him during the period covered by such payment.

(cf: P.L.2012, c.45, s.124)

13. Section 32 of P.L.1954, c.84 (C.43:15A-32) is amended to read as follows:

32. The board of trustees of the State Part and the Local Part shall be and are hereby constituted trustees of the various funds and accounts established by this act [; provided, however, that all] for the State Part and the Local Part, as appropriate. 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 for the State Part established under this act, shall be exercised and performed by the Director of the Division of Investment in accordance with the provisions of chapter 270, P.L.1950, as amended and supplemented, for the State Part. The secretary of the board of trustees for the State Part and the actuary for the Local Part 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 for the State Part and to the chair and executive director of the board of trustees for the Local Part.

The members of the finance committee of the board of trustees of the State Part shall be appointed at or after July 1 of each calendar year by the chairman of the board of trustees of the State Part to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees of the State Part shall consist of five members of the board of trustees, one of whom shall be the State Treasurer, and one of whom shall be the member designated to serve on the State Investment Council. At least three members of the finance committee shall be members of the board of trustees of the State Part who have been elected by members of the system. A quorum of the finance committee shall consist of three members thereof.

An elected member of the board of trustees of the State Part 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 three years and until a successor is designated and qualified.

The Division of Investment, the Director of the Division of Investment, and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council, by P.L. 2017, c. 98 (C.5:9-22.5 et seq.).

(cf: P.L.2011, c.78, s.30)

14. Section 34 of P.L.1954, c.84 (C.43:15A-34) is amended to read as follows:

34. Any member who has at least 3 years of service to his credit for which he has contributed as a member may borrow from the retirement system, an amount equal to not more than 50% of the amount of his accumulated deductions, but not less than $50.00; provided, that the amount so borrowed, together with interest thereon, can be repaid by additional deductions from compensation, not in excess of 25% of the member's compensation, made at the same time compensation is paid to the member. The amount so borrowed, together with interest on any unpaid balance thereof, shall be repaid to the retirement system in equal installments by deduction from the compensation of the member at the time the compensation is paid or in such lump sum amount to repay the balance of the loan but such installments shall be at least equal to the member's rate of contribution to the retirement system and at least sufficient to repay the amount borrowed with interest thereon. Not more than two loans may be granted to any member in any calendar year. Notwithstanding any other law affecting the salary or compensation of any person or persons to whom this act applies or shall apply, the additional deductions required to repay the loan shall be made.

The rate of interest for a loan requested by a member prior to the effective date of P.L.2007, c.92 (C.43:15C-1 et al.) shall be 4% per annum on any unpaid balance thereof. For a loan requested after the effective date of that act, the rate of interest per annum shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on that effective date, and on January 1 of each calendar year thereafter, or by the board of trustees of the Local Part for each calendar year after the effective date of P.L, , c. (pending before the Legislature as this bill). An administrative fee in an amount set by the State Treasurer for the State Part, or the board of trustees for the Local Part, as appropriate, for each calendar year may be charged for any loan requested after the effective date of P.L.2007, c.92 (C.43:15C-1 et al.).

Loans shall be made to a member from his accumulated deductions. The interest earned on such loans shall be treated in the same manner as interest earned from investments of the retirement system.

(cf: P.L.2007, c.92, s.36)

15. Section 65 of P.L.1954, c.84 (C.43:15A-65) is amended to read as follows:

65. (a) All employees of any public agency or organization of this State, which employs persons engaged in service to the public, shall be eligible to participate in the Local Part of the Public Employees' Retirement System; provided the employer consents thereto by resolution and files a certified copy of such resolution with the board of trustees of the Public Employees' Retirement System and the board of trustees approves thereof by resolution. Such organization shall be referred to in this act as the employer. If the participation of such employees is so approved then the employer shall contribute to the contingent reserve fund on account of its members at the same rate per centum as would be paid by employers other than the State.

(b) Notwithstanding the provisions of subsection (a) of this section, every person becoming an employee of a public agency or organization of this State, which employs persons engaged in service to the public, after June 30, 1966, who is not eligible to become a member of any other retirement system, shall be required to participate in the Local Part of the Public Employees' Retirement System. Notwithstanding the provisions of subsection (a) of this section, membership in the Public Employees' Retirement System shall be optional with any person in the employ of any such public agency or organization on June 30, 1966, provided such person is not required to be a member pursuant to another provision of this act, and provided further that such person is not eligible to be a member of any other retirement system. The provisions of this subsection shall not apply to any person whose position is temporary or seasonal, nor to any person in office, position or employment for which the annual salary or remuneration, or the number of hours of work, is fixed at less than that which is required for membership pursuant to section 7 of P.L.1954, c.84 (C.43:15A-7) as applicable to the member, nor to any person whose position is not covered by the old-age and survivors' insurance provisions of the federal Social Security Act. After the effective date of P.L.2010, c.1, the provisions of this subsection shall not apply to any person in office, position or employment for which the hours of work are fewer per week than those required for membership pursuant to subsection d. of section 7 of P.L.1954, c.84 (C.43:15A-7), unless the person shall have been a member since that effective date continuously. The public agency or organization employing any such person who becomes a member of the retirement system pursuant to this subsection shall contribute to the contingent reserve fund on account of such employees at the same rate per centum as would be paid by employers other than the State.

(cf: P.L.2010, c.1, s.5)

16. Section 68 of P.L.1954, c.84 (C.43:15A-68) is amended to read as follows:

68. The Public Employees' Retirement System shall certify to the chief fiscal officer of the employer the rates of contributions payable by members. The system shall further certify, no later than December 31 each year, the contributions, including the accrued liability contribution similar to the State accrued liability contribution, payable by the employer to the contingent reserve fund on behalf of these members, and a pro rata share of the cost of the administration of the retirement system, based upon the payroll of the members who are employees of the employer. The initial actuarial expense incident to the determination of the accrued liability contribution payable by the employer shall be paid by the employer. The amount certified by the system as payable by such employer to the contingent reserve fund shall be included in the next budget subsequent to the certification by the system. The treasurer or corresponding officer shall pay to the State Treasurer or the board of trustees of the Local Part, as appropriate, no later than April 1 of the State's fiscal year in which payment is due the amount of the employer's charges so certified. If payment of the full amount of such obligation is not made within 30 days after April 1, interest at the rate of 10% per annum shall commence to run against the unpaid balance thereof on the first day after such thirtieth day. The treasurer or corresponding officer shall also pay to the State Treasurer or the board of trustees of the Local Part the amount of the deductions from the compensation of the members who are employees of the employer. The State Treasurer or the board of trustees of the Local Part, as appropriate, shall credit these amounts to the appropriate fund or account.

Nothing in P.L. , c. (C. )(pending before the Legislature as this bill) shall relieve State or local government employers of any present or future obligations of their normal cost or unfunded liabilities required to be paid into the retirement system.

(cf: P.L.1992, c.41, s.17)

17. Section 5 of P.L.1950, c.270 (C.52:18A-83) is amended to read as follows:

5. a. There is hereby established in the Division of Investment a State Investment Council which shall consist of 16 members.

(1) Each of the following agencies, namely, the State Part of the Board of Trustees of the Public Employees' Retirement System, and the Board of Trustees of the Teachers' Pension and Annuity Fund, shall designate one board member elected to serve on the board, to serve as a member of the State Investment Council herein established. The Chief Justice of the New Jersey Supreme Court shall designate one member of the Retired Judges Association of New Jersey to serve as a member of the State Investment Council herein established. The three members of the council so designated shall serve as such for a period of three years from the date of their designation and until their respective successors are in like manner designated.

(2) Eight of the members of the State Investment Council shall be appointed by the Governor, with the advice and consent of the Senate, for a term of five years and shall serve until the member's successor is appointed and has qualified. Of the initial members appointed following the effective date of P.L.2011, c.78, one shall serve for an initial period of three years, and one shall serve for an initial period of two years.

(3) One member of the State Investment Council shall be appointed by the Governor from among three persons nominated jointly by the President of the Senate and the Speaker of the General Assembly and shall serve for a term of five years and until the member's successor is appointed and has qualified.

(4) Two members of the State Investment Council shall be appointed by the Governor from among six persons nominated by the Public Employee Committee of the New Jersey State AFL-CIO and shall serve for a term of five years and until the member's successor is appointed and has qualified. If the persons nominated are not acceptable to the Governor for appointment, the Governor may request submission of new nominees.

(5) One member of the State Investment Council shall be appointed by the Governor from among three persons nominated by the New Jersey Education Association and shall serve for a term of three years and until the member's successor is appointed and has qualified. If the persons nominated are not acceptable to the Governor for appointment, the Governor may request submission of new nominees.

(6) One member of the State Investment Council shall be appointed by the Governor from among three persons nominated by the State Troopers Fraternal Association and shall serve for a term of three years and until the member's successor is appointed and has qualified. If the persons nominated are not acceptable to the Governor for appointment, the Governor may request submission of new nominees.

The four members appointed pursuant to paragraphs (4), (5) and (6) of this subsection by the Governor to the council shall be qualified by training, experience or long-term interest in the direct management, analysis, supervision or investment of assets, and this training, experience or long-term interest shall have been supplemented by academic training in the fields of economics, business, law, finance or actuarial science or by actual employment in those fields.

At least seven of the nine members appointed pursuant to paragraphs (2) and (3) of this subsection by the Governor to the council shall be qualified by training and experience in the direct management, analysis, supervision or investment of assets, which training and experience shall have been acquired through academic training or through actual employment in those fields.

b. No member of the State Investment Council shall hold any office, position or employment in any political party nor shall any such member benefit directly or indirectly from any transaction made by the Director of the Division of Investment provided for herein.

The members of the council shall elect annually from their number a chairman of such council. Any member of the council so elected shall serve as such chairman for a term of one year and until a successor is, in like manner, elected. The chairman of the council shall be its presiding officer.

The members of the council shall serve without compensation but shall be reimbursed for necessary expenses incurred in the performance of their duties as approved by the chairman of the council. The members of the council shall be required to file the same annual financial disclosure statements as those required to be filed by members of other State boards and commissions who are not compensated for their services, as such statements shall be required by law or executive order of the Governor. The financial disclosure statements of council members shall be made available to the public in the same manner as the statements of members of other State boards and commissions are made available to the public.

Each member of the council, except the member appointed from among persons nominated by the President of the Senate and the Speaker of the General Assembly, may be removed from office by the Governor, for cause, upon notice and opportunity to be heard at a public hearing. Any vacancy in the membership of the council occurring other than by expiration of term shall be filled in the same manner as the original appointment, but for the unexpired term only.

c. The terms of the members of the council serving pursuant to paragraph (1) of subsection a. of this section and serving on the effective date of P.L.2011, c.78 are terminated as of that effective date. A member terminated pursuant to this subsection shall be eligible for reappointment.

(cf: P.L.2019, c.435, s.1)

18. Section 7 of P.L.1950, c.270 (C.52:18A-85) is amended to read as follows:

7. The functions, powers and duties vested by law in the following enumerated agencies:

The Board of Trustees of the State Part 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; 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, are hereby transferred to and shall be exercised and performed for such agencies by the Director of the Division of Investment established hereunder. Notwithstanding this provision, the Board of Trustees of the Police and Firemen's Retirement System and of the Local Part of the Public Employees’ Retirement System shall have the authority to direct investment policy. The purchase, sale or exchange of any investments or securities under the control and management of the Board of Trustees of the Police and Firemen's Retirement System or of the Local Part of the Public Employees’ Retirement System shall be exercised and performed by the Director of the Division of Investment. Notwithstanding this provision, Common Pension Fund L and the assets held by Common Pension Fund L as of the effective date of this Act and thereafter, including the interest of the Police and Firemen's Retirement System of New Jersey and of the Local Part of the Public Employees’ Retirement System therein shall remain within the Division of Investment. The Division of Investment, the Director of the Division of Investment and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council, by P.L. 2017, c. 98 (C.5:9-22.5 et seq.).

(cf: P.L.2018, c.55, s.35)

19. Section 1 of P.L.1959, c.17 (C.52:18A-88.1) is amended to read as follows:

1. 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;

The Police and Firemen's Retirement System of New Jersey;

The Prison Officers' Pension Fund;

The Public Employees' Retirement System of New Jersey;

The State Police Retirement System;

The Teachers' Pension and Annuity Fund;

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, or in the case of the Police and Firemen's Retirement System of New Jersey, by regulation of the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, or in the case of the board of trustees of the Local Part of the Public Employees’ Retirement System, by regulation of the board of trustees of the Local Part, except that notwithstanding this provision, Common Pension Fund L and the assets held by Common Pension Fund L as of the effective date of this Act and thereafter, including the interest of the Police and Firemen's Retirement System of New Jersey or Local Part of the Public Employees’ Retirements System therein shall remain within the Division of Investment. The Director of the Division of Investment and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council, by P.L. 2017, c. 98 (C.5:9-22.5 et seq.).

(cf: P.L.2018, c.55, s.36)

20. Section 11 of P.L.1950, c.270 (C.52:18A-89) is amended to read as follows:

11. a. Limitations, conditions and restrictions contained in any law concerning the kind or nature of investment of any of the moneys of any of the funds or accounts referred to herein shall continue in full force and effect; provided, however, that subject to any acceptance required, or limitation or restriction contained herein: the Director of the Division of Investment shall at all times have authority to invest and reinvest any such moneys in investments as defined in subsection c. of this section and, for or on behalf of any such fund or account, to sell or exchange any such investments; provided, however, that the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, and the Board of Trustees of the Local Part of the Public Employees’ Retirement System, shall have the authority to direct the investment and reinvestment policies for or on behalf of the Police and Firemen's Retirement System of New Jersey or the Local Part of the Public Employees’ Retirement System, as appropriate, with the exception of those monies held by Common Pension Fund L as of the effective date of this act and thereafter, which the Board of Trustees of the Police and Firemen's Retirement System of New Jersey or the Board of Trustees of the Local Part of the Public Employees’ Retirement System shall have no authority to direct investment associated with the Common Pension Fund L. The Director of the Division of Investment shall retain all functions, powers, and duties pursuant to P.L. 2017, c. 98 (C.5:9-22.5 et seq.).

b. In investing and reinvesting any and all money and property committed to the director's investment discretion from any source whatsoever, and in acquiring, retaining, selling, exchanging and managing investments, the Director of the Division of Investment, and in the case of the Police and Firemen's Retirement System of New Jersey, the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, and in the case of the Local Part of the Public Employees’ Retirement System, the board of trustees of the Local Part, the shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. In making each investment, the director may, depending on the nature and objectives of the portfolio, consider the whole portfolio, provided that, in making each investment, the director shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. The director shall be under a duty to manage and invest the portfolio solely in the interests of the beneficiaries of the portfolio and for the exclusive purpose of providing financial benefits to the beneficiaries of the portfolio.

c. For the purposes of this section, "investments" means and includes property of every nature, real, personal and mixed, tangible and intangible, and specifically includes, solely by way of description and not by way of limitation, bonds, debentures and other corporate obligations, direct and indirect investments in equity real estate, mortgages and other direct or indirect interests in real estate or investments secured by real estate, capital stocks, common stocks, preferred stocks, diversified pools of venture capital which otherwise could be made consistent with the standard of care required by subsection b. of this section, common trust funds as defined in and regulated by sections 36 through 46 of P.L.1948, c.67 (C.17:9A-36 through 17:9A-46), repurchase agreements, securities loan transactions secured by cash, securities issued by the United States government or its agencies, or irrevocable bank letters of credit, whether directly or through a bank or similar financial institution acting as agent or trustee, mutual funds, and any other security issued by an investment company or investment trust, whether managed or not by third parties, registered under the "Investment Company Act of 1940," (15 U.S.C. s.80a-1 et seq.). No investment that is otherwise permissible under this subsection shall be considered to be unlawful solely because the investment is made indirectly or through a partnership, trust, or other legal entity.

(cf: P.L.2018, c.55, s.37)

21. The terms of service of those elected members serving on the board of trustees of the Public Employees’ Retirement System on the effective date of P.L. , c. (pending before the Legislature as this bill) in accordance with subparagraph (d) and (e) of paragraph (2) of subsection a. of section 17 of P.L.1954, c.84 (C.43:15A-17) shall be terminated as of the effective date of P.L. c. (pending before the Legislature as this bill), so that the board of trustees of the Local Part of the Public Employees' Retirement System shall commence its duties. A trustee whose service on the board has been terminated pursuant to this section may be appointed to serve as a trustee of the Local Part if qualified.

22. This act shall take effect on the 366th day next following the date of enactment, except the provisions concerning the appointment and composition of the new board of trustees of the Local Part of the Public Employees’ Retirement System, set forth in section 1 of this act, shall take effect on the first day of the fourth month next following the date of enactment of this act and the new board of trustees of the Local Part shall take office on the first business day of the seventh month next following the date of enactment of this act. The board of trustees of the Public Employees’ Retirement System, the Division of Pensions and Benefits, and the Division of Investment may take such anticipatory administrative action in advance as shall be necessary for the implementation of the act.

STATEMENT

This bill divides the Public Employees’ Retirement System (PERS) into a State Part for employees and retirees of the State and a Local Part for employees and retirees of public employers other than State. The bill transfers management of the Local Part from the Division of Pensions and Benefits in the Department of the Treasury to the Board of Trustees of the Local Part of PERS.

The bill creates a board of trustees for the Local Part composed of seven members. There will be three trustees representing public employers who have active members and retirees in the Local Part of PERS, and three trustees representing collective bargaining units that represent active employees in the Local Part of PERS. There will be one trustee appointed in a manner provided by the other trustees.

The board of trustees for the Local Part will manage the Local Part of PERS and develop the policies for the investment of the funds of the Local Part of PERS. The Division of Investment in the Department of the Treasury will manage the investments in accordance with polices developed by the board.

The bill requires the board to hire an executive director, actuary, chief investment officer, ombudsman, and internal auditor, and retain legal counsel.

This bill imposes certain education and experience requirements on the executive director and chief investment officer employed by the board.

The bill provides the board of trustees of the Local Part with authority to modify the system’s member contribution rate; cap on creditable compensation; formula for calculation of final compensation; and standards for special retirement and disability retirement. The bill allows the board to reinstate cost of living adjustments for retirees. At least five votes of the authorized membership of the board would need to approve any enhancement or reduction of a member benefit, or to approve any increase or decrease in the employer contribution that is more than what is recommended by the actuary for the system for the purpose of the annual funding requirements of the system.

This bill requires the board of trustees of the Local Part, at the end of six years following the enactment date of this bill, to conduct a review of the performance and funding levels of the retirement system, as compared to available market data, including, but not limited to, the performance of the State Investment Council and Division of Investment with regard to the investment of other State-administered retirement systems or funds and other appropriate benchmarks, and may, based on a majority vote of the authorized membership of the board, petition the Legislature to consider legislation that reverts control of the system to the Department of the Treasury, or other agency as the State deems appropriate.

The bill does not diminish the non-forfeitable right PERS members have to receive the benefits provided under State law or affirmed by the State’s courts. Nothing in the bill relieves the State or local government employers of any past, present, or future obligations to the PERS or its members.