ASSEMBLY, No. 844

 

STATE OF NEW JERSEY

 

Introduced Pending Technical Review by Legislative Counsel

 

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

 

 

By Assemblymen COTTRELL and MALONE

 

 

An Act concerning the formula for death benefits payable upon death of retired members of the Teachers' Pension and Annuity Fund, amending N.J.S.18A:66-37, N.J.S.18A:66-41, N.J.S.18A:66-42, N.J.S.18A:66-44 and N.J.S.18A:66-53.

 

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

 

    1. N.J.S.18A:66-37 is amended to read as follows:

    18A:66-37. Should a member resign after having established 25 years of creditable service before reaching age 60, he may elect "early retirement," provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent to the execution and filing thereof he desires to be retired. He shall receive, in lieu of the payment provided in [section] N.J.S.18A:66-34, an annuity which is the actuarial equivalent of his accumulated deductions and a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 1/70 of his final compensation for each year of service credited as class A service and 1/60 of his final compensation for each year of service credited as class B service, calculated in accordance with [section] N.J.S.18A:66-44, reduced by 1/4 of 1% for each month that the member lacks of being age 55; provided, however, that upon the receipt of proper proofs of the death of such a member there shall be paid to his beneficiary an amount equal to 3/16 of the compensation upon which contributions by the member [of] to the annuity savings fund were based in the last year of creditable service or in the year of the member's highest contractual salary, whichever is higher.

    The board of trustees shall retire him at the time specified or at such other time within [1] one month after the date so specified as the


board finds advisable.

(cf: P.L.1973, c.131, s.1)

 

    2. N.J.S.18A:66-41 is amended to read as follows:

    18A:66-41. A [member']member upon retirement for ordinary disability shall receive a [retiren)ent] retirement allowance which shall consist of:

    (a) [An] an annuity which shall be the actuarial equivalent of his accumulated deductions at the time of his retirement together with regular interest after January 1, 1956; and

    (b) [A] a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 1½% of final compensation multiplied by his number of years of creditable service; and provided further, that in no event shall the [allowalice] allowance be less than 40% of final compensation, except that in no case shall the rate of allowance exceed 9/10 of the rate of the regular service retirement allowance which the member would have received had he remained in service from the date of retirement to age 60.

    Upon the receipt of proper proofs of the death of a member who has retired on an ordinary disability retirement allowance, there shall be paid to such member's beneficiary, an amount equal to 1½ times the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable [to] service or in the year of the member's highest contractual salary, whichever is higher; provided, however, that if such death shall occur after the member shall [gave] have attained age 60, the amount payable shall equal 3/16 of such compensation. The death benefits provided in this section shall apply to any member who has retired or shall retire on or after January 1, 1956.

(cf: P.L.1971, c.121, s.22)

 

    3. N.J.S.18A:66-42 is amended to read as follows:

    18A:66-42. A member under 65 years of age upon retirement for accidental disability shall receive a retirement allowance which shall consist of:

    (a) [An] an annuity which shall be the actuarial equivalent of his accumulated deductions at the time of his retirement together with regular interest after January 1, 1956; and

    (b) [A] a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of [2/3%]2/3 of his actual annual compensation for which contributions were being made at the time of the [occurence] occurrence of the accident.

    Upon the[,]receipt of proper proofs of the death of a member who has retired on an accidental disability retirement allowance, there shall be paid to such member's beneficiary, an amount equal to 1½ times the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable service or in the year of the member's highest contractual salary, whichever is higher; provided, however, that if such death shall occur after the member shall have attained age 60, the amount payable shall equal 3/16 of such compensation. The death benefits provided in this section shall apply to any member who has retired or shall retire on or after January 1, 1956.

(cf: P.L.1971, c.121, s.23)

 

    4. N.J.S.18A:66-44 is amended to read as follows:

    18A:66-44. A member, upon retirement for service, shall receive a retirement allowance consisting of:

    (a) an annuity which shall be the actuarial equivalent of his accumulated deductions, together with interest after January 1, 1956, less any excess contributions as provided in [section] N.J.S. 18A:66-20; and

    (b) [A] a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 1/70 of his final compensation for each year of service credited as class A service and 1/60 of his final [compelisation] compensation for each year of service credited as class B service.

    Upon the receipt of proper proofs of the death of a member who has retired on a service retirement allowance, there shall be paid to the member's beneficiary, an amount equal to 3/16 of the compensation upon which contributions by the member to the annuity savings fund were based in the last year of [credtiable] creditable service or in the year of the member's highest contractual salary, whichever is higher.

(cf: P.L.1971, c.121, s.25)

 

    5. N.J.S.18A:66-53 is amended to read as follows:

    18A:66-53. a. Each member who is a member on January 1, 1958 and each person who thereafter becomes a member will be eligible to purchase the additional death benefit coverage hereinafter described, provided that he selects such coverage within one year after January 1, 1958 or after the effective date of membership, whichever date is later.

    b. Each member who is a member on [the effective date of this amendatory act] October 29, 1969 , but for whom such additional death benefit coverage is not then in effect, shall, during the period stated below, also be eligible to elect such additional death benefit coverage, provided he (1) furnished satisfactory evidence of insurability, (2) on the date of such election is actively at work and performing all his regular duties at his customary place of employment and (3) agrees to make such additional contribution as may be required by the board of trustees by reason of the commencement of such [members's] member's participation in the benefits of this section pursuant to this subsection b. Applications under this subsection shall be filed during the period January 1, 1970 to March 31, 1970, both dates inclusive. Benefits for a member applying under this [subsction] subsection shall come into effect on the later of (a) July 1, 1970 and (b) the date a required percentage of such members shall have applied for such additional death benefit coverage. This required percentage shall be fixed by the board of trustees. Any such percentage may be made applicable to male or female members only or to other groupings as determined by the board of trustees.

    c. No member who enrolls on and after July 1, 1970 for the additional death benefit coverage provided by this section shall be eligible for the benefits described in subsections f. and g. if such [such] member retires with less than 10 years of participation in the program.

    d. The board of trustees shall establish schedules of contributions to be made by the members who elect to purchase the additional death benefit coverage. Such contributions shall be so computed that the contributions made by or on behalf of all covered [member's] members in the aggregate shall be sufficient to provide for the cost of the benefits established by subsections e. and g. of this section. Such schedules of contributions shall be subject to adjustment from time to time, by the board of trustees, as the need may appear.

    e. Upon the receipt of proper proofs of the death in service, [occuring] occurring on or after July 1, 1968, of any such member while covered for the additional death benefit coverage there shall be paid to such member's beneficiary an amount equal to two times the compensation received by the member in the last year of creditable service.

    f. The board of trustees may also provide, effective as of January 1, 1961, for additional death benefit coverage, as described in subsection g. of this section, for former members who are receiving retirement allowances pursuant to the provisions of this article, subject to the provisions hereinafter stated, and the board may terminate such coverage at any time[, the] . The additional death benefit coverage to be so provided shall be in accordance with rules as determined by the board from time to time on the basis of dates of retirement or other factors deemed appropriate by it. In no event shall the additional death benefit coverage described in subsection g. of this section apply to any former member receiving a retirement allowance unless such member was covered by the additional death benefit described in subsection e. of this section during the former member's last month of creditable service. No contributions toward the cost of additional death benefit coverage described in subsection g. of this section shall be required of a former member while he is receiving a retirement allowance pursuant to the provisions of this article.

    g. Upon receipt of proper proofs of the death, occurring on or after July 1, 1968, of a former member who was covered for the additional death benefit coverage pursuant to subsection f. of this section, there shall be paid to such former member's beneficiary an amount equal to 1/4 of the compensation received by the former member in the last year of creditable service or in the year of the former member's highest contractual salary, whichever is higher.

    h. The contributions of a member for the additional death benefit coverage shall be deducted from his compensation, but if there is no compensation from which such contributions may be deducted it shall be the obligation of the member, except as provided in subsection j. of this section, to make such contributions directly to the retirement system or as directed by the system; provided, however, that no contributions shall be required while a member remains in service after attaining age 70 but that his employer shall be required to pay into the fund on his behalf in such case an amount equal to the contributions otherwise required by the board of trustees in accordance with this section.

    i. Any other provisions of this article notwithstanding the contributions of a member for the additional death benefit coverage under this section shall not be returnable to the member or his beneficiary in any manner, or for any reason whatsoever, nor shall any contributions made for the additional death benefit coverage be included in any annuity payable to any such member or to his beneficiary.

    j. For the purpose of this section, a member shall be deemed to be in service (1) while he is disabled due to sickness or injury arising out of or in the course of his employment as a teacher to whom this article applies, is not engaged in any gainful occupation, and is receiving or entitled to receive periodic benefits (including any commutation of, or substitute for, such benefits) for loss of time on account of such disability under or by reason of workmen's compensation law, occupational disease law or similar legislation; or (2) for a period of no more than two years while on official leave of absence without pay if satisfactory evidence is presented to the retirement system that such leave of absence without pay is due to illness other than an illness to which (1) above applies. No contributions for the optional death benefit provided by this section shall be required of a member while he is deemed to be in service pursuant to the above provisions of this subsection j.

    k. All other provisions of this section notwithstanding , this section and the benefits provided under this section shall not come into effect until a required percentage of the members shall have applied for the additional death benefit coverage under this section. This required percentage shall be fixed by the board of trustees. Any such percentage may be made applicable to [to] male or female [member's] members only or to other groupings as determined by the board of trustees. Applications for such additional death benefit coverage shall be submitted to the system in such manner and upon such forms as the retirement system shall provide.

    l. Any person becoming a member of the retirement system after benefits provided under this section shall have come into effect, who is, by sex or other characteristic, within the grouping to which the additional death benefit coverage under this section is applicable, for the first year of his membership in the retirement system shall be covered by the additional death benefit coverage provisions of this section with the benefit in the event of death, in the first year of membership only, being based upon contractual salary instead of compensation actually received and shall make contributions as fixed by the board of trustees during such period. Such member shall have the right to continue to be covered by the benefits of this section and to contribute therefor after his first year of membership has been completed. This subsection shall not apply in the case of such a member who has already attained his sixtieth birthday prior to becoming a member of the retirement system unless he shall furnish satisfactory evidence of insurability at the time of becoming a member.

(cf: P.L.1984, c.132, s.3)

 

    6. This act shall take effect immediately and shall be retroactive to January 1, 1992.

 

 

STATEMENT

 

    This bill changes the formula used in the "Teachers' Pension and Annuity Fund Law" for calculating the death benefit payable on account of a member's death after retirement.

    Under current law, the retirant's paid-up life insurance benefit is based upon compensation received by the retirant in the last year of creditable service. The bill provides that the benefit would be based upon either that compensation or on the compensation received in the year of the member's highest contractual salary, whichever results in a higher benefit.

    The bill would be retroactive to January 1, 1992.

 

 

 

Changes the calculation of TPAF post-retirement death benefit.