ASSEMBLY, No. 2415

 

STATE OF NEW JERSEY

 

INTRODUCED OCTOBER 7, 1996

 

 

By Assemblymen DORIA and COLLINS

 

 

An Act concerning creditable service in certain State-administered retirement systems and for retiree health benefits coverage in the State Health Benefits Program, amending and supplementing chapter 66 of Title 18A of the New Jersey Statutes and P.L.1954, c.84, and amending P.L.1961, c.49 and P.L.1964, c.125.

 

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

 

    1. N.J.S.18A:66-15.1 is amended to read as follows:

    18A:66-15.1. a. A member who is a member of another State-administered retirement system or pension fund at the time of enrollment in the Teachers' Pension and Annuity Fund and who [does not contribute to the other system or fund after that time] has ceased or ceases, at that time or subsequently, to be an active contributing member of the other system or fund may transfer the service credit in the other system or fund to the Teachers' Pension and Annuity Fund upon application and transfer of the member's contributions from the other system or fund to the fund. If the member has withdrawn the contributions to the other retirement system or pension fund, the member may purchase credit for the service in the other system or fund. The purchase shall be made in the same manner and be subject to the same terms and conditions provided for the purchase of previous membership service by N.J.S.18A:66-9.

    b. A member of the retirement system who had established service credit in a municipal or county retirement system or pension fund, and who was ineligible to transfer the service credit to the retirement system and withdrew contributions from the municipal or county retirement system or pension fund, may purchase credit for all of the member's service in that retirement system or pension fund by paying into the annuity savings fund the amount required by applying the factor, supplied by the actuary, as being applicable to the member's age at the time of the purchase, to the member's salary at that time, or to the highest annual compensation for service in this State for which contributions were made during any prior fiscal year of membership, whichever is greater. The terms of the purchase and the credit granted shall be identical, except as otherwise herein provided, to those stipulated for the purchase of previous membership service by members of the retirement system as provided by N.J.S.18A:66-9.

(cf: P.L.1991, c.138, s.5)

 

    2. (New section) A member of the Teachers' Pension and Annuity Fund who ceases participation in the Alternate Benefit Program (ABP), established by P.L.1969, c.242 (C.18A:66-167 et seq.), may use nonconcurrent service credited in ABP to meet the service requirements for the following:

    a. vested benefits as provided in N.J.S.18A:66-36;

    b. early retirement as provided in N.J.S.18A:66-37;

    c. ordinary disability retirement as provided in N.J.S.18A:66-39;

    d. contributory death benefits as provided in N.J.S.18A:66-53;

    e. noncontributory death benefits as provided in N.J.S.18A:66-69; and

    f. special veterans' retirement as provided in N.J.S.18A:66-71.

    If ABP service is used to meet the service requirement for special veterans' retirement, the benefit under subsection a. of N.J.S.18A:66-71 shall be the benefit determined as provided in the subsection multiplied by the years of service credited in the retirement system divided by the years of service required to qualify for the benefit, but in no case shall the benefit be greater than the benefit determined as provided in the subsection. The benefit under subsection d. of N.J.S.18A:66-71 shall be the benefit determined as provided in the subsection based only upon the service credited to the retirement system. The ABP service shall not be used in calculating any of the benefits specified in this section.

 

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

    14. A member who is a member of another State-administered retirement system or pension fund at the time of enrollment in the Public Employees' Retirement System and [does not contribute to the other system or fund after that time] who has ceased or ceases, at that time or subsequently, to be an active contributing member of the other system or fund may transfer the service credit in the other system or fund to the Public Employees' Retirement System upon application and transfer of the member's contributions from the other system or fund to the system. If the member has withdrawn the contributions to the other retirement system or pension fund, the member may purchase credit for the service in the other system or fund. The purchase shall be made in the same manner and be subject to the same terms and conditions provided for the purchase of previous membership service by section 8 of P.L.1954, c.84 (C.43:15A-8).

(cf: P.L.1991, c.138, s.9)

 

    4. (New section) A member of the Public Employees' Retirement System who ceases participation in the Alternate Benefit Program (ABP), established by P.L.1969, c.242 (C.18A:66-167 et seq.), may use nonconcurrent service credited in ABP to meet the service requirements for the following:

    a. vested benefits as provided in section 38 of P.L.1954, c.84 (C.43:15A-38);

    b. early retirement as provided in subsection b. of section 41 of P.L.1954, c.84 (C.43:15A-41);

    c. ordinary disability retirement as provided in section 42 of P.L.1954, c.84 (C.43:15A-42);

    d. special veterans' retirement as provided in section 61 of P.L.1954, c.84 (C.43:15A-61); and

    e. noncontributory death benefits as provided in section 64 of P.L.1954, c.84 (C.43:15A-64).

    If ABP service is used to meet the service requirement for special veterans' retirement, the benefit under subsection b. of section 61 of P.L.1954, c.84 (C.43:15A-61) shall be the benefit determined as provided in the subsection multiplied by the years of service credited in the retirement system divided by the years of service required to qualify for the benefit, but in no case shall the benefit be greater than the benefit determined as provided in the subsection. The benefit under subsection d. of section 61 shall be the benefit determined as provided in the subsection based only upon the service credited to the retirement system. The ABP service shall not be used in calculating any of the benefits specified in this section.

 

    5. Section 8 of P.L.1961, c.49 (C.52:14-17.32) is amended to read as follows:

    8. a. The basic coverage and the major medical coverage of any employee, and of his dependents, if any, shall cease upon the discontinuance of his term of office or employment or upon cessation of active full-time employment subject to such regulations as may be prescribed by the commission for limited continuance of basic coverage and major medical coverage during disability, part-time employment, leave of absence or lay off, and for continuance of basic coverage and major medical coverage after retirement, any such continuance after retirement to be provided at such rates and under such conditions as shall be prescribed by the commission, subject, however, to the requirements hereinafter set forth in this section. The commission may also establish regulations prescribing an extension of coverage when an employee or dependent is totally disabled at termination of coverage.

    b. Rates payable by retired employees for themselves and their dependents, by active employees for dependents covered by medicare benefits, and by the State or other employer for an active employee alone covered by medicare benefits, shall be determined on the basis of utilization experience according to classifications determined by the commission, provided, however, that the total rate payable by such retired employee for himself and his dependents, or by such active employee for his dependents and the State or other employer for such active employee alone, for coverage hereunder and for Part B of medicare, shall not exceed by more than 25%, as determined by the commission, the total amount which would have been required to have been paid by him and by the State or other employer for the coverage maintained had he continued in office or active employment and he and his dependents were not eligible for medicare benefits. "Medicare" as used in this act means the coverage provided under Title XVIII of the Social Security Act as amended in 1965, or its successor plan or plans.

    c. (1) From funds appropriated therefor, the State shall pay the premium or periodic charges for the benefits provided to a retired State employee and his dependents covered under the program, but not including survivors, if such employee retired from [a State-administered retirement system] one or more State- or locally-administered retirement systems on a benefit or benefits based in the aggregate on 25 years or more of nonconcurrent service credited in [such retirement system] the retirement systems, excepting the employee who elected deferred retirement, but including the employee who retired on a disability pension based on fewer years of service credited in [such retirement system] the retirement systems and shall also reimburse such retired employee for his premium charges under Part B of the federal medicare program covering the retired employee and the employee's spouse. In the case of full-time employees of the Rutgers University Cooperative Extension Service, service credited in the federal Civil Service Retirement System (5 U.S.C. §8331 et seq.) which was earned as a result of full-time employment at Rutgers University, may be considered alone or in combination with service credited in [a State-administered retirement system] State- or locally-administered retirement systems for the purposes of establishing the minimum 25-year service requirement to qualify for the benefits provided in this section. Any full-time employee of the Rutgers University Cooperative Extension Service who meets the eligibility requirements set forth in this amendatory act shall be eligible for the benefits provided in this section, provided that at the time of retirement such employee was covered by the State Health Benefits Program and elected to continue such coverage into retirement.

    (2) Notwithstanding the provisions of this section to the contrary, from funds appropriated therefor, the State shall pay the premium or periodic charges for the benefits provided to a retired State employee and his dependents covered under the program, but not including survivors, if: (a) the employee retires on or after the effective date of this 1987 amendatory act; (b) the employee was employed by Rutgers University prior to January 2, 1955 and remained in continuous service with Rutgers University until retirement even though the employee (i) did not join a State-administered retirement system, or, (ii) became a member of a State-administered retirement system, but accumulated less than 25 years of credited service; and (c) the employee is covered by the program at the time of retirement.

    (3) Notwithstanding the provisions of this section to the contrary, in the case of an employee of a State college, as described in chapter 64 of Title 18A of the New Jersey Statutes, or of a county college, as defined in N.J.S.18A:64A-1, service credited in a private defined contribution retirement plan which was earned as an employee of an auxiliary organization, as defined in section 2 of P.L.1982, c.16 (C.18A:64-27), at a State or county college shall be considered in combination with service credited in a State-administered retirement system for the purposes of establishing the minimum 25-year service requirement to qualify for the benefits provided in this section, provided that the employee is covered by the program at the time of retirement.

(cf: P.L.1993, c.28, s.1)

 

    6. Section 7 of P.L.1964, c.125 (C.52:14-17.38) is amended to read as follows:

    7. The Division of Pensions and Benefits shall certify to the certifying agent of each employer electing participation under the program the premium rates and periodic charges applicable to the coverage provided for employees and dependents. The participating employer shall remit to the division all contributions to premiums and periodic charges in advance of their due dates, subject to the rules and regulations of the commission.

    From funds allocated therefor, the employer other than the State may pay the premium or periodic charges for the benefits provided to a retired employee and the employee's dependents covered under the program, if such employee retired from [a State or locally-administered retirement system] one or more State- or locally-administered retirement systems on a benefit or benefits based in the aggregate on 25 years or more of nonconcurrent service credited in [such retirement system] the retirement systems, excepting the employee who elected deferred retirement, but including the employee who retired on a disability pension based on fewer years of service credited in [such retirement system] the retirement systems, and may also reimburse such retired employee for the employee's premium charges under Part B of Medicare covering the retired employee and the employee's spouse. "Retired employee and the employee's dependents" may, upon adoption of an appropriate resolution therefor by the participating employer, also include otherwise eligible employees, and their dependents, who retired from a State or locally-administered retirement system prior to the date that the employer became a participating employer in the New Jersey State Health Benefits Program. The term may also, upon adoption of an appropriate resolution therefor by the participating employer, include otherwise eligible employees, and their dependents, who did not elect to continue coverage in the program during such time after the employer became a participating employer that the employer did not pay premium or periodic charges for benefits to retired employees and their dependents pursuant to this section. Eligibility and enrollment of such employees and dependents shall be in accordance with such rules and regulations as may be adopted by the State Health Benefits Commission.

    The employer other than the State may, by resolution, pay the premium or periodic charges for the benefits provided to the surviving spouse of a retired employee and the employee's dependents covered under the program as provided in this section.

(cf: P.L.1996, c.8, s.4)

 

    7. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill permits a member of the Teachers' Pension and Annuity Fund (TPAF) or the Public Employees' Retirement System (PERS) who, at and after the time of enrollment in TPAF or PERS, was an active, contributing member of another State-administered retirement system, but who has since ceased to be such, to establish, by transfer or purchase as appropriate, credit in the current fund or system for service previously credited in the other retirement system. At present, such a transfer or purchase is permitted only if the active service covered by the prior retirement system had ceased as of the time of the person's enrollment in TPAF or PERS.

    The bill applies a similar rule to permit recognition in TPAF or PERS of a member's previous service on the faculty of a New Jersey public institution of higher education if that service was covered by the alternate benefit program (ABP). (The ABP is a special retirement plan for such faculty members.) A member's benefits under the ABP are based solely upon contributions and earnings thereon accumulated in the member's ABP account, and not (as under the retirement programs for other public employees) upon service; accordingly, a person covered by the ABP does not accrue pensionable "service credit" as such, and therefore no such credit can be established in the current fund in the manner described above. Instead, the bill provides that a member of TPAF or PERS may "use" nonconcurrent service credited in ABP to meet the service requirement, under the appropriate system, for vesting, early retirement, ordinary disability retirement, contributory death benefits, noncontributory death benefits, and special veteran's retirement.

    With respect to special veteran's retirement, the bill includes provisions clarifying that ABP service may be used only to qualify for that form of retirement: the amount of the benefit would (a) in the case of a member qualifying only for the regular half-pay veteran's allowance, be reduced to an amount reflecting only that proportion of the total service requirement that was satisfied by the TPAF or PERS service, as the case may be, or (b) in the case of a member qualifying for the enhanced, service-based veteran's allowance, exclude ABP service from the calculation of that allowance.

    Finally, the bill amends the statute governing employees' eligibility for employer-paid coverage under the State Health Benefits Program (SHBP) after retirement. Currently, the statute requires that to qualify for such coverage, an employee must have accrued 25 years of creditable service in a single State-administered retirement system. (Local government employees may meet the requirement on the basis of service credited in a locally-administered retirement system.) The bill provides that, instead of having to meet the 25 year requirement in a single system, a State employee, and a local government employee if the local government chooses to provide such coverage in retirement, may receive this benefit if the 25 years are in one or more of those systems.

 

 

                             

Makes certain changes regarding transfer of service credit among certain retirement systems and inclusion of certain service for meeting various threshold requirements, including paid health benefits coverage for retirees.