ASSEMBLY, No. 2828
STATE OF NEW JERSEY
INTRODUCED MARCH 13, 1997
By Assemblyman BLEE, Assemblywoman MURPHY, Assemblymen Kavanaugh and Malone
An Act conforming the administration of State-administered retirement systems to federal Internal Revenue Code requirements, establishing certain non-forfeitable pension rights, and supplementing Title 43 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. In accordance with the provisions of section 401 (a) (2) of the federal Internal Revenue Code, and subject to such exceptions as may be permitted for governmental plans under section 401 (a) (2) of the federal Internal Revenue Code, at no time prior to the satisfaction of all liabilities with respect to members and their beneficiaries under 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.), the State Police Retirement System, established pursuant to P.L.1965, c.89 (C.53:5A-1 et seq.), and the Alternate Benefit Program, established pursuant to P.L.1969, c.242 (C.18A:66-167 et seq.), shall any part of the corpus or income of the respective retirement systems, within the taxable year or thereafter, be used for or diverted to purposes other than for the exclusive benefit of the members or their beneficiaries.
2. Notwithstanding any law, rule or regulation to the contrary, the contributions to and benefits payable under 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, the State Police Retirement System and the Alternate Benefit Program shall not exceed the limitations provided under section 415 of the federal Internal Revenue Code. The Division of Pensions and Benefits in the Department of the Treasury shall be responsible for implementation and enforcement of these limitations.
3. Notwithstanding any law, rule or regulation to the contrary, for members of the Teachers' Pension and Annuity Fund, the Judicial Retirement System, the Public Employees' Retirement System, the Police and Firemen's Retirement System, and the State Police Retirement System, the amount of compensation which may be used for member contributions and benefits under the retirement systems after June 30, 1996 shall not exceed the compensation limitation of section 401 (a) (17) of the federal Internal Revenue Code of 1986, (26 U.S.C §401 (a) (17) ), as amended pursuant to section 13212 of the Omnibus Budget Reconciliation Act of 1993, Pub. L.103-66, 107 Stat. 312 or as hereafter amended or supplemented, to the extent applicable to governmental plans. The provisions of this section shall not be applicable to members enrolled prior to July 1, 1996 if the employer of the members certifies to the Director of the Division of Pensions and Benefits, in the form and manner prescribed by the director, prior to July 1, 1997, that the employer will pay the additional cost for not applying the limit to the members.
4. Notwithstanding any law, rule or regulation to the contrary, for members of the Alternate Benefit Program, the amount of compensation which may be used for employer and member contributions and benefits under the program after June 30, 1996 shall not exceed the compensation limitation of section 401 (a) (17) of the federal Internal Revenue Code of 1986, (26 U.S.C §401 (a) (17) ), as amended pursuant to section 13212 of the Omnibus Budget Reconciliation Act of 1993, Pub. L.103-66, 107 Stat. 312, or as hereafter amended or supplemented, to the extent applicable to governmental plans. The provisions of this section shall not be applicable to members enrolled prior to July 1, 1996 if the employer of the members certifies to the Director of the Division of Pensions and Benefits, in the form and manner prescribed by the director, prior to July 1, 1997, that the employer will pay the additional cost for not applying the limit to the members.
5. 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 shall have a non-forfeitable right to receive benefits, excluding post-retirement medical benefits, as provided under the laws governing the retirement systems in effect on the date of attainment of 10 years of service credit in the systems. This act shall not be construed to preclude forfeiture, suspension or reduction of benefits for dishonorable service. Nothing in this act shall be deemed to: a. limit the right of the State to alter, modify or amend such retirement systems, other than the above-mentioned benefits for members who have attained 10 years of service credit, or b. create in any member a property right in the corpus or management of a retirement system.
6. This act shall take effect immediately.
STATEMENT
The purpose of this bill is to conform the administration of the Teachers' Pension and Annuity Fund (TPAF), the Alternate Benefit Program (ABP), the Judicial Retirement System (JRS), the Prison Officers' Pension Fund (POPF), the Public Employees' Retirement System (PERS), the Consolidated Police and Firemen's Pension Fund (CPFPF), the Police and Firemen's Retirement System (PFRS), and the State Police Retirement System (SPRS) to federal Internal Revenue Code requirements in order to maintain the qualified status of these retirement systems. The bill provides that in accordance with the provisions of section 401 (a) (2) of the federal Internal Revenue Code, at no time prior to the satisfaction of all liabilities with respect to members and their beneficiaries shall any part of the corpus or income of the respective retirement systems, within the taxable year or thereafter, be used for or diverted to purposes other than for the exclusive benefit of the members or their beneficiaries. It also provides that the contributions and benefits payable under the above-mentioned retirement systems shall be subject to the limitations provided under section 415 of the federal Internal Revenue Code.
The bill further provides that the compensation which may be used for employer and employee contributions and benefits under the State-administered retirement systems shall not exceed the compensation limit prescribed by section 401 (a) (17) of the federal Internal Revenue Code. The current amount of the limit is $160,000. If the limit is made applicable to the retirement systems prior to July 1, 1997, members of the systems enrolled prior to July 1, 1996 will not be affected by the limit if their employers certify to the Director of the Division of Pensions and Benefits that they will pay the additional cost for not applying the limit to the members.
The bill also provides that a PERS, TPAF, PFRS, SPRS, JRS, POPF, or CPFPF member shall have a non-forfeitable right to receive benefits, excluding post-retirement medical benefits, as provided under the laws governing the retirement systems in effect on the date of attainment of 10 years of service credit in the system. Once a member has attained 10 years of service credit, the member shall be eligible to receive benefits thereafter based upon the benefit provision in effect on the date on which the member attained 10 years of service credit. The bill does not preclude the forfeiture, suspension or reduction of benefits for dishonorable service. It shall also not be deemed to: (1) limit the right of the State to alter, modify or amend the retirement systems, other than the above-mentioned benefits for members who have attained 10 years of service, or (2) create in any member a property right in the corpus or management of a retirement system.
Conforms administration of State-administered retirement systems to federal IRC requirements; establishes certain non-forfeitable pension rights.