ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 165

STATE OF NEW JERSEY

DATED: JUNE 13, 1996

      The Assembly Appropriations Committee reports favorably Senate Bill No. 165.

      Senate Bill No. 165 revises the retirement and survivorship benefits payable to retirants and beneficiaries under an employees' retirement system established in a city of the first class having a population of less than 300,000. The bill:

      (1) increases from 50% to 55% of final salary the basic allowance payable to retirants with at least 20 years of service who have attained the age of 60. The allowance continues to be supplemented by an amount equal to 1% of such salary for each year of creditable service in excess of 20 years;

      (2) increases the retirement allowance for a retirant with 25 years of service before the age of 60, from 50% to 55% of final salary, plus the current 1% for each year of service in excess of 20 years. The pension, currently reduced by 5/12 of 1% for each month that the member is under age 60, would be reduced by only 2/12 of 1% per month under the bill. (If the member waits until age 60 to collect there is no reduction in benefits.)

      (3) provides for inclusion of the cost-of-living adjustments in determining the amount of pension provided to the survivor of the retirant. Current law excludes adjustments;

      (4) increases from 50% to 60% the proportion of the increase in the cost of living, as measured by the federal Department of Labor's Consumer Price Index.

      This bill is identical to A1853

FISCAL IMPACT:

      In the legislative fiscal estimate the Office of Legislative Services (OLS) noted that this legislation pertained only to Jersey City. This retirement system is active with all new hires enrolled as members. The annual increase as part of a normal employer cost could be approximately $470,950. This will increase by an estimated 6% per year.