SENATE STATE MANAGEMENT, INVESTMENT AND FINANCIAL INSTITUTIONS COMMITTEE

STATEMENT TO

SENATE, No. 563

with committee amendments

STATE OF NEW JERSEY

DATED: MAY 9, 1996

      The Senate State Management, Investment and Financial Institutions Committee reports favorably and with committee amendments Senate, No. 563.

      P.L.1995, c.92 allowed employees of the Department of Education, the Commission on Higher Education, or the governing body of any public institution of higher education to invest, pursuant to section 403(b) of the federal Internal Revenue Code of 1954, as amended, in a tax-deferred annuity with an insurer or mutual fund company authorized to provide investment contracts under the alternate benefit program and not solely with the State-administered Supplemental Annuity Collective Trust (SACT) program. That law, however, was not interpreted by the Division of Pensions and Benefits as allowing these employees to transfer all or a portion of their funds from the SACT program to investments with an approved alternate vendor. This bill allows employees to make such a transfer as well as allowing employees to transfer all or a portion of the funds that they may have invested in a tax-deferred annuity with an approved alternate vendor to the SACT program.

      At its March 15, 1996 meeting, the Pension and Health Benefits Review Commission recommended that the bill be enacted with an amendment to provide for the "transfer of funds from accounts with private vendors to the SACT program."

COMMITTEE AMENDMENTS

      The committee amended the bill to provide for the transfer of funds from an approved alternate vendor to the SACT program.