LEGISLATIVE FISCAL ESTIMATE TO

[First Reprint]

SENATE, No. 767

STATE OF NEW JERSEY

DATED: AUGUST 2, 1996

      Senate Bill No. 767 (1R) of 1996 would allow the surviving spouse of a member of the Police and Firemen's Retirement System (PFRS) or the State Police Retirement System (SPRS) to remarry without losing their death-in-service accidental death benefit pension. Under current law, a surviving spouse loses the death-in-service accidental death benefit if he or she remarries. The basic death-in-service accidental death benefit for a surviving PFRS spouse is a pension of 70 percent of the compensation upon which contributions by the member were based in the last year of creditable service; for a surviving SPRS spouse the benefit is a pension equal to 70 percent of the average final compensation received by the member in the last 12 months of creditable service prior to death. The bill also restores the death-in service accidental death benefit to those surviving spouses who lost this benefit because of a remarriage if they reapply within five years after the effective date of this act to receive the benefit. The bill requires the Division of Pensions and Benefits to review its records to determine which persons may be reclassified as a surviving spouse and to notify such persons of their eligibility.

      The Office of Legislative Services (OLS) notes that it cannot estimate the total cost of this bill because it only has information on the number of State Troopers and full-time municipal police officers. There is currently no information on the number of firemen that might be affected. In addition, there is no information available to indicate the number of surviving spouses who remarry.

      According to the 1994 Uniform Crime Report for the State of New Jersey, there were 2,674 State Police officers and 33,810 full-time municipal police officers in 1994. In 1994, two municipal police officers were killed while in the performance of duty. Since the inception of the Uniform Crime Report in 1967, there have been fifty police officers killed in the line of duty for an average of 1.85 officers killed annually.

      Using the average salary of $52,784 for members of the SPRS and $45,208 for members of the PFRS, the first-year cost of a death-in-service accidental death benefit for a surviving spouse of a SPRS member who remarries would be $36,949 and the first-year cost for a PFRS spouse who remarries would be $31,646. It should be noted that these costs will increase approximately 3.0 percent per year over the remaining life of the surviving spouse as cost-of-living adjustments increase the annual benefit.

      According to the actuary for these retirement systems, the average age of a spouse of a SPRS member is 34 and the average age of a spouse of a PFRS member is 35. If the spouse survives to age 84, the lifetime benefit for one surviving SPRS spouse is $4,168,000. The net present value of this lifetime benefit is $600,000. The total lifetime benefit for one surviving PFRS spouse is $3,634,000 for a net present value of $537,000.

      The legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980, c.67.