SENATE, No. 1301

 

STATE OF NEW JERSEY

 

INTRODUCED JUNE 13, 1996

 

 

By Senator SINGER

 

 

An Act concerning the formula for death benefits payable upon the death of retired members of the Public Employees' Retirement System and amending P.L.1954, c.84.

 

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

 

    1. Section 41 of P.L.1954, c.84 (C.43:15A-41) is amended to read as follows:

    41. A member who withdraws from service or ceases to be an employee for any cause other than death or retirement shall, upon the filing of an application therefor, receive all of his accumulated deductions standing to the credit of his individual account in the annuity savings fund, plus regular interest, less any outstanding loan, except that for any period after June 30, 1944, the interest payable shall be such proportion of the interest determined at the regular rate of 2% per annum bears to the regular rate of interest, and except that no interest shall be payable in the case of a member who has less than three years of membership credit for which he has made contributions. He shall cease to be a member two years from the date he discontinued service as an eligible employee, or, if prior thereto, upon payment to him of his accumulated deductions. If any such person or member shall die before withdrawing or before endorsing the check constituting the return of his accumulated deductions, such deductions shall be paid to the member's beneficiary. No member shall be entitled to withdraw the amounts contributed by his employer covering his military leave unless he shall have returned to the payroll and contributed to the retirement system for a period of 90 days.

    b. Should a member resign after having established 25 years of creditable service before reaching age 60, he may elect "early retirement," provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent to the execution and filing thereof he desires to be retired. He shall receive, in lieu of the payment provided in subsection a. of this section, an annuity which is the actuarial equivalent of his accumulated deductions together with regular interest, and a pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of one-seventieth of his final compensation for each year of service credited as Class A service and one-sixtieth of his final compensation for each year of service credited as Class B service, calculated in accordance with section 48 (C. 43:15A-48) of this act, reduced by 1/4 of 1% for each month that the member lacks of being age 55; provided, however, that upon the receipt of proper proofs of the death of such a member there shall be paid to his beneficiary an amount equal to three-sixteenths of the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable service or three-sixteenths of the highest compensation upon which contributions were based during any fiscal year of membership, whichever is greater.

    The board of trustees shall retire him at the time specified or at such other time within one month after the date so specified as the board finds advisable.

    c. Upon the receipt of proper proofs of the death of a member in service on account of which no accidental death benefit is payable under section 49 there shall be paid to such member's beneficiary:

    (1) The member's accumulated deductions at the time of death together with regular interest; and

    (2) An amount equal to one and one-half times the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable service.

(cf: P.L.1987, c. 1, s. 1)

 

    2. Section 45 of P.L.1954, c.84 (C.43:15A-45) is amended to read as follows:

    45. A member upon retirement for ordinary disability shall receive a retirement allowance, which shall consist of:

    a. An annuity which shall be the actuarial equivalent of his accumulated deductions together with regular interest and

    b. A pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 1 1/2 % of final compensation multiplied by his number of years of creditable service; provided further, that in no event shall the allowance be less than 40% of final compensation, except that in no case shall the rate of allowance exceed 9/10 of the rate of the regular service retirement allowance which the member would have received had he remained in service from the date of retirement to age 60.

    c. Upon the receipt of proper proofs of the death of a member who has retired on an ordinary disability retirement allowance, there shall be paid to such member's beneficiary, an amount equal to 1 1/2 times the compensation upon which contributions by the member to the


annuity savings fund were based in the last year of creditable service or 1 1/2 times the highest compensation upon which contributions were based during any fiscal year of membership, whichever is greater; provided, however, that if such death shall occur after the member shall have attained age 60, the amount payable shall equal 3/16 of such compensation.

(cf: P.L.1971, c. 213, s. 19)

 

    3. Section 46 of P.L.1954, c.84 (C.43:15A-46) is amended to read as follows:

    46. A member under 65 years of age upon retirement for accidental disability shall receive a retirement allowance which shall consist of:

    a. An annuity which shall be the actuarial equivalent of his accumulated deductions together with regular interest; and

    b. A pension, in the amount which, when added to the member's annuity, will provide a total retirement allowance of 2/3 of his actual annual compensation for which contributions were being made at the time of the occurrence of the accident.

    c. Upon receipt of proper proofs of the death of a member who has retired on an accidental disability retirement allowance, there shall be paid to such member's beneficiary, an amount equal to 1 1/2 times the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable service or 1 1/2 times the highest compensation upon which contributions were based during any fiscal year of membership, whichever is greater; provided, however, that if such death shall occur after the member shall have attained age 60, the amount payable shall equal 3/16 of such compensation.

(cf: P.L.1971, c. 213, s. 20)

 

    4. Section 48 of P.L.1954, c.84 (C.43:15A-48) is amended to read as follows:

    48. A member, upon retirement for service, shall receive a retirement allowance consisting of:

    a. An annuity which shall be the actuarial equivalent of his accumulated deductions together with regular interest; and

    b. A pension in the amount which, when added to the member's annuity, will provide a total retirement allowance of 1/70 of his final compensation for each year of service credited as Class A service and 1/60 of his final compensation for each year of service credited as Class B service.

    c. Upon the receipt of proper proofs of the death of a member who has retired on a service retirement allowance, there shall be paid to the member's beneficiary, an amount equal to 3/16 of the compensation upon which contributions by the member to the annuity savings fund were based in the last year of creditable service or 3/16 of the highest


compensation upon which contributions were based during any fiscal year of membership, whichever is greater.

(cf: P.L.1971, c. 213, s. 22)

 

    5. This act shall take effect immediately.

 

STATEMENT

 

    This bill changes the formula used in the "Public Employees' Retirement System Act" for calculating the death benefit payable on account of a member's death after retirement.

    Under current law, the retirant's paid-up life insurance benefit is based upon compensation received by the retirant in the last year of creditable service. The bill provides that the benefit would be based upon either that compensation or the highest compensation received in any fiscal year of membership, whichever is greater.

 

                             

 

Changes the calculation of PERS post-retirement death benefit.