SENATE, No. 1987

STATE OF NEW JERSEY

INTRODUCED APRIL 17, 1997

By Senator CASEY

An Act concerning the repayment of certain loans under the Police and Firemen's Retirement System and amending P.L.1981, c.370.

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

    1. Section 2 of P.L.1981, c.370 (C.43:16A-16.2) is amended to read as follows:

    2. a. In the case of any member who retires, other than on a disability pension or where it is shown to the satisfaction of the board of trustees that the retirement is necessitated by medical illness or disability of the employee, without repaying the full amount so borrowed, the Division of Pensions and Benefits shall retain the retirement benefit payments, excluding authorized deductions of such member as repayment of the loan until the aggregate amount of such retirement benefit payments is equal to the outstanding balance of the loan, together with the interest at the rate of 4% per annum on the amount so borrowed, at which time the retired member shall receive his retirement benefit payments.

    b. In the case of a member who retires on a disability pension or because of medical illness or disability without paying the full amount borrowed, the division shall deduct from the retirement benefit payments the same monthly amount which was deducted from the compensation of the member immediately preceding retirement until the balance of the amount borrowed together with the interest at the rate of 4% per annum is repaid.

    c. In the case of a pensioner who dies before the outstanding balance of the loan and interest thereon has been recovered, the remaining balance shall be repaid, at the discretion of the widow or widower or other beneficiary if there is no surviving widow or widower, from the proceeds of any other benefits payable on the account of the pensioner [either] in the form of: (1) retaining monthly payments due to his beneficiaries [or in the form of], (2) lump sum payments payable [for] from the deceased's pension or group life insurance, or (3) deductions from the monthly retirement benefit payable to a widow or widower equal to the loan deductions made from the deceased pensioner's monthly retirement allowance.

(cf: P.L.1988, c.134, s.3)

    2. This act shall take effect immediately.

STATEMENT

    At present, if a Police and Firemen's Retirement System (PFRS) retiree dies before the outstanding balance of a loan has been repaid, the beneficiary can only pay-off the loan either by having PFRS retain the proceeds from the monthly payments due to the beneficiary or in a lump sum payment from the deceased's pension or group life insurance. This bill provides that a loan can also be repaid by deductions from the monthly retirement benefit payable to a widow or widower equal to the loan deductions made from the deceased pensioner's monthly retirement allowance.

Provides for loan deductions from a PFRS surviving spouse's pension benefit.