Senate President Sweeney has introduced legislation (S-3522) that would divide the Public Employees’ Retirement System (PERS) into two parts. A State Part for State employees and a Local Part for all other employees. The Senate President has indicated that he is advancing this legislation as a mean of protecting the local part of the PERS from being co-mingled with the State.
This is the last of a four part blog series summarizing further amendments to the original PERS bill.
Section 2 (Amends N.J.S.A. 43:3B-2)
Permits the Local Part PERS Board of Trustees to adjust the monthly retirement allowance or pension of its members in accordance with N.J.S.A. 43:16A-13.
Section 3 (Amends N.J.S.A. 43:3C-9.5)
Ensures that nothing in the law will be interpreted to diminish the non-forfeitable right of benefits provided to any member of the Local Part PERS.
Section 4 (Amends N.J.S.A. 43:3C-17)
Removes Local Part PERS from the super conciliator process.
Section 5 (Amends N.J.S.A. 43:3C-18)
Authorizes the Local Part PERS Board of Trustees to modify the provisions of the retirement plans, when a modification is required to maintain the qualified status of the retirement plan under the IRS.
Gives the Local Part PERS Board of Trustees rulemaking authority to make modifications to the plan to maintain the IRS status.
Section 6 (Amends N.J.S.A. 43:3C-25)
Requires the Local Part PERS Board of Trustees to provide prompt written notification to any member or retiree of the Local Part PERS when the member or retiree submits a change to the designation of beneficiary for contributory and non-contributory group life insurance, that there is on file a judgment, court order, decree, or other legal document for that member or retiree specifically designating the beneficiary of such life insurance.
The notification requirement will apply only when there is a valid judgment, court order, decree, or other legal document that has been filed with the Local Part PERS Board of Trustees, or its designee, pursuant to the board’s determination to accept and honor such a judgment, court order, decree, or document and that has been reviewed, approved, or classified as qualified by the board or the board’s designee.
Section 7 (Amends N.J.S.A. 43:4B-1)
Removes the Local Part PERS representative from the Retirement Systems Actuary Selection Committee.
Section 8 (Amends N.J.S.A. 43:15A-6)
Changes definition of “regular interest” to mean interest as determined by the State Treasurer for the Local Part PERS, after consultation with the actuary. Instead of a determination by the State Treasurer, after consultation with the Directors of the Divisions of Investments and Pensions, the board of trustees and after consultation with the actuary.
Section 9 (Amends N.J.S.A. 43:15A-7)
Establishes the Local Part Public Employees’ Retirement System of New Jersey.
System will be comprised of two separate parts – State Part and Local Part,each part governed by separate board of trustees.
Membership of the State Part include employees of the State or any independent board, commission, authority, or instrumentality.
Membership of the Local Part include employees employed by an employer other than the State.
Any reference to N.J.S.A. 43:15A-1 et seq., or any other law, rule, regulation, contract, document, judicial or administrative proceeding to PERS must be referenced to both the board of trustees of the State and Local Part of PERS unless otherwise specified by law or the by the context within which the reference is made.
Section 10 (Amends N.J.S.A. 43:15A-17)
The general responsibility for the proper operation of the Local Part PERS is vested in the board of trustees for the Local Part PERS.
Outlines the membership, rules, and committees of the State Part PERS.
Section 11 (Amends N.J.S.A. 43:15A-24)
Upon the basis of the table of recommended by the actuary which the board of the Local Part PERS board of trustees adopts and regular interest, the actuary must compute the amount of the accrued liability of the retirement system as of March 31, 1992 under the projected unit credit method. Excludes the liability for pension adjustment benefits for active employees funded by N.J.S.A. 15A-24.1.
The board of trustees of the Local Part PERS must determine upon advice of the actuary the time period for full funding of “accrued liability contribution,” which will not exceed 40 years on initial application of this section.
Section 12 (Amends N.J.S.A. 43:15A-25)
The Board is authorized to make an adjustment to the uniform contribution rate of the members as the board deems reasonable, necessary, and appropriate after consultation with, and the recommendation of, the actuary. Any adjustment to a contribution rate will be made at such time and in such manner as the board determines upon certification by the actuary that such change will not result in an increased employer contribution in the current year and that such change will not impact the long-term viability of the fund.
Requires 5 votes of the board.
Section 13 (Amends N.J.S.A. 43:15A-32)
All functions, powers, and duties relating to the investment or reinvestment of moneys of, and purchase, sale, or exchange of any investments or securities, of or for any fund or account for the State Part established under this act shall be exercised and performed by the Director of the Division of Investment.
The secretary of the board of trustees for the State Part and the actuary for the Local Part shall determine from time to time the cash requirements of the various funds and accounts established by this act and the amount available for investment, all of which will be certified to the chair and executive director of the board of trustees for the Local Part and Director of the Division of Investments for the State Part.
The Division of Investment, the Director of the Division of Investment, and the State Investment Council shall retain all functions, powers, and duties relating to Common Pension Fund L assigned to the Division of Investment, the Director of the Division of Investment, and the State Investment Council, by N.J.S.A. 5:9-22.5 et seq.
Section 14 (Amends N.J.S.A. 43:15A-34)
The Board determines the interest rate for loans on January 1.
Permits the Board to charge an administrative fee.
Section 15 (Amends N.J.S.A. 43:15A-65)
Permits all employees of any public agency or organization of this state, which employs persons engaged in service to the public, to be eligible for participation in the Local Part of the PERS.
Any person becoming an employee of a public agency or organization of this State after June 30, 1966 who is not eligible to become a member of any other retirement system is required to participate in the Local Part of PERS.
Section 16 (Amends N.J.S.A. 43:15A-68)
The treasurer or corresponding officer shall pay the board of trustees of the Local Part no later than April 1 of the State's fiscal year in which payment is due the amount of the employer's charges so certified as payable by the employer.
The treasurer or corresponding officer shall also pay to the board of trustees of the Local Part the amount of the deductions from the compensation of the members who are employees of the employer. The board of trustees of the Local Part shall credit these amounts to the appropriate fund or account.
If the required payment is not made within 30 days of the due date an interest rate of 10% per annum shall commence to run against the unpaid balance.
Nothing in this bill relieves the State or local government employers of any present or future obligations of their normal cost or unfunded liabilities required to be paid into the retirement system.
Section 17 (Amends N.J.S.A. 52:18A-83)
Amends the Division of Investment’s State Investment Council to include the State Part PERS Board of Trustees.
Section 18 (Amends N.J.S.A. 52:18A-85)
Gives the Local Part PERS the authority to direct investment policy.
The purchase, sale, or exchange of any investments or securities under the control and management of the Local PERS must be exercised and performed by the Director of the Division of Investments.
Common Pension Fund L and the assets held by Common Pension Fund L as of the effective date of this bill and thereafter, including the interest of the Police and Firemen's Retirement System of New Jersey and of the Local Part of the Public Employees’ Retirement System, therein shall remain within the Division of Investment.
Section 19 (Amends N.J.S.A. 52:18A-88.1)
Investments are authorized or approve for investment by regulation of the Local Part of PERS.
Section 20 (Amends N.J.S.A. 52:18A-89)
Provides that the Board of Trustees of the Local Part PERS will have the authority to invest and reinvest moneys for or on behalf of the Local Part PERS.
Section 21 (New Section)
The terms of service of those appointed and elected members serving on the Board of Trustees of the PERS on the date of enactment of law will be terminated as of the 1st day of the 7th month next following that date of enactment, so that Local Part PERS board can commence its duties.
A trustee whose service on the board has been terminated pursuant to this section may be appointed or elected to serve as a trustee after that effective date if qualified.
Section 22 (Effective Date)
This act will take effect on the 366th day next following enactment, except the provisions concerning the appointment, and composition of the new Board of Trustees of the Local Part PERS, set forth in section 1 of this act, will take effect as specified in that section and the new Board of Trustees of the Local Part PERS will take office on the 1st business day of the 7th month next following the date of enactment of this act.
The Board of Trustees of the Local Part PERS, the Division of Pensions and Benefits, and the Division of Investment may take such anticipatory administrative action in advance as necessary for the implementation of the act.
Contact: Lori Buckelew, Assistant Executive Director, email@example.com, 609-695-3481, x112.