S2013

An Act concerning the membership of business administrators in the Public Employees’ Retirement System and amending P.L.2007, c.92 and supplementing P.L.1954, c.84 (C.43:15A-1 et seq.).

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

1. Section 2 of P.L.2007, c.92 (C.43:15C-2) is amended to read as follows:

2. a. The following persons shall be eligible and shall participate in the Defined Contribution Retirement Program:

(1) A person who commences service on or after the effective date of this section of P.L.2007, c.92 (C.43:15C-1 et al.) in an elective public office of this State or of a political subdivision thereof, except that it shall not include a person who holds elective public office on the effective date of this section and is enrolled in the Public Employees' Retirement System while that person continues to hold that elective public office or, for an elected official specified in section 5 of P.L.2017, c.344 (C.43:15A-7.5), another elective public office, without a break in service. Service in the Legislature shall be considered a single elective public office.

(2) A person who commences service on or after the effective date of this section in an employment, office or position of the State or of a political subdivision thereof, or an agency, board, commission, authority or instrumentality of the State or of a subdivision, pursuant to an appointment by the Governor that requires the advice and consent of the Senate, or pursuant to an appointment by the Governor to serve at the pleasure of the Governor only during his or her term of office. This paragraph shall not be deemed to include a person otherwise eligible for membership in the State Police Retirement System or the Judicial Retirement System. This paragraph shall not include Workers' Compensation Judges of the Division of Workers' Compensation in the Department of Labor and Workforce Development.

(3) A person who commences service on or after the effective date of this section in an employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, pursuant to an appointment by an elected public official or elected governing body, that requires the specific consent or approval of the elected governing body of the political subdivision that is substantially similar in nature to the advice and consent of the Senate for appointments by the Governor of the State as that similarity is determined by the elected governing body and set forth in an adopted ordinance or resolution, pursuant to guidelines or policy that shall be established by the Local Finance Board in the Department of Community Affairs or the Department of Education, as appropriate to the elected governing body. This paragraph shall not be deemed to include a person otherwise eligible for membership in the Teachers' Pension and Annuity Fund or the Police and Firemen's Retirement System, or a person who is employed or appointed in the regular or normal course of employment or appointment procedures and consented to or approved in a general or routine manner appropriate for and followed by the political subdivision, or the agency, board, commission, authority or instrumentality of a subdivision, or a person who holds a professional license or certificate to perform and is performing as a certified health officer, tax assessor, tax collector, municipal planner, chief financial officer, registered municipal clerk, construction code official, licensed uniform subcode inspector, qualified purchasing agent, or certified public works manager, or a business administrator as defined in section 2 of P.L. , c. (C. )(pending before the Legislature as this bill).

(4) A person who is granted a pension or retirement allowance under any pension fund or retirement system established under the laws of this State and elects to participate pursuant to section 1 of P.L.1977, c.171 (C.43:3C-3) upon being elected to public office.

(5) A member of the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System for whom compensation is defined as the amount of base or contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act, for contribution and benefit purposes of those retirement systems, for whom participation in this retirement program shall be with regard to any excess over the maximum compensation only.

(6) A person in employment, office or position for which the annual salary or remuneration is less, or the hours of work per week are fewer, than that which is required to become a member of the Teachers' Pension and Annuity Fund or the Public Employees' Retirement System, or to make contributions to those systems as a member on the basis of any such employment, office or position, after November 1, 2008.

b. No person shall be eligible to participate in the retirement program with respect to any public employment, office, or position if:

(1) the base salary for that employment, office, or position is less than $5,000 per year;

(2) the person is, on the basis of service in that employment, office, or position, eligible for membership or enrolled as a member of another State or locally-administered pension fund or retirement system established under the laws of this State including the Alternate Benefit Program, except as otherwise specifically provided in subsection a. of this section;

(3) the person is receiving a benefit as a retiree from any other State or locally-administered pension fund or retirement system established under the laws of this State, except as provided in section 1 of P.L.1977, c.171 (C.43:3C-3); or

(4) the person is an officer or employee of a political subdivision of this State or of a board of education, or of any agency, authority or instrumentality thereof, who is ineligible for membership in the Public Employees' Retirement System pursuant to section 20 of P.L.2007, c.92 (C.43:15A-7.2).

c. A person eligible and required to participate in the retirement program pursuant to paragraph (5) of subsection a. of this section may elect to waive participation with regard to that employment, office, or position by filing, when first eligible, on a form required by the division, a written waiver with the Division of Pensions and Benefits that waives all rights and benefits that would otherwise be provided by the retirement program. Such a person may thereafter elect to participate in the retirement program by filing, on a form required by the division, a written election to participate in the retirement program and participation in the retirement program pursuant to such election shall commence on the January 1 next following the filing of the election to participate.

d. Service credited to a participant in the Defined Contribution Retirement Program shall not be recognized as service credit to determine eligibility for employer-paid health care benefits in retirement pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.), N.J.S.40A:10-16 et seq., P.L.1979, c.391 (C.18A:16-12 et al.) or any other law, rule or regulation.

(cf: P.L.2021, c.140, s.1)

2. (New section) a. A business administrator, who, as of the effective date of this act, P.L. , c. (pending before the Legislature as this bill), is employed by a political subdivision of the State, or an agency, board, commission, authority, or instrumentality of a subdivision, and participating in the Defined Contribution Retirement Program on the basis of service in that position shall be enrolled as a member of the Public Employees’ Retirement System within 90 days following the effective date of this act if the employee meets the eligibility requirements for membership in the retirement system at the time of enrollment that would apply to an employee who commences service on or after the effective date of this act. The retirement system shall notify in writing, within 15 days following the effective date of this act, all eligible employees of the enrollment required pursuant to this section.

b. The business administrator shall be given service credit in the Public Employees’ Retirement System for service starting on the date of the appointment of the business administrator.

Service credit transferred from a participant in the Defined Contribution Retirement Program under this act shall be recognized as service credit to determine eligibility for employer-paid health care benefits in retirement pursuant to P.L.1961, c.49
(C.52:14-17.25), or any other law, rule, or regulation.

For retirement tier determination, as tier is defined by the Division of Pensions and Benefits, an eligible employee’s tier shall be determined by their participation date in the Defined Contribution Retirement Program or their original enrollment date in the Public Employees’ Retirement System, if applicable, whichever is earlier.

c. The actuary for the Public Employees’ Retirement System shall determine the unfunded accrued liability resulting from the transfer and coverage of business administrators under subsection a. of this section in the same manner provided for the determination of the unfunded accrued liability of the retirement system by section 24 of P.L.1954, c.84 (C.43:15A-24). This unfunded accrued liability shall be amortized in the manner provided by section 24 over an amortization period of 20 years.

d. The value of the account of a business administrator who is transferred out of the program shall be transferred from the Defined Contribution Retirement Program to the Public Employees’ Retirement System in accordance with the relevant provisions of the federal Internal Revenue Code and Internal Revenue Service guidance as a direct trustee-to-trustee transfer. The transfer shall be in accordance with a rule, method, or process that shall not result in the transfer being deemed a distribution includible in federal gross income for the business administrator.

e. As used in this section, “business administrator” means the executive and administrative officer of any political subdivision of the State, or any agency, board, commission, authority, or instrumentality of the State or of a subdivision serving, in a position with the title of business administrator, municipal or county administrator, municipal or county manager, city manager, town manager, village manager, borough manager, township manager, or any functional equivalent, as the case may be.

3. This act shall take effect immediately.

STATEMENT

This bill makes business administrators serving in local governments eligible for membership in the Public Employees’ Retirement System (PERS). Business administrators currently participate in the Defined Contribution Retirement Program (DCRP). The bill defines “business administrator” as the executive and administrative officer of any political subdivision of the State or any agency, board, commission, authority, or instrumentality of the State or of a subdivision serving in a position with the title of business administrator, municipal or county administrator, municipal or county manager, city manager, town manager, village manager, borough manager, township manager, or any functional equivalent, as the case may be.

The bill provides for the transfer to the PERS of a business administrator who is participating in the DCRP within 90 days following the effective date of the bill if the employee meets the eligibility requirements for membership in the PERS at the time of enrollment. The bill requires the PERS notify eligible business administrators of the required enrollment within 15 days after the effective date.

The bill specifies that service credit transferred from a participant in the DCRP would be recognized as service credit in the PERS to determine eligibility for employer-paid health care benefits in retirement pursuant to current law. The bill also specifies that the membership tier will be determined by the member’s participation date in the DCRP or their original enrollment date in the PERS, if applicable, whichever is earlier.

Additionally, the actuary for the PERS is required to determine the unfunded accrued liability resulting from the transfer of the business administrators. This unfunded accrued liability will be amortized over a period of 20 years.

The value of the account in the DCRP of the business administrator will be transferred to the PERS in accordance with relevant provisions of the federal Internal Revenue Code and Internal Revenue Service guidance.

The bill will take effect immediately.