Sponsored by:
Senator ANDREW ZWICKER
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
Establishes alternate calculation of retirement benefits for members of TPAF and PERS.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the calculation of retirement benefits for members of the Teachers’ Pension and Annuity Fund and the Public Employees’ Retirement System and supplementing Title 18A of the New Jersey Statutes and Title 43 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Notwithstanding any law, rule, or regulation to the contrary, upon receiving a properly completed retirement application from a member of the Teachers’ Pension and Annuity Fund, the Division of Pensions and Benefits shall send a first notice to the member or the member’s designated beneficiary stating the details of the final compensation, as defined in N.J.S.18A:66-2, that shall be utilized in calculating the member’s retirement benefits. Within 60 days of receiving the notice, the member or the member’s designated beneficiary shall be eligible to request a recalculation of the member’s final compensation utilizing the member’s average annual compensation for New Jersey service for which contributions are made during any three calendar years of the member’s membership providing the largest possible benefit to the member or the member's beneficiary as an alternative to the calculation of final compensation as defined in N.J.S.18A:66-2.
Within 30 days of receiving the request for the recalculation from the member or the member’s designated beneficiary, the Division of Pensions and Benefits, in consultation with the board of trustees of the retirement system, shall send a second notice to the member or the member’s designated beneficiary stating the details of the recalculated final compensation requested by the member or beneficiary pursuant to this subsection.
Upon receiving the second notice from the Division of Pensions and Benefits, the member or the member’s designated beneficiary shall have 30 days to approve the recalculated final compensation to be utilized in calculating the member’s retirement benefits. If the member or the member’s designated beneficiary fails to approve the recalculated final compensation within the 30 days, the Division of Pensions and Benefits shall utilize the final compensation stated in the first notice to calculate the member’s retirement benefits using the calculation of final compensation as defined in N.J.S.18A:66-2.
b. Any member of the retirement system who retired after January 1, 2025 and began receiving retirement benefits on or before the effective date of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), shall have one year following the effective date of this act to initiate the recalculation process provided under subsection a. of this section by submitting a recalculation request to the Division of Pensions and Benefits.
Upon completing the recalculation process, if the member or the member’s designated beneficiary approves the recalculated final compensation to be utilized in calculating the member’s retirement benefits, the recalculation in the member’s retirement benefits shall apply to such benefit entitlements granted prior to and in effect on the effective date of this act, but only for benefit payments made after that effective date. No member of the retirement system shall be granted a retroactive payment based upon the difference between the benefit the member would have received if the recalculation had been applicable at the date of entitlement and the benefit that the member has received from the date of entitlement to that effective date.
c. The director of the Division of Pensions and Benefits shall promulgate such rules and regulations as the director determines are necessary to effectuate the provisions of this section.
2. a. Notwithstanding any law, rule, or regulation to the contrary, upon receiving a properly completed retirement application from a member of the Public Employees’ Retirement System, the Division of Pensions and Benefits shall send a first notice to the member or the member’s designated beneficiary stating the details of the final compensation, as defined in section 6 of P.L.1954, c.84 (C.43:15A-6), that shall be utilized in calculating the member’s retirement benefits. Within 60 days of receiving the notice, the member or the member’s designated beneficiary shall be eligible to request a recalculation of the member’s final compensation utilizing the member’s average annual compensation for New Jersey service for which contributions are made during any three calendar years of the member’s membership providing the largest possible benefit to the member or the member's beneficiary as an alternative to the calculation of final compensation as defined in section 6 P.L.1954, c.84 (C.43:15A-6).
Within 30 days of receiving the request for the recalculation from the member or the member’s designated beneficiary, the Division of Pensions and Benefits, in consultation with the board of trustees of the retirement system, shall send a second notice to the member or the member’s designated beneficiary stating the details of the recalculated final compensation requested by the member or beneficiary pursuant to this subsection.
Upon receiving the second notice from the Division of Pensions and Benefits, the member or the member’s designated beneficiary shall have 30 days to approve the recalculated final compensation to be utilized in calculating the member’s retirement benefits. If the member or the member’s designated beneficiary fails to approve the recalculated final compensation within the 30 days, the Division of Pensions and Benefits shall utilize the final compensation stated in the first notice to calculate the member’s retirement benefits using the calculation of final compensation as defined in section 6 P.L.1954, c.84 (C.43:15A-6).
b. Any member of the retirement system who retired after January 1, 2025 and began receiving retirement benefits on or before the effective date of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), shall have one year following the effective date of this act to initiate the recalculation process as provided under subsection a. of this section by submitting a recalculation request to the Division of Pensions and Benefits.
Upon completing the recalculation process, if the member or the member’s designated beneficiary approves the recalculated final compensation to be utilized in calculating the member’s retirement benefits, the recalculation in the member’s retirement benefits shall apply to such benefit entitlements granted prior to and in effect on the effective date of this act, but only for benefit payments made after that effective date. No member of the retirement system shall be granted a retroactive payment based upon the difference between the benefit the member would have received if the recalculation had been applicable at the date of entitlement and the benefit that the member has received from the date of entitlement to that effective date.
c. The director of the Division of Pensions and Benefits shall promulgate such rules and regulations as the director determines are necessary to effectuate the provisions of this section.
3. This act shall take effect on the 90th day following the date of enactment, except that anticipatory administrative action in advance as shall be necessary for the implementation of this act.
STATEMENT
This bill establishes an alternate calculation of retirement benefits for members in the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS).
The bill requires the Division of Pensions and Benefits to send a first notice to the member or the member’s designated beneficiary stating the details of the final compensation that will be utilized in calculating the member’s retirement benefits upon receiving a properly completed retirement application from the member of TPAF or PERS. Under current law, final compensation is calculated using the member’s ultimate three years of creditable service in New Jersey immediately preceding the member's retirement or death, or the average annual compensation for New Jersey service for which contributions are made during any three fiscal years of the member’s membership providing the largest possible benefit to the member or the member's beneficiary.
Under the bill, upon receiving the notice from the Division of Pensions and Benefits, the member or the member’s designated beneficiary is eligible to request a recalculation of the member’s final compensation utilizing the member’s average annual compensation for New Jersey service for which contributions are made during any three calendar years of the member’s membership providing the largest possible benefit to the member or the member's beneficiary as an alternative to the stated final compensation provided by the Division of Pensions and Benefits. The member or the member’s beneficiary has 60 days from receipt of the notice to submit a request for the recalculation.
The Division of Pensions and Benefits, in consultation with the board of trustees of the respective retirement system, has 30 days upon receiving the recalculation request to send a second notice to the member or the member’s designated beneficiary stating the recalculated final compensation.
The member or the member’s designated beneficiary has 30 days upon receiving the second notice from the Division of Pensions and Benefits to approve the recalculated final compensation to be utilized in calculating the member’s retirement benefits. If the member fails to approve the recalculated final compensation within the 30 days, the Division of Pensions and Benefits will utilize the final compensation stated in the first notice to calculate the member’s retirement benefits.
Under the bill, members who retired after January 1, 2025 and began receiving retirement benefits as of the effective date of this bill will have one year following the effective date of the bill to initiate the recalculation process. However, any adjustment in retirement benefits granted under the provisions of the bill will only apply to benefit payments made after the effective date.