S3653

An Act concerning the transfer of certain participants from the Defined Contribution Retirement Program to the Public Employees’ Retirement System 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. a. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, all employees of school districts or boards of education hired on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) who earn more than the minimum salary requirements for members eligible to enroll on or after November 2, 2008, and on or before May 21, 2010, and would otherwise be eligible for enrollment in the Public Employees’ Retirement System but for the fact that such employees do not meet the minimum work hours eligibility requirements, pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), but who work more than 20 hours per week, shall be enrolled as members of the Public Employees’ Retirement System and shall be entitled to and shall receive the same benefits received by members of the retirement system who enrolled in the system after July 1, 2011.

b. Public school employees who are enrolled as participants of the Defined Contribution Retirement Program established pursuant to P.L.2007, c.92 (C.43:15C-1 et seq.) on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be enrolled in the Public Employee’s Retirement System pursuant to the provisions of subsection a. of this section within 180 days following that effective date. Each employee shall be given service credit in the Public Employees’ Retirement System for service starting on the employee’s date of enrollment in the Defined Contribution Retirement Program.

Service credit transferred from a participant of the Defined Contribution Retirement Program under this subsection shall be recognized as service credit to determine eligibility for deferred retirement, early retirement, service retirement, disability retirement, veteran’s retirement, health benefits enumerated under the School Employees’ Health Benefits Program, and other benefits as determined to be appropriate by the Division of Pensions and Benefits; provided, however, that any years of service credit transferred to the Public Employees’ Retirement System from the Defined Contribution Retirement Program pursuant to this subsection shall not be used to calculate the amount of the pension benefits the member would receive in retirement as set forth by P.L.1954, c.84 (C.43:15A-1 et seq.).

The actuary for the Public Employees' Retirement System shall determine the unfunded accrued liability resulting from the transfer and coverage of employees under this subsection 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). The unfunded accrued liability shall be amortized in the manner provided by section 24 over an amortization period of 20 years. The State shall be responsible for the one-time payment to fund the unfunded liability, which would be the difference between the value of the funds transferred from the Defined Contribution Retirement Program and the actuarially determined unfunded liability of the Public Employees’ Retirement System resulting from the provisions of this section.

c. The value of the account of an employee 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 employee. If it is determined that the funds currently in the Defined Contribution Retirement Program held by an employee moving to the Public Employees' Retirement System can be moved to the Public Employees' Retirement System fund, then the employee moving to the Public Employees' Retirement System shall receive full service credit upon enrollment in the Public Employees' Retirement System for the time the employee accrued in the Defined Contribution Retirement Program. If, however, it is determined that the Defined Contribution Retirement Program funds cannot be moved to the Public Employees' Retirement System in order to provide the employee full service credit, then the employee moving to the Public Employees' Retirement System shall not receive full service credit for the purposes of the base pension credit.

2. This act shall take effect immediately.

STATEMENT

This bill requires the transfer of certain participants of the Defined Contribution Retirement Program (DCRP) to the Public Employees’ Retirement System (PERS).

Under the bill, employees of school districts or boards of education who are hired on or after the effective date of this bill and earn more than the minimum salary requirement for members eligible to enroll on or after November 2, 2008, and on or before May 21, 2010, and would otherwise be eligible for enrollment in the Public Employees’ Retirement System but for the fact that such employees do not meet the minimum work hours eligibility requirements, but who work more than 20 hours per week, will be enrolled as members of the PERS. Those employees will be entitled to and will receive the same benefits received by members of the retirement system who enrolled in the system after July 1, 2011.

Any affected employees who are currently enrolled as participants of the DCRP will be transferred to the PERS within 180 days of the bill’s effective date.

Upon the transfer, each employee will be given service credit in the PERS for service starting on the employee’s date of enrollment in the DCRP.

Any years of service credit transferred to the PERS from the DCRP will be used to qualify members for retirement and health benefits associated with the PERS, but will not be used to calculate the amount of pension benefit.

Under the bill, the actuary for the PERS is required to determine the unfunded accrued liability resulting from the transfer and coverage of employees in the same manner provided under current law. The State will be responsible for the one-time payment to fund the unfunded liability resulting from the provisions of this bill.

Additionally, the value of the account of a transferred employee is required to be transferred from the DCRP to the PERS in accordance with the relevant provisions of the federal Internal Revenue Code and Internal Revenue Service guidance as a direct trustee-to-trustee transfer.

If it is determined that the funds currently in the DCRP held by those employees moving to the PERS can be moved to the PERS fund, then the employees moving to the PERS will receive full service credit upon enrollment in the PERS for the time they accrued in the DCRP. If, however, it is determined that the DCRP funds cannot be moved to the PERS in order to provide the employees with full service credit, then those employees moving to the PERS will not receive full service credit for the purposes of the base pension credit.