CIRCULAR NO.: 91-29 OMB

ATTENTION: DIRECTORY OF ADMINISTRATION AND DIRECTORS OF PERSONNEL

SUBJECT: EMPLOYEE MEMBERSHIP IN THE STATE'S RETIREMENT SYSTEM

EXPIRE DATE: INDEFINITE

SUPERSEDES: NONE

Employee Membership in the State's retirement system is required as
a condition of employment for all public employees unless they are
specifically exempt by law. All employees who are eligible for
membership in the State's retirement system must be enrolled within
one year of the compulsory enrollment date. The compulsory
enrollment date is the effective date of the permanent appointment
to a classified title, or date of appointment for an unclassified
appointment, or after one year of continuous State employment if
not unclassified or permanent. If there is a delay in enrollment
beyond one year, then the employer is assessed a penalty. The
employer must pay 50% of the employee's share of the back
deductions as the penalty.

A recent audit issued by the Office of the State Auditor found
that a large number of employees are not being enrolled into the
retirement system in a timely fashion. This results in the
Division of Pensions billing the Departments for the cost of 50%
of the employee's back deduction contribution in accordance with
N.J.S.A. 43:15A-7.18 and N.J.S.A. 43:16A-15.1B. The audit report
also found that very few of the agencies are paying these bills or
are requesting appropriations to pay for these bills.

In order to alleviate this problem, all appointing authorities
must require all employees to fill out the pension enrollment
application on the first day of work. The enrollment application
should be properly completed by both the employee and the employer
and submitted to the Division of Pensions if the employee is
permanent, unclassified, non-competitive, or has an existing
membership. For those employees who have existing memberships,
the completion of a report of intra-fund transfer instead of an
enrollment application may be required. If the employee is not
eligible for enrollment on the date of hire, (i.e., provisionals,
temporary, interim appointments, etc.) that application must be
placed in the employee's file and submitted to the Division of
Pensions within one year after the compulsory enrollment date or
upon achieving permanent status, whichever occurs sooner. Prior
to submission of the enrollment application to the Division of
Pensions for processing, a copy of that application must be
submitted to the employee for verification of the beneficiary
information. If the employee alters his/her beneficiary
designation then a new enrollment application should be completed
and submitted to the Division of Pensions.

To assist the agency in maintaining accurate records, the Office
of Management and Budget (OMB) Centralized Payroll Unit will
generate quarterly reports listing all State employees employed
for a period of more than six months who are not having any
pension deductions. This report will be forwarded to the Division
of Pensions who will distribute the report to the appointing
authority.

If the employee is not enrolled within the one year compulsory
time period, the Division of Pensions will bill the agency for 50%
of the employee's back pension contribution. Copies of these
bills will be submitted to OMB. OMB will monitor these
transactions to ensure that these bills are paid in a timely
fashion.

Richard F. Keevey
Director