CERTIFYING OFFICER LETTERS 2013

Also available: Archived E-Messages to Certifying Officers and EPIC Users

CERTIFYING OFFICER LETTERS FROM OTHER YEARS

Also available Archived E-Messages to Certifying Officers and EPIC Users.

June 19, 2013

The Division of Pensions and Benefits is pleased to announce a new application available for employees through the Member Benefits Online System (MBOS)¹ — the Purchase Calculator for estimating the cost of a purchase of additional service credit.
The Purchase Calculator on MBOS:

• Identifies the employee through pension membership, to provide only the purchase options available under that retirement system.

• Uses the salary information currently posted to the member’s pension account for the most accurate estimates available².

• Calculates both shared-cost purchases (Former Membership, Leave of Absence, etc.) and full-cost purchases. (Military, US Government, etc.).

• Is available when employees need it — 24 hours-a-day, seven days-a-week on their MBOS accounts.

¹MBOS is a set of applications that allow registered users access to their pension account information over the Internet.  Log on or register for MBOS at: www.state.nj.us/treasury/pensions/mbosregister.shtml

²When the actual purchase cost is calculated by the Division, the member’s highest pensionable salary will be used.

ACCESS TO THE PURCHASE CALCULATOR

Employees who are registered with MBOS have immediate access to the Purchase Calculator through their MBOS account.  The Purchase Service Credit button on the MBOS home page will open a sub-menu with buttons for both the Purchase Calculator and the Purchase Application.

Employees who are new to MBOS can access the Purchase Calculator after they register with both the MyNewJersey Web site and MBOS. Registration is free. New users should be provided with the MBOS Registration Instructions (see attachment).

If, after following the MBOS Registration Instructions, employees need assistance registering for or using MBOS, they should call the MBOS Help Line at (609) 292-7524 or send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us

Employees enrolled in the PERS, TPAF, or PFRS can hear a purchase estimate over the phone when calling the Automated Information System at (609) 292-7524. Telephone estimates are based upon current posted salary information, with the Division of Pensions and Benefits.

Please note that the Purchase Calculator is for estimating purchase costs only!  Do not remit a payment to the Division of Pensions and Benefits based on the estimate provided. Before any service credit can be purchased, the employee must submit a Purchase Application through MBOS.  If the service is verified and eligible for purchase, the Division will issue a Purchase Cost Quotation Letter, which contains a Purchase Authorization that must be returned to the Division by the member. 

ADDITIONAL PURCHASE INFORMATION

Before applying to purchase service credit, employees should read and understand the information provided in Fact Sheet #1, Purchasing Service Credit; Fact Sheet #2, Estimating the Cost of Purchasing Service Credit (PERS and TPAF); or Fact Sheet #3, Estimating the Cost of Purchasing Service Credit (PFRS).

EMPLOYER ACTION IS REQUESTED

Employer communication with employees is a key element for announcing the new online Purchase Calculator on MBOS. The Division asks employers to assist with informing employees by:

• Taking all available opportunities to inform employees of the new online Purchase Calculator on MBOS using any in-house communication channels; and

• Providing employees with the attached fliers, or similar messages, with information about the new application. 

ADDITIONAL INFORMATION

If you have questions regarding any of the information provided in this letter, contact the Division’s Office of Client Services at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Information about using MBOS applications is available in the MBOS User’s Guide at: www.state.nj.us/treasury/pensions/mboskit.htm  A link to the MBOS User’s Guide can be found on your MBOS home page.

For assistance registering with or using MBOS, contact the MBOS Help Line at (609) 292-7524 or send an e-mail with the subject line "MBOS E-mail" to: pensions.nj@treas.state.nj.us

Enclosures

MBOS Online Purchase Calculator Flier Adobe PDF (27K)

CO Letter in Printable Format Adobe PDF (75K)

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June 6, 2013

The Division has named The Variable Annuity Life Insurance Company (VALIC), as the Alternate Benefit Program (ABP) default provider for the upcoming fiscal year — July 1, 2013 thru June 30, 2014.

Alternate Benefit Program (ABP) enrollees who do not designate an investment provider for their program contributions within 45 days of program participation are enrolled with the default investment provider designated — at the time of enrollment — by the Division of Pensions and Benefits.

The default investment provider is authorized to accept employer and employee mandatory contributions and invests the funds in a money market fund. Contributions continue to be sent to the default investment provider and invested in that money market fund until the ABP member designates a different investment provider, completes an application with that investment provider, and notifies the employer of this action.

If the member is subject to delayed vesting, and is enrolled with the default investment provider, the member is allowed to choose an alternate investment provider during the first year and transfer the contributions deposited to that alternate investment provider.

The Division of Pensions and Benefits considers the concerns of members, human resource managers, and the investment providers for the ABP and periodically selects an investment provider to serve as the default provider. The Division of Pensions and Benefits will provide notification of any change to the default provider each fiscal year.

CO Letter in Printable Format Adobe PDF (57K)

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May 28, 2013

Pursuant to Chapter 78, P.L. 2011, Pension and Health Benefit Reform, PERS and TPAF employee pension contribution rates will increase from 6.64% to 6.78% of salary with the first paycheck on or after July 1, 2013. 

State employees paid through the Centralized Payroll Unit will receive check messages as notification of the contribution change which will begin as of the July 5, 2013 paycheck.

For all other employees, the increase to 6.78% is to be effective with the first paycheck to be paid on or after July 1, 2013 (which is reported to the Division of Pensions and Benefits as compensation during the 3rd calendar quarter of 2013).

The change in the employee’s contribution rate will also increase the minimum repayment amount for new pension loans or the cost for a purchase of service credit if certified after the increased contribution rate becomes effective.

Note: There is no additional increase for PERS Prosecutors Part members whose contribution rate increased to 10% in October 2011.

NOTIFICATION OF EMPLOYEES

State biweekly employees paid through the State Centralized Payroll Unit will receive check messages with Pay Periods #13 (June 21, 2013) and #14 (July 5, 2013) to announce the PERS/TPAF contribution change.  Copies of the check messages are attached for reference (see printable version). State biweekly employers are encouraged to provide their employees with additional reminders of the coming rate change.

State monthly, local government, and local education employers are asked to provide payroll messages or other notifications to inform their employees of the coming rate change.

FUTURE INCREASES

July 2013 marks the third rate increase under the provisions of Chapter 78, which calls for PERS and TPAF employee pension contribution rates to increase over 7 years until the total pension contribution rate is 7.5% of salary as of July 2018. The fourth contribution rate increase to 6.92% will be effective July 2014.

ADDITIONAL INFORMATION

If you have questions regarding the information provided in this letter, contact the Division’s Employer Education Unit at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Enclosure
Centralized Payroll Check Messages — Pension Rate Change

CO Letter in Printable Format Adobe PDF (59K)

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May 28, 2013

Under the provisions of Chapter 78, P.L. 2011, employees are required to pay an increased contribution toward the cost of health benefits coverage based on a specified percentage¹ of the medical and prescription drug plan premiums. 

For State employees who were hired on or before June 28, 2011, the contribution increase is being phased in over four years with these employees paying ¼, ½, ¾ and the full amount of the contribution rate during the phase-in years.

For most State employees the health benefit contribution rate change is to be effective with the first paycheck on or after July 1, 2013. 

¹The amount of the contribution is calculated using the level of coverage selected and a scale of percentages that increase with the employee’s annual salary.  Single coverage and Family coverage have separate scales of percentages. Member & Spouse/Partner and Parent & Child coverage use the same scale of percentages.  The appropriate percentage is multiplied by the premium cost of the medical and/or prescription drug plans selected. The total contribution cannot be less than 1.5% of annual salary.

CONTRIBUTION PERCENTAGE CHANGES

Percentage rate increase levels and effective dates for specific employee groups are as follows:

Employees Biweekly Employees (Paid Through State Centralized Payroll)

Effective with State Biweekly Pay Period #14 (the July 5, 2013 paycheck), Executive, Legislative, and non-represented Judiciary employees hired on or before June 28, 2011 will pay at the Year Three percentage* (¾ of the full percentage) for medical and prescription drug plan premiums.

Employees in these categories who were hired after June 28, 2011 currently pay the Year Four full percentage* amount and should not see an increase in their health benefit contribution as of July 2013.

*Or 1.5% of salary, whichever is greater.

State Monthly Employees

Effective with the first paycheck to be paid on or after July 1, 2013 (reported to the Division of Pensions and Benefits as compensation during the 3rd calendar quarter of 2013), State Monthly employees hired on or before June 28, 2011 will pay at the Year Three percentage* (¾ of the full percentage) for medical and prescription drug plan premiums.

State Monthly employees who were hired after June 28, 2011 pay the Year Four full percentage* amount and should not see an increase in their health benefit contribution as of July 2013.

*Or 1.5% of salary, whichever is greater.

CONTRIBUTION EXAMPLE

As an example: An employee with an annual salary of $50,000 has a gross biweekly pay of $1,915.71 and 1.5% of that salary equals $28.73 per pay period.  The employee also has Family coverage through NJ DIRECT15 and the Employee Prescription Drug Plan with a biweekly premium of $870.92 for Plan Year 2013. 

The current Year Two contribution is 6% of the premium, with a biweekly cost for medical and prescription drug coverage equal to $52.26.  The employee pays the percentage of premium contribution amount of $52.26 per biweekly pay period, because it is greater than 1.5% of salary ($28.73).

For the Year Three contribution the percentage increases to 9% of the premium, or $78.38 per biweekly pay period. Therefore, effective July 2013, the employee begins to pay the Year Three percentage of the premium ($78.38).

CALCULATING HEALTH BENEFIT CONTRIBUTIONS

For employees who wish to estimate their expected health benefit contributions amounts, rate charts, salary based percentage scales, worksheets, and Percentage of Premium Calculators are available on the SHBP Web site at: www.state.nj.us/treasury/pensions/health-benefits.shtml

Separate worksheets and calculators are provided for both State biweekly employees and State monthly employees.

Note: For the Premium Calculators, Internet Explorer or Firefox browsers are recommended. Safari or Chrome users may receive error messages.

NOTIFICATION OF EMPLOYEES

State Executive, Legislative, and non-represented Judiciary employees paid biweekly through the State Centralized Payroll Unit will receive check messages with Pay Periods #13 (June 21, 2013) and #14 (July 5, 2013) to announce the health benefit contribution increase. Copies of the check messages are attached for reference (see printable version). State biweekly employers are encouraged to provide their employees with additional reminders of the coming contribution increase.

State monthly employers are asked to provide payroll messages or other notifications to inform their employees of the coming contribution increase.

FUTURE CONTRIBUTION INCREASES

The next phase of the health benefit contribution increase will be effective with the first paycheck on or after July 1, 2014.

ADDITIONAL INFORMATION

If you have questions regarding the information provided in this letter, contact the Division’s Employer Education Unit at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Enclosure
Centralized Payroll Check Messages — Health Benefit Contribution Changes

CO Letter in Printable Format Adobe PDF (68K)

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May 28, 2013

Under the provisions of Chapter 78, P.L. 2011, employees are required to pay an increased contribution toward the cost of health benefits coverage based on a specified percentage¹ of the medical and prescription drug plan premiums. 

For most employees the contribution increase is being phased in over four years with these employees paying ¼, ½, ¾ and the full amount of the contribution rate during the phase-in years. 

This letter is being distributed as a reminder to Local Government and Local Education Employers who participate in the SHBP or SEHBP that increases to employee health benefit contributions may be due with the first payroll on or after July 1, 2013.

¹Under Chapter 78, the amount of the contribution is calculated using the level of coverage selected and a scale of percentages that increase with the employee’s annual salary. Single coverage and Family coverage have separate scales of percentages. Member & Spouse/Partner and Parent & Child coverage use the same scale of percentages. The appropriate percentage is multiplied by the premium cost of the medical and/or prescription drug plans selected. The total contribution cannot be less than the 1.5% of annual salary required under Chapter 2, P.L. 2010.

IMPLEMENTING CONTRIBUTION CHANGES

Due to the variation in local Collective Negotiations Agreements (CNA), it is the local employer’s responsibility to correctly identify and implement the correct level of required contributions for the next phase-in amount and to appropriately notify their employees of the increase.  In addition, the required contribution increases are implemented differently for Local Government or Education Employees who were covered under a CNA as of the effective date of Chapter 78 (June 28, 2011) and employees with agreements that were expired or who were without CNA coverage as of the effective date of Chapter 78. 

In general, required contributions under Chapter 78, P.L. 2011, are applied as follows:

For Local Government or Education Employees covered under a CNA that was still in effect as of June 28, 2011, the four-year phase-in was to start upon expiration of the CNA and must run for the full four years.  Existing CNAs that are extended, altered, reopened, amended, or otherwise adjusted are considered to be new CNAs.

New Local Government or Education Employees whose positions are covered by an existing CNA who began work on or after June 28, 2011, are treated the same as employees who are already employed and covered under the CNA.  In other words, the phase-in of contributions begins upon the expiration of the CNA that was in effect on June 28, 2011.

For Local Government or Education Employees who were covered under a CNA that was expired as of June 28, 2011, and employees not covered by a CNA, the four-year phase-in began immediately effective with Chapter 78. If an expired CNA was under negotiation as of June 28, 2011, and the final settlement included retroactive salary increases, the health care contribution must take into account increases in salary only back to the date the Year One contributions were implemented. The Year Two amount of the phase-in began July 1, 2012, and the Year Three amount of the phase-in begins July 1, 2013, regardless of when the Year One contributions began.  

New Local Government or Education Employees whose positions were covered by an expired CNA and employees not covered by a CNA who began work after June 28, 2011, pay the full (Year Four) contribution amount specified under Chapter 78. Since these employees already pay the full contribution, there should be no increase seen in their contribution level as of July 1, 2013.

Employees with separate individual employment agreements in effect as of June 28, 2011, paid pursuant to the agreement until it expired; after which the four-year phase-in was required to begin.

Employment is based on the employing entity.  Changing employers to one with a different (or without a) CNA can result in the employee being considered as “new” and subject to the immediate implementation of the full (Year Four) contribution.

Employers were expected to use due diligence in working with staff and vendors to implement the contributions required under the law. 

CONTRIBUTION EXAMPLE

As an example: A government employee with an annual salary of $50,000 has a gross monthlypay of $4,166.66 and 1.5% of that salary equals $62.49 per month.  The employee also has Family coverage through NJ DIRECT15 and the SHBP Prescription Drug Plan with a monthly premium of $2,141.84 for Plan Year 2013. 

The employee’s current Year Two contribution requirement is 6% of the premium, with a monthly cost for medical and prescription drug coverage equal to $128.50.  The employee pays the percentage of premium contribution amount of $128.50 per month, because it is greater than 1.5% of salary ($62.49).

For the Year Three contribution the percentage increases to 9% of the premium, or $192.75 per month. Therefore, effective July 2013, the employee begins to pay the Year Three percentage of the premium ($192.75).

CALCULATING CONTRIBUTIONS

For employees who wish to estimate their expected health benefit contributions amounts, rate charts, salary based percentage scales, worksheets,and Percentage of Premium Calculators are available on the SHBP/SEHBP Web site at: www.state.nj.us/treasury/pensions/health-benefits.shtml

Separate worksheets and calculators are provided for both local government employees and local education employees.

Note: For the Premium Calculators, Internet Explorer or Firefox browsers are recommended. Safari or Chrome users may receive error messages.

NOTIFICATION OF EMPLOYEES

Local Government and Local Education employers are asked to provide any necessary payroll messages and/or other notifications to inform their employees of the upcoming contribution increase as appropriate with the employers CNAs and phase-in level.

ADDITIONAL INFORMATION

CO Letter in Printable Format Adobe PDF (67K)

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May 28, 2013

Under the provisions of Chapter 78, P.L. 2011, employees are required to pay an increased contribution toward the cost of health benefits coverage based on a specified percentage¹ of the medical and prescription drug plan premiums. 

For State employees who were hired on or before June 28, 2011, the contribution increase is being phased in over four years with these employees paying ¼, ½, ¾ and the full amount of the contribution rate during the phase-in years.

Effective with State Biweekly Pay Period #15 (the July 19, 2013 paycheck), Judiciary employees covered by collective negotiations agreements that expired on June 30, 2012, who were hired on or before June 28, 2011 will contribute at the Year Two percentage* (½ of the full percentage) for medical and prescription drug plan premiums.

Employees who were hired after June 28, 2011 currently pay the Year Four full percentage* amount and should not see an increase in their health benefit contribution as of July 2013.

*Or 1.5% of salary, whichever is greater.

¹The amount of the contribution is calculated using the level of coverage selected and a scale of percentages that increase with the employee’s annual salary.  Single coverage and Family coverage have separate scales of percentages. Member & Spouse/Partner and Parent & Child coverage use the same scale of percentages.  The appropriate percentage is multiplied by the premium cost of the medical and/or prescription drug plans selected. The total contribution cannot be less than 1.5% of annual salary.

NOTIFICATION OF EMPLOYEES

The Division asks that the AOC and Human Resources notify the Judiciary employee group (defined above) of the pending health benefit contribution increase.  As a convenience we have enclosed sample messages at the end of this letter that can be used for check messages, handouts or fliers, or posted to the Judiciary Intranet.

It is also suggested that Judiciary employees receive notification on a schedule to coordinate with Centralized Payroll check messages to other State Employees for Pay Period #13 (the June 21, 2013 paycheck), Pay Period #14 (the July 5, 2013 paycheck), and Pay Period #15 (the July 19, 2013 paycheck).

CONTRIBUTION EXAMPLE

As an example: An employee with an annual salary of $50,000 has a gross biweekly pay of $1,915.71 and 1.5% of that salary equals $28.73 per pay period.  The employee also has Family coverage through NJ DIRECT15 and the Employee Prescription Drug Plan with a biweekly premium of $870.92 for Plan Year 2013. 

The current Year Two contribution is 6% of the premium, with a biweekly cost for medical and prescription drug coverage equal to $52.26.  The employee pays the percentage of premium contribution amount of $52.26 per biweekly pay period, because it is greater than 1.5% of salary ($28.73).

For the Year Three contribution the percentage increases to 9% of the premium, or $78.38 per biweekly pay period. Therefore, effective July 2013, the employee begins to pay the Year Three percentage of the premium ($78.38).

CALCULATING HEALTH BENEFIT CONTRIBUTIONS

For employees who wish to estimate their expected health benefit contributions amounts, rate charts, salary based percentage scales, worksheets,and Percentage of Premium Calculators are available on the SHBP Web site at: www.state.nj.us/treasury/pensions/health-benefits.shtml

Note: For the Premium Calculators, Internet Explorer or Firefox browsers are recommended. Safari or Chrome users may receive error messages.

FUTURE CONTRIBUTION INCREASES

The next phase of the health benefit contribution increase will be effective July 2014.

ADDITIONAL INFORMATION

If you have questions regarding the information provided in this letter, contact the Division’s Employer Education Unit at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Enclosure
Judiciary Health Benefit Contribution Messages

CO Letter in Printable Format Adobe PDF (61K)

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May 28, 2013

Pursuant to Article VI, Section VI, Paragraph 6 of the New Jersey Constitution — as authorized under Chapter 78, P.L. 2011, Pension and Health Benefit Reform — employee pension and health benefit contribution rates for members of the JRS will increase as of State Biweekly Pay Period #14 of 2013 (the July 5, 2013 paycheck).

Please notify your employees who are JRS members of the upcoming contribution rate changes.

PENSION CONTRIBUTION RATES

The increase in JRS pension contributions is calculated in one of two different ways depending upon when an individual was enrolled into the JRS.

For JRS members enrolled into the retirement system on or after January 1, 1996, the pension contribution rate will increase from 5.56% to 6.84% of all compensation.

For JRS members enrolled into the retirement system before January 1, 1996, the pension contribution is calculated using one rate for the compensation of the member’s current position as of January 18, 1982, and a separate rate for the balance of the member’s compensation in excess of the January 18, 1982, compensation. The employee contribution rates for this group will increase from 2.56% to 3.84% for the compensation as of January 18, 1982, and from 5.56% to 6.84% for any compensation exceeding the January 18, 1982, compensation.

The change in the JRS contribution rate will also increase the minimum repayment amount for new pension loans or the cost for a purchase of service credit if certified after the increased contribution rate becomes effective.

FUTURE PENSION INCREASES

The 3.84% contribution rate for compensation as of January 18, 1982, and 6.84% contribution rate for any compensation exceeding the January 18, 1982, compensation contribution amount represents the third year of phased-in rate increases under the provisions of Chapter 78, P.L. 2011.  The fourth year contribution rate increase of an additional 1.28% will begin with the first payroll of July 2014.

Overall, Chapter 78 calls for JRS employee pension contribution rates to increase by 1.28% a year over 7 years until a total additional pension contribution rate of 9% is reached as of July 2017 — making the full contribution rate 12% for JRS members enrolled into the retirement system on or after January 1, 1996. 

EMPLOYEE HEALTH BENEFIT CONTRIBUTIONS

Chapter 78, P.L. 2011, also requires that employees enrolled in the State Health Benefits Program (SHBP) pay an increased portion of the cost of health benefits coverage based on a specified percentage of the medical and prescription drug plan premiums. Contribution increases are being phased in over four years with employees paying ¼, ½, ¾ and the full amount of the contribution rate during the phase-in years.
The health benefits contribution is calculated in one of two different ways depending upon when an individual was appointed to the JRS position. Effective with State Biweekly Pay Period #14 (the July 5, 2013 paycheck):

JRS members appointed prior to June 28, 2011 — or reappointed after that date with no break in service — will pay the Year Three (¾ of the full percentage) contribution rate for health benefits coverage.

JRS members who are newly appointed¹ on or after June 28, 2011, or reappointed after that date with a break in service, pay the Year Four (full percentage) contribution rate for health benefits coverage.

The amount paid is calculated using the level of coverage selected and a scale of percentages that increase with the employee’s annual salary. The appropriate percentage is multiplied by the premium cost of the medical and/or prescription drug plans selected.

Rate charts, percentage worksheets, and Percentage of Premium Calculators are available on the SHBP home page at:
www.state.nj.us/treasury/pensions/health-benefits.shtml

The next, and final, phase of the health benefit contribution changes will be in July 2014, when employees will pay the full amount of the required percentage of premiums for medical and prescription drug coverage.

ADDITIONAL INFORMATION

If you have questions regarding the information provided in this letter, contact the Division’s Employer Education Unit at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

¹State employees who were newly appointed on or after June 28, 2011 and had continuous service until the employee was appointed as a judge will pay the Year 3contribution rate (¾ of the full amount) for health benefits coverage.

CO Letter in Printable Format Adobe PDF (65K)

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May 16, 2013

The Division of Pensions and Benefits, with assistance from the Office of the Attorney General, recently completed a formal process to amend the New Jersey Administrative Code (N.J.A.C.) as it relates to the Alternate Benefit Program (ABP) (N.J.A.C. 17:7-1 through 21).  The final rules were published in the New Jersey Register on March 18, 2013. 

CLOSURE OF PRE-1995 CONTRACTS

As part of this process it became apparent that several long-time members of the ABP continued to make voluntary contributions to the 403(b) annuity contracts available under the ABP prior to 1995.  Those contracts have been deemed to be “closed” and identified as the “ABP Pre-1995 Annuity Contracts Plan (Closed Plan)” (N.J.A.C. 17:7-1.2).  It was determined that these non-qualified contracts should be closed not just to new members but to all future contributions from all program members.  Under the newly adopted rules the only accounts approved to receive 403(b) contributions are those administered under the Additional Contributions Tax-Sheltered Program (ACTS) (N.J.A.C. 17:7-1.2). Therefore, we ask all employers to begin the process of transitioning their employees who continue to make contributions to a “Closed Plan” account to the qualified 403(b) annuities available under ACTS.  We also ask that you complete this process as soon as is administratively possible but in all cases contributions should cease to these “Closed Plan” accounts no later than June 28, 2013.

Our plan service providers are aware of the need to transition these employees’ accounts and will work with you and your affected employees to expedite this process.  If you are in need of assistance please reach out to your campus service provider representative.  If you require additional assistance, please contact us at the Division.

IRS DETERMINATION

The N.J.A.C. amendment process also resulted in a favorable determination letter being issued by the U.S. Department of the Treasury’s Internal Revenue Service (IRS) for the ABP and ACTS.  The favorable determination by the IRS means that the plan complies with federal standards as to the plan’s design.  A plan operating in compliance with these federal standards will continue to receive favorable tax treatment under the U.S. Internal Revenue Code. 

PLAN DOCUMENTATION AND ADMINISTRATION

The IRS determination revealed that several areas of plan administration were not sufficiently defined in existing literature to allow for consistent interpretation of administration policy between educational institutions and the various service providers.  The newly adopted rules resolve that program deficiency and provide what amounts to a complete “Plan Document” that may be referred to as the reference source for determination of all facets of program benefits. The Division is also working with the ABP’s service providers to assure that the plan is administered consistently with its adopted rules. 

The Plan Document (N.J.A.C. 17:7) has been placed on the Division’s Web site at: www.state.nj.us/treasury/pensions/abp1.shtml  

I encourage each of you with oversight responsibility for administration of this program to make use of this source for decision-making under the program.

CO Letter in Printable Format Adobe PDF (59K)

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May 10, 2013

This letter is being distributed to employers as a reminder of the existing policy for the effective dates of SHBP/SEHBP coverage as it applies to 10-month employees.

As outlined in N.J.S.A. 52:14-17.32c, employees hired as of September 1st under a 10-month contract are entitled to have their health benefits effective September 1st providing they start work at the beginning of the contract year and a completed Health Benefits Enrollment Application is received in our office by October 5th (or the next business day if October 5th falls on a weekend).  Coverage for these employees and their dependents will continue during the two months of the year in which they are not paid, provided that proper payment is made for coverage as may be required by the State or participating employer.

Applications for 10-month employees received after October 5th will be effective November 1st.  All other 10-month employees who do not start work at the beginning of the contract year (September 1st) will have benefits begin 60 days from the date of hire.

The termination of health coverage for a 10-month employee who terminates employment at the end of a contract year will be September 1st provided the employee’s benefits were in effect September 1st of the previous year.  Terminations submitted via the Employer Pensions and Benefits Information Connection (EPIC) must be processed by the 5th of the month prior to the health benefit termination date.  Please refer to the “Timetable for Terminations in the NJ SHBP/SEHBP for State and Monthly Employers” found in EPIC by clicking on 10-month termination explanation when processing terminations.

If you have any questions about the information in this letter, please contact the Division’s Office of Client Services at (609) 292-7524 to speak with an Employer Group representative or send an e-mail to: pensions.nj@treas.state.nj.us

CO Letter in Printable Format Adobe PDF (53K)

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March 26, 2013

Due to the expansion of health plan offerings effective January 1, 2013, part-time employees may enroll in any SHBP/SEHBP health plan that is offered by the employer (except for NJ Direct HD1500 or Aetna Value HD1500) and a SHBP/SEHBP prescription drug plan (if offered by the employer).

Programming to align prescription drug plans with the appropriate health plan was not completed prior to January 1, 2013, and some part-time employees were enrolled in a prescription drug plan that did not align with the correct health plan. The Division of Pensions and Benefits recently completed system alignment of part-time coverage offerings with the employers who offer prescription drugs through a SHBP/SEHBP health plan. In many cases, there will be corrections to employer billed amounts in the April 2013 billing retroactive to January 1, 2013. Impacted member claims will be reprocessed and may result in an adjustment to the amount the member is required to pay. 

Also, part-time employees of employers who offer prescription drug based upon the health plan in which the subscriber is enrolled will no longer be able to waive prescription drug coverage. If a part-time member had previously waived their stand-alone prescription coverage, their enrollment in prescription coverage through the health plan will be effective April 1, 2013.  

Please inform your participating part-time employees of this update.

Enclosure

Fact Sheet #66, Health Benefits Coverage for Part-Time Employees Adobe PDF (32K)

CO Letter in Printable Format Adobe PDF (49K)

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March 14 , 2013

Chapter 52, P.L. 2011, (N.J.S.A. 43:3C-15) requires that both the Certifying Officer¹ and the immediate Supervisor of the Certifying Officer receive training² in enrollments and annually certify for each member of the retirement system, that the enrolled person is eligible for membership in the retirement system in accordance with the statutes and regulations of the retirement system.

ONLINE MEMBERSHIP CERTIFICATION NOW AVAILABLE IN EPIC

The Division of Pensions and Benefits has completed work on the Chapter 52 Annual Membership Certification which is available as an online application in the Employer Pensions and Benefits Information Connection (EPIC).

With the completion of programming, the Annual Membership Certification is now due from employers.  The designated and trained Certifying Officer and Supervisor of the Certifying Officer are both required to complete the Chapter 52 Annual Membership Certification. 

The Certifying Officer and Supervisor of the Certifying Officer should immediately:

Log on to EPIC — go to: www.state.nj.us/treasury/pensions/  and click the link “Log on to MBOS or EPIC.”  Then log on to myNewJersey and EPIC.

On your EPIC Home Page you will see a button for the “Chapter 52 Annual Certification.”  Click the button and the first page of the application will show the Chapter 52 training and certification status of the Certifying Officer and the Supervisor of the Certifying Officer.  To complete the Annual Membership Certification, click the “Complete Certification” button to open the certification page.

Note: If Chapter 52 training has not been completed by both individuals, it must be done immediately². The “Complete Certification” button will not be available until Chapter 52 training is completed.

If you are able to certify that each member of the retirement system is properly enrolled, click “Yes.”  You will receive an online confirmation and the process is completed.

If you are unable to certify that each member of the retirement system is properly enrolled, click “No” and you will be shown a page with detailed instructions on how to report any improperly enrolled individuals to the Division of Pensions and Benefits — employers should also remove these individuals from the quarterly Report of Contributions.  Once any instance of an improperly enrolled worker has been reported with the Division, you will receive a follow-up e-mail from the Division with instructions that you may return to EPIC and complete the Annual Membership Certification.

Immediate action is required. The Certifying Officer and Supervisor of the Certifying Officer must each complete the Annual Membership Certification within 30 days of receipt of this letter.  Failure to do so will prevent the Division from accepting any new enrollment applications from the employing location until the certifications are completed.

CERTIFICATION IS REQUIRED ANNUALLY

Please note that the current certification marks the initial rollout of the Chapter 52 Annual Membership Certification.  Under the provisions of Chapter 52, Membership Certifications are due annually and will be required each September.

Therefore, the Division will send employers an e-mail notification for September 2013 as a reminder that memberships are again due for certification.  After memberships are recertified in September, the process will be complete for the year³ until a new reminder is sent for September 2014 and each year thereafter. 

IMPORTANCE OF PROPER ENROLLMENT

Improper enrollment of ineligible individuals in the retirement systems results in pension abuse and a loss of public confidence in local and state administrators.  Failure to complete the required training and/or Annual Membership Certification may also result in financial hardship for your employees and financial harm or other penalties for you, the employer.

Until Chapter 52 training and the Annual Certification is completed:

Your employing location cannot process enrollment applications or transfers until both the Certifying Officer and the Supervisor complete training.

Employees with delayed enrollments will have significantly larger back deduction amounts resulting in longer repayment schedules and in some cases, assessment of interest charges.

Your employing location may also be subject to a delayed enrollment liability if an employee is not properly enrolled in the pension system in a timely manner.

An employer who enrolls, or permits the continued enrollment of, an individual who is ineligible for membership in the retirement system will be subject to prosecution under N.J.S.A. 43:3C-15 — “any person who knowingly makes a false statement, or falsifies or permits to be falsified any record, application, form, or report of a pension fund or retirement system, in an attempt to defraud the fund or system will be guilty of a crime of the fourth degree.”

It is essential that public employers remain up to date with the enrollment eligibility training and certification requirements.  The Division of Pensions and Benefits expects that all Certifying Officers and their Supervisors will make every effort to ensure that their location is in full compliance with this law.

ENROLLMENT AND TRANSFER FORM UPDATES

In addition to the new online Annual Membership Certification, the Division has also updated its online and paper Enrollment Applications and Report of Transfer forms to reflect the Chapter 52 training and certification requirements.  PDF versions of the revised forms can be found in the Forms Index of the online Employers’ Pensions and Benefits Administration Manual (EPBAM) at: www.state.nj.us/treasury/pensions/epbam/

¹“Certifying Officer” is defined in the law as an officer or employee of the State or of an employer other than the State who is responsible for submitting information to and performing the duties relating to matters concerning the retirement system with respect to each of the employees of the employing location, as required by law, the board of trustees or commission, and the Division of Pensions and Benefits. “Supervisor of the Certifying Officer” is designated by the employing location and is required to be the immediate supervisor of the Certifying Officer as defined above.

²For more information on Chapter 52 Mandatory Training Requirements see the Certifying Officer Letters of May 26, 2011, Enrollment Certification and Training Requirements Under Chapter 52, P.L. 2011, and June 17, 2011, Required Training under Chapter 52, P.L. 2011.  Links to these letters are at: www.state.nj.us/treasury/pensions/coltr11.shtml

³In the event of a change in either the Certifying Officer or the Supervisor of the Certifying Officer, the new individual must complete both Chapter 52 training in enrollments and complete a new membership certification.

CO Letter in Printable Format Adobe PDF (69K)

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February 26, 2013

We appreciate your efforts in preparing to launch ING’s Common Remitter services for participants in the New Jersey Alternate Benefit Program and Additional Contributions Tax-Sheltered Program administered through the Division of Pensions and Benefits.
In order to implement the Common Remitter service, we want to remind you of the plans that are within the scope for this service:

Alternate Benefit Program (ABP) — A mandatory 401(a) retirement plan, the ABP covers primarily employees who provide instruction and/or are required to have a professional degree or designation as part of their job functions. Typically, such employees will be full-time officers, full-time professional staff, faculty, and teaching staff

Additional Contributions Tax-Sheltered Program (ACTS) — A voluntary 403(b) plan, ACTS is available for all employees of the State’s public universities and colleges provided that the employee normally works at least 20 hours per week

We recognize that schools and/or investment providers may have developed different naming conventions for the ABP and ACTS programs.  As a reminder, employees eligible to participate in ACTS may fall into one of two categories:

Employees who are ABP members, and

School employees who are not eligible to become ABP members.

As a reminder, data related to any other plan, including the pre-1995 403(b) Alternate Benefit Plan and any other school-sponsored plan not offered under the auspices of the Alternate Benefit Program (such as a school-sponsored voluntary 403(b) plan or a school-sponsored excess plan), is not currently part of these common remitter services and should not be transmitted through ING.
We know that you may have questions about these new common remitter services.  We intend to hold webcasts to address your concerns and assist you in transitioning to the Common Remitter services.  We will notify you of the dates for these webcasts as soon as they are available.

In the meantime, if you have specific questions about your plan data files, please do not hesitate to contact Mala Emera at (732) 326-5613 or the ING Common Remitter team at 1-866-408-0658 or by e-mail at common.remitter@us.ing.com

CO Letter in Printable Format Adobe PDF (58K)

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January 24, 2013

On May 9, 2012, we advised all Alternate Benefit Program (ABP) employers and their staff that if there was no remedial correction to statutes to permit programs that had been referred to as “Transition to Retirement” by June 30, 2012, the Division’s position as stated in its July 1, 2011, communication on this subject would be implemented; all “Transition to Retirement” programs would have to be discontinued; and corrective measures would have  to be taken with regard to your employees who had elected to participate in the program.

As background, on July 1, 2011, the Division released guidance relating to a practice whereby some, if not all, of the State’s public colleges and universities (including county colleges) offered programs referred to as “Transition to Retirement.” Under those programs employees, typically faculty members, retired from their full-time positions with the institution, began collecting retirement benefits from the ABP, and continued employment with the institution in a reduced, part-time capacity.  In some situations this practice may have been memorialized in a collective negotiations agreement.  The ABP statutes do not authorize “Transition to Retirement” programs and, as such, the programs should not be utilized to qualify an employee for retirement benefits from the ABP.  The Division did not take corrective action at that time since amendments to New Jersey’s Statutes to permit these programs had been proposed and were pending before the Legislature.

On October 11, 2012 we advised this same group of employers and their staff that, since no remedial correction to statutes had occurred, the Division would have to take steps to discontinue these programs and correct past actions taken by employers and employees under these programs. The Treasurer’s Office then received a request from a group representing the State’s Colleges and Universities to reconsider the “arbitrary deadline of June 30, 2012” and allow more time for corrective legislation, in the form of S-1819 and A-3024, to progress through the legislative process.

Unfortunately, as of now, that legislation has not been enacted. To maintain the qualified status of the Alternate Benefit Program with the Internal Revenue Service, the Division must take the following corrective measures:

First, employers are advised that ABP members participating in “Transition to Retirement” programs will not be approved to receive any retirement benefits from the retirement system, including retiree health benefit coverage (if applicable), and those employees must continue participation under the ABP if their continued employment so permits.

Second, the Division requests a copy of all “Transition to Retirement” programs that have been in force through the employment agreements from January 2009 through December 2012. 

Third, we are asking all employers to provide a list, in the format provided in attachment A of this notice, of all employees who have participated in a “Transition to Retirement” program since January 1, 2009.  As you will see in the provided format, the Division is interested in the original date of retirement and the position from which the employee retired under the “Transition to Retirement” program, the date and position under which the employee continued employment under the “Transition to Retirement” program, and if the subsequent employment has terminated.

Fourth, any ABP member who elected to retire under a “Transition to Retirement” program during calendar year 2012 only who wishes to rescind that retirement and continue participation under the ABP will be permitted to do so if:

The member submits a written request to their employer to rescind their retirement;

The employer confirms in writing that the retirement is rescinded and employment will continue;

The member, working through their ABP service provider, cancels any request for a benefit payment or, in the case of an account that has been withdrawn or is otherwise in payment status, returns the funds that were distributed to their investment provider to re-establish the ABP retirement account, and;

The Division receives copies of the member’s and employer’s written confirmation of the rescinding of retirement and the ABP service provider’s confirmation of cancelation or return of benefits.

Additional guidance will be provided concerning corrective actions that will be required for those employees who have participated in a “Transition to Retirement” program between 2009 and 2011 or in 2012 and are unable to re-establish their retirement account as outlined under the fourth step above.  That guidance will be provided after the Division is able to analyze data requested under the second and third steps above and has conferred with the Office of Employee Relations and the Office of the Attorney General.  Therefore, your prompt attention is requested to allow for corrective action to take place as soon as is possible.

All information requested by the Division related to this matter should be forwarded to:

Attn: ABP Transition Project
Bureau of DB & DC Plans Reporting
New Jersey Division of Pensions and Benefits
50 West State St
PO Box 295
Trenton, NJ 08625-0295

The requested information must be provided to the Division of Pensions and Benefits no later than February 15, 2013.  If an institution did not offer to its employees a program commonly referred to as a “Transition to Retirement” program or if no employees participated in such a program during the period from 2009 through 2012, a statement to that effect must be filed with the Division of Pensions and Benefits and sworn to by the certifying officer for that institution no later than February 15, 2013.  Failure to file the requested information related to participants in a “Transition to Retirement” or a statement from the certifying officer may impact the timely processing of reimbursement requests for employer pension obligations for current members of the ABP.

Any questions may be directed to this address or to the ABP Transition to Retirement Project call center at (609) 292-3440.

Enclosure
Attachment A - Transition to Retirement Participation List Adobe PDF (136K)

CO Letter in Printable Format Adobe PDF (55K)

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January 18 , 2013

On July 17, 2012, the Office of the State Comptroller (OSC) released its report, Improper Participation by Professional Service Providers in the State Pension System.  In the report the OSC cited continued instances of improper pension enrollment by local employers of individuals working under Professional Services Contracts.

Individuals who meet the definition of an “independent contractor” as set forth in regulation or policy of the federal Internal Revenue Service (IRS) for the purposes of the Internal Revenue Code are not considered to be “employees” and have never been eligible for membership in the Public Employees’ Retirement System (PERS) or the Defined Contribution Retirement Program (DCRP) as a result of the contracted services.

In 2007, the New Jersey Legislature passed Chapter 92, P.L. 2007, enacting significant reforms recommended in the Final Report of the Joint Legislative Committee on Pension and Health Benefit Reform.  These reforms, specifically those codified at N.J.S.A. 43:15A-7.2 and 43:15C-2b(4) expressly provide that, effective January 1, 2008 and after, persons performing professional services 1) under a contract awarded pursuant to N.J.S.A. 40A:11-5, 18A:18A-5, or 18A:64A-25.5 (no bid contracts) and/or 2) under an independent contract as determined in accord with the rules and policy of the IRS, are ineligible for membership in the PERS based on that service, and correspondingly are ineligible for participation in the DCRP (pursuant to Section 20 of Chapter 92).  

Professional services are defined in N.J.S.A. 40A:11-2(6) to be services performed by a person authorized by law to practice a recognized profession, whose practice is regulated by law, the performance of which requires knowledge of an advanced type in a field of learning acquired by a prolonged formal course of specialized instruction and also the performance of services that are original and create in character in a recognized field of artistic endeavor.  Accordingly, attorneys, physicians, engineers, architects, accountants, auditors and other individuals providing "professional services" who perform services as a result of a Professional Services Contract with a public employer are ineligible for participation in the PERS or DCRP as a result of those services. 

EMPLOYER REVIEW REQUIREMENTS

In its report the OSC indicates that many employing locations have apparently failed to implement Chapter 92 and remove ineligible individuals from the PERS or DCRP who are performing services under no bid Professional Services Contracts or who are performing professional services as independent contractors.  Employing locations will now be required to review the employment status with regards to these professionals and take corrective actions regarding improper pension enrollment.

In reviewing the eligibility for membership of individuals performing professional services under no bid contracts, or as independent contractors, the employer must first review the pre-Chapter 92 service, i.e. the status of the individual prior to January 1, 2008, to determine whether the individual was an employee or an independent contractor in accord with IRS guidelines.  If the enrollment was based solely upon work as an independent contractor in accordance with the Internal Revenue Code, these individuals were not employees and therefore were not eligible for membership in the PERS (or DCRP). In these cases, the pension service is subject to review of the facts by the Division of Pensions and Benefits to determine if the individual was in fact an employee or an independent contractor. 

There are also no “grandfathering” provisions under N.J.S.A.43:15A-7.2 to permit individuals who were already enrolled in the PERS, to remain PERS (or DCRP) members after January 1, 2008, if the enrollment was based solely upon work as a professional services provider.  All individuals with Professional Services Contracts, or who met the definition of a professional services provider, were required to be removed from PERS or DCRP membership after January 1, 2008 (June 30, 2008 for fiscal year contracts).

In both of the situations described above, individuals found to have been improperly enrolled will be issued a return of pension contributions and any pension service based upon an ineligible position will be canceled by Division of Pensions and Benefits.

ENROLLMENT CERTIFICATIONS

The review and correction of these professionals’ status is of added importance under the requirements of Chapter 52, P.L. 2011 (N.J.S.A. 43:3C-15), insofar that law requires:

“the certifying officer and the officer's immediate supervisor to certify…  …annually for each member of the retirement system, that the person enrolled is eligible for enrollment in the pension fund or retirement system in accordance with the relevant law and the rules or regulations promulgated thereto”

and that:

“any person who knowingly makes a false statement, or falsifies or permits to be falsified any record, application, form, or report of a pension fund or retirement system, in an attempt to defraud the fund or system as a result of such act shall be guilty of a crime of the fourth degree.”

Beginning in early 2013, the Chapter 52 Annual Certification of Enrollments will be required of all employing locations. (Additional information about the Chapter 52 Annual Certification of Enrollments will be distributed when the certification application becomes available for use.)  However, in advance of the Annual Certification, and in order to avoid potential penalties under Chapter 52 for the improper enrollment of professional services providers or independent contractors into the retirement system, Certifying Officers should review the employee/independent contractor status of their staff and take immediate corrective action for any individuals who may be improperly enrolled.

On the recommendation of the OSC, the Division of Pensions and Benefits has developed the accompanying Employee/Independent Contractor Checklist form to certify the PERS eligibility of employees and exclude from enrollment ineligible professional service contractors and independent contractors.  Certifying Officers should complete this checklist for each individual who has provided professional services and was reported as a member of the PERS or DCRP since January 1, 2008, regardless of whether the individual is still working at your location.  Submit the completed forms to the Division of Pensions and Benefits no later than February 15, 2013.

In addition, upon completion of this form employing locations must take all appropriate action to remove ineligible individuals from PERS or DCRP membership, prior to completing the Chapter 52 Annual Certification of Enrollments.

To remove an ineligible individual from PERS enrollment:

Stop reporting pension contributions for the individual on the quarterly Report of Contributions; and

Immediately notify the Division of Pensions and Benefits, External Audit Unit in writing or by sending e-mail to pensions.nj@treas.state.nj.us  with “External Audit” in the e-mail subject line. When writing, please identify your employing location, a contact name and phone number, the name of the independent contractor or professional service provider, the position held, and the original date of hire or appointment.

ADDITIONAL INFORMATION

For specific questions regarding the classification of employees or Independent Contractors, please refer to the information provided by the Internal Revenue Service at: www.irs.gov  or seek the advice of an attorney.

A Certifying Officer Letter of August 2007 regarding Chapter 92, P.L. 2007, — including the ineligibility of Professional Services Contracts — can be found on the Division’s Web site at: www.state.nj.us/treasury/pensions/coltr07.shtml

Additional information on the ineligibility of Professional Services Contracts was provided for Local Employers by the Department of Community Affairs in the December 2007 Local Finance Notice 2007-28 at: www.state.nj.us/dca/divisions/dlgs/lfns/07/2007-28.doc  and the April 2008 Local Finance Notice 2008-10 at: www.state.nj.us/dca/divisions/dlgs/lfns/08/2008-10.doc

Employers with general questions about this letter, PERS enrollment, or the provisions of Chapter 92, P.L. 2007 or Chapter 52, P.L. 2011, can contact the Division of Pensions and Benefits, Employer Education unit at (609) 292-7524, or send e-mail to:pensions.nj@treas.state.nj.us

Enclosures

Fact Sheet #84, Professional Services Contracts, Independent Contractors, and Pension Enrollment Adobe PDF (53K)

Employee/Independent Contractor Checklist Adobe PDF (38K)

CO Letter in Printable Format Adobe PDF (110K)

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