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Pensions and Benefits
PENSION AND HEALTH BENEFITS
REVIEW COMMISSION 2009

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PENSION AND HEALTH BENEFITS REVIEW COMMISSION
2009 CALENDAR

The following meeting dates have been scheduled at 10:00 AM in the first floor board room at the
Division of Pensions and Benefits, 50 West State Street, Trenton, NJ 08625:

  • February 13, 2009
  • March 27, 2009
  • May 8, 2009
  • June 19, 2009
  • October 2, 2009
  • November 6, 2009 - CANCELLED
  • December 18, 2009 RESCHEDULED (10/21/2009)

Meeting Agendas for 2009

February

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Vote Results for 2009

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MEETING AGENDAS


Pension and Health Benefits Review Commission
Agenda for
December 18, 2009

The Pension and Health Benefits Review Commission will meet on Friday, December 18, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton.  No verbal comments are accepted during the meeting.  The Commission should receive written comments at least ten business days in advance of the meeting.  The agenda is as follows:

A- 4176 (Wagner/Voss)
Requires premium sharing for health care benefits for elected officials and certain appointed officials.

A-4254 (Rible/Johnson) /S-2986 (Sweeney)
Requires local unit public employers to maintain and preserve retiree health benefits of PFRS retirees at least at the same level as provided at employee retirement.

A-4259 (Giblin/Watson Coleman)/S-222 (Singer)
Allows application for PERS accidental disability benefit for injury sustained while employed at State psychiatric institution or correctional facility immediately prior to PERS membership.

S-870 ( Connors/Van Drew)/A-758 (Conners)
Broadens eligibility for certain veterans' benefits by eliminating requirement of service during specified dates or in specified locations.

S-3020 (Scutari)
Provides temporary PERS definition of contractual salary which includes deferred collectively negotiated wage increases currently applicable to Executive Branch employees will also apply to Judicial Branch employees in PERS.


Pension and Health Benefits Review Commission
Agenda for October 2, 2009

The Pension and Health Benefits Review Commission will meet on Friday, October 2, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton.  No verbal comments are accepted during the meeting. The Commission should receive written comments at least ten business days in advance of the meeting.  The agenda is as follows:

A-4127 (O’Scanlon/Casagrande)/S-2915 (Beck)
Makes members of county boards of taxation ineligible for membership in State-administered retirement system or for health care benefits coverage under plan for public employees.

A-4091 (Wisniewski)/S-2960 (Vitale)
Permits county, county college, or municipality to offer additional retirement benefits to certain employees; permits issuance of refunding bonds to fund benefits.

A-4033/(Milam/Albano)/S-2784 (Van Drew)
Penalties certain activities; prohibits holding more than one elective public office; addresses activities during and after elective public office; restricts campaign contribution use; restricts certain benefits; regulates gifts to public officials.

A-3997 (Carroll/McHose)
Provides certain limits on benefits coverage by health insurers, SHBP, and SEHBP for certain services related to infertility.

A-3959 (Casagrande)
Creates TPAF and PERS new membership eligibility criteria of 20 or more hours weekly.


Pension and Health Benefits Review Commission
Revised Agenda for June 19, 2009

The Pension and Health Benefits Review Commission will meet on Friday, June 19, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton.  No verbal comments are accepted during the meeting.  The Commission should receive written comments at least ten business days in advance of the meeting.  The agenda is as follows:

S-2742 (Weinberg)/A-3956 (Johnson)
Makes various revisions to laws regulating certain health benefits plans.

S-2719 (Van Drew)
Allows public employers to offer retirees with other health care coverage incentive to waive SHBP coverage.

A-3869 (Watson Coleman)
Permits qualified members of State Police Retirement System to serve until age 60.

A-3832 (Rumpf/Van Pelt)/S-2566 (Connors)
“Breann’s Law” requires health insurers, the State Health Benefits Program and NJ FamilyCare to provide “out of network” coverage for children with catastrophic illnesses.

S-2783 (Van Drew)
Permits municipality, fire district or authority to approve transfer of certain firefighters from PERS to PFRS.

S-2791 (Turner)
Requires spousal consent to election of certain pension payout options under TPAF, JRS and PERS.


Pension and Health Benefits Review Commission
Agenda for May 8, 2009

The Pension and Health Benefits Review Commission will meet on Friday, May 8, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton.  No verbal comments are accepted during the meeting.  The Commission should receive written comments at least ten business days in advance of the meeting.  The agenda is as follows:

S-2653 (Ciesla/Smith)/A-3864 (Cryan)
Permits certain persons holding elective public office to remain eligible for enrollment in PERS.

S-1929 (Allen)
Permits purchase of PFRS credit for certain pre-enrollment temporary service.

S-1638 (Turner)
Allows certain retirees to reenroll in SHBP.

S-1215 (Bucco)
Allows members of PERS Prosecutors Part to purchase credit in Prosecutors Part for previous prosecutor service credited as regular PERS service.

A-1183 (Oliver)
Allows TPAF and PERS members to purchase up to one year of credit for official child-care leave. 


Pension and Health Benefits Review Commission
Revised Agenda for March 27, 2009

The Pension and Health Benefits Review Commission will meet on Friday, March 27, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton. No verbal comments are accepted during the meeting. The Commission should receive written comments at least ten business days in advance of the meeting. The agenda is as follows:

A-2558 (Lampitt)
Makes part-time elected and appointed officials ineligible for publicly paid health care benefits if they are in any way eligible for other health care coverage.

A-2584 (O’Scanlon)
Prohibits certain public officers and employees from receiving dual health care benefit coverage.

A-3653 (Evans/Scalera)
Designates unmarried ex-spouse of marriage of 25 or more years as the widow or widower eligible for PFRS pension.

A-3704 (Coutinho/O’Scanlon/DeAngelo)
Offers surviving spouse of TPAF or PERS member with 25 or more years of service choice of deferred pension instead of current return of contributions and non-contributory life insurance.

A-3710 (Quigley/Johnson)
Requires health insurers, SHBP, and SEHBP to provide coverage for interpreter services for persons who have limited English proficiency or deafness.

S-2682 (Oroho/Sweeney) For Discussion Only
Expands scope of review of Pension and Health Benefits Review Commission.




Pension and Health Benefits Review Commission
Revised Agenda for February 13, 2009

The Pension and Health Benefits Review Commission will meet on Friday, February 13, 2009 at 10:00 AM in the first floor boardroom of the Division of Pensions and Benefits, 50 West State Street, Trenton. No verbal comments are accepted during the meeting. The Commission should receive written comments at least ten business days in advance of the meeting. The agenda is as follows:

S-2303 (Oroho)
Repeals law allowing PFRS member to retire with PFRS pension and continue to receive salary for current PFRS-covered elective office.

S-414 (Van Drew)
Broadens eligibility for certain veterans' benefits by eliminating requirement of service during specified dates or in specified locations.

A-3593 (Casagrande)
Allows only one PERS-covered position for PERS membership, contributions and service credit; provides for PERS designation of maximum compensation position among multiple positions held.

A-3370 (Conaway)
Requires health insurers that cover speech therapy and SHBP to provide coverage for certain services.

A-3299 (Johnson)
Increases from $15,000 to $30,000 annual compensation in PERS-covered employment retiree may earn without reenrollment.

A-3116 (Coutinho)
Exempts TPAF retirees reemployed as mentor teachers or part-time science or math teachers from TPAF reenrollment.

A-2579 (O’Scanlon)/S-1322 (O’Toole)
Requires that ordinary disability retirement in certain State-administered retirement systems be granted only if member has qualified for federal Social Security Disability benefits.            

 


VOTE RESULTS


Pension and Health Benefits Review Commission
Vote Results
December 18, 2009

A- 4176 (Wagner/Voss)
Requires premium sharing for health care benefits for elected officials and certain appointed officials.

Motion:  Recommend enactment.

Discussion:  The Commission supports this bill, since it will result in reduced State and local employer active health benefits costs.  Another recommended approach is to require 20 percent of the expected premium for the program as a whole, but an individual can buy up or down by paying 100 percent of the cost differential.  In this case, a participant would pay exactly 20 percent of the premium for an average plan, but if the participant wanted to enroll in a richer plan that has a premium that is $100 more per month, than the employee would pay 100 percent of the additional $100 per month.  This means that a participant would be paying more than 20 percent of the premium for more expensive coverage options and less than 20 percent of the premium for less expensive coverage options.

A-4254 (Rible/Johnson) /S-2986 (Sweeney)
Requires local unit public employers to maintain and preserve retiree health benefits of PFRS retirees at least at the same level as provided at employee retirement.

Motion:  Recommend against enactment.                            

Discussion:  The Commission opposes this bill because it removes the employer flexibility to manage health benefit costs. This bill will preclude any future benefit structure design changes that both participating and non-participating SHBP local employers may feel is required to manage employee benefit costs from impacting their employees who retire from the PFRS with employer paid post-retirement medical benefits.  If enacted, this bill would be administratively burdensome to the SHBP if future benefit design changes are adopted for the program, while a special benefit structure must be maintained only for retirees from the PFRS.  Over time, the administration would get increasingly complex as different tiers of health benefit coverage applicable to PFRS retirees must be accounted for. 

A-4259 (Giblin/Watson Coleman)/S-222 (Singer)
Allows application for PERS accidental disability benefit for injury sustained while employed at State psychiatric institution or correctional facility immediately prior to PERS membership.

Motion: Recommend against enactment.

Discussion:  The laws governing the PERS make the enrollment of an otherwise eligible employee in the pension system compulsory on the date the individual is employed. The law, however, precludes the enrollment of any public employee employed on a temporary basis until such time that the employee has accumulated one year of continuous service.

The statutory provisions regarding the eligibility for accidental disability pension benefits are generally uniform under all the major State retirement systems.  An application for an accidental disability pension must be filed by a member within five years of the qualifying traumatic event.  This bill would provide an exception to the PERS laws by providing an accidental disability pension to an individual when the traumatic event that would purportedly qualify the member for the benefit occurred prior to becoming an actual member of the pension system.  The enactment of this bill would serve to encourage the continued introduction of more special legislation.

S-870 ( Connors/Van Drew)/A-758 (Conners)
Broadens eligibility for certain veterans' benefits by eliminating requirement of service during specified dates or in specified locations.

Motion: Recommend against enactment.

Discussion:  The Commission believes that the Legislature’s intent when it originally provided veterans preference in the State was to include all who served in the “theatre of operations” during world wars or major national emergencies.  To include military duty where only limited, regional service is involved would provide a windfall for those who had no direct participation in a military engagement and detracts from the original intent regarding entitlement to this benefit. 

Pension liabilities for veteran members are approximately 50% higher than for non-veteran members.  Expanding the eligibility of pension system members that could qualify for a special veteran retirement will increase State and local pension costs significantly.

S-3020 (Scutari)
Provides temporary PERS definition of contractual salary which includes deferred collectively negotiated wage increases currently applicable to Executive Branch employees will also apply to Judicial Branch employees in PERS.

Motion:  Recommend enactment.

Discussion: The Commission supports this bill since it will provide Judicial Branch State employees who are members of PERS with the same pension protection the enactment of Chapter 85, P.L. 2009 provided to PERS members who are State employees in the Executive Branch.  In order for PERS members to receive credit in the pension system for the deferred wage increases, they would be responsible for member contributions on the deferred wages.  Members would be required to contribute as the rate of 5.5 percent on both the actual salary they receive and on the deferred increase. Retroactive employee contributions to July 1, 2009 would be required.


Pension and Health Benefits Review Commission
Vote Results
October 2, 2009

A-4127 (O’Scanlon/Casagrande)/S-2915 (Beck)
Makes members of county boards of taxation ineligible for membership in State-administered retirement system or for health care benefits coverage under plan for public employees.

Motion: Recommend enactment.

Discussion: Assemblywoman Casagrande, the bill’s co-sponsor, briefly addressed the Commission in support of this bill.  Under this bill, individuals appointed or reappointed to a county board of taxation would be precluded from participation in any State-administered retirement system, including the DCRP. The bill also restricts individuals that are appointed or reappointed to the county board of taxation the ability to acquire health benefit coverage. If enacted, the bill would have initial cost savings of over $306,000 in FY 2011 which will continue to increase annually. The Commission supports this bill but would encourage a broader bill that would apply to all part-time public employees.

A-4091 (Wisniewski)/S-2960 (Vitale)
Permits county, county college, or municipality to offer additional retirement benefits to certain employees; permits issuance of refunding bonds to fund benefits.

Motion: Recommend enactment with modifications.           

 Discussion: The Commission recommends that the rehire provision be reduced from 50 percent to 10 percent.  The bill currently has the provision of permitting local employers to refill up to 50 percent of the vacancies created by any ERI.  Any savings produced by early retirement programs are very much dependent upon the policy adopted regarding the refilling of the vacated positions. The Commission therefore recommends a 10 percent rehire provision, as the State ERI provided for, and suggests that the same language that was used in the State’s ERI program be included in this bill.

A-4033 (Milam/Albano)/S-2784 (Van Drew)
Penalties certain activities; prohibits holding more than one elective public office; addresses activities during and after elective public office; restricts campaign contribution use; restricts certain benefits; regulates gifts to public officials.

Motion: Recommend against enactment.

Discussion: This bill, referred to as the “Ethical Standards of Conduct Reform Act: addresses the standards applicable to the conduct and benefits of elected and other public officials to ensure that public officials serve the public and fulfill their responsibilities with integrity.  Section 9 and 10 of the bill would provide that a person will be eligible for membership in the PERS based upon only one position at any time.  The position providing the higher or highest compensation as the basis for membership would be the compensation base for contributions and calculations.  Sections 16 through 18 would require a person holding elective public office who, because of service in that office and service in another public office or employment, is eligible for health care coverage under more than one plan or program to select coverage under only one such health care plan or program.

The Commission recommended against enactment, since the bill would not eliminate pension abuse. It attempts to address the abuse of pension “padding” however; it would not eliminate the potential for the receipt of a higher pension resulting from a few years of covered employment at high salaries and many years of covered service at lower salaries. The Commission would support a provision that would allow PERS membership eligibility with 20 or more hours of work per week.

A-3997 (Carroll/McHose)
Provides certain limits on benefits coverage by health insurers, SHBP, and SEHBP for certain services related to infertility.

Motion:  Recommend against enactment.

Discussion:  The Commission cannot support this bill since changes to the benefit structure of the SHBP/SEHBP should be negotiated through the collective bargaining process and not legislatively mandated. Further, the bill provides no justification for limiting coverage to individuals with fewer than two children.   

A-3959 (Casagrande)
Creates TPAF and PERS new membership eligibility criteria of 20 or more hours weekly.

Motion: Recommend enactment.

Discussion: Assemblywoman Casagrande, the bill’s sponsor, briefly addressed the Commission in support of this bill.  Its enactment will further narrow pension system eligibility toward employees that are considered more “full-time”.  By requiring at least 20 hours of work per week as a prerequisite for prospective PERS and TPAF membership, the enactment of this bill will serve to curtail future instances of the abusive practice of boosting, but will not eliminate this practice.  A more “full-time” employment requirement for PERS and TPAF eligibility is recommended.


Pension and Health Benefits Review Commission
Vote Results
June 19, 2009

S-2742 (Weinberg)/A-3956 (Johnson)
Makes various revisions to laws regulating certain health benefits plans.

Motion:  Recommend enactment of a requirement for a quality assurance audit for insurance carriers and disclosures as to selective contracting arrangements but does not support the concept of a minimum loss ratio requirement in the large employer market and a requirement that employees of local unit or school boards receive benefit of certain negotiated rate structures within the State Health Benefits Program (SHBP) and the School Employees Health Benefits Program (SEHBP).

Discussion:  This bill would apply an 80% minimum loss ratio requirement to insurers that provide large group health insurance policies, beginning in January 1, 2010.  Currently, this 80% loss ratio only applies to the insurers participating in the individual and small employer markets in the State. The Commission is concerned that applying an 80% minimum loss ratio requirement will increase costs to the SHBP and the SEHBP. In addition, this bill would mandate a requirement that employees of local unit or school boards receive benefit of certain negotiated rate structures within the SHBP and the SEHBP. The carrier contracts are based upon the provisions of the SHBP and change when the benefits of the SHBP change. Unless the other groups are offering exactly the same benefits with the same restrictions or latitude for the carrier and claims experience duplicates those of the State plan, using the same rates makes no sense.  Without an examination of the claims experience of the other groups, mandating the use of the same rates may not be appropriate for the other group.

S-2719 (Van Drew)
Allows public employers to offer retirees with other health care coverage incentive to waive SHBP coverage.

Motion:  Recommend not to enact.

Discussion:  The enactment of this bill may have potential income tax consequences when offering cash incentives in lieu of health benefit coverage. Post-retirement medical benefits are normally non-taxable benefits to the retiree.  However, an election to receive cash in lieu of post-retirement medical benefits may render both the cash payment and the value of health benefit coverage taxable to the retiree, regardless which is elected, under the Internal Revenue Code’s rules of constructive receipt. In addition, there may be additional costs to the SHBP due to anti-selection. Healthy retirees may be able to obtain affordable health coverage outside of the SHBP, leaving more unhealthy retirees in the plan. The unhealthy retirees will incur larger claims and effectively increase the cost per retiree in the plan. 

A-3869 (Watson Coleman)
Permits qualified members of State Police Retirement System to serve until age 60.

Motion: The bill is tabled pending additional information from the Division of Pensions and Benefits.

A-3832 (Rumpf/Van Pelt)/S-2566 (Connors)
“Breann’s Law” requires health insurers, the State Health Benefits Program and NJ FamilyCare to provide “out of network” coverage for children with catastrophic illnesses.

Motion:  Recommend not to enact since it will increase State and local employer SHBP costs.

Discussion:  The Commission cannot support the enactment of this bill since it will increase costs of the SHBP.  The insurance carriers participating in the SHBP (Horizon Blue Cross Blue Shield of New Jersey, Aetna HMO and Cigna Healthcare) have entered into special contractual arrangements with doctors to develop an extensive nationwide network of providers that provide medical services at costs predetermined to be “reasonable and customary.”  Covered members need only pay the appropriate co-payment in order to avail themselves of these in-network medical services. The enactment of this bill would undermine the cost controls inherent in this type of arrangement by mandating full coverage for out-of-network medical services whose costs may exceed the reasonable and customary charges the Plan’s carriers have negotiated with the doctors participating in their network. In addition, the enactment of this bill would be contrary to recently enacted reforms designed to reign in the upward spiraling public employer pension and health benefits costs.  The health benefit reforms included a change in the plan design of the SHBP, requiring employee contributions and requiring the carriers in the plan to utilize a disease and chronic care management plan.

S-2783 (Van Drew)
Permits municipality, fire district or authority to approve transfer of certain firefighters from PERS to PFRS.

Motion:  Recommend not to enact.

Discussion: The enactment of this bill would continue a disparity in the PFRS enrollment provisions as they apply to firemen employed by a county or State. State law regarding membership in the PFRS restricts enrollment to police and firemen age 35 and under.  The law does provide the following exceptions:

  • Eligible periods of military service during periods of conflict may be used to reduce enrollment age and
  • Any former State trooper, sheriff’s officer, deputy sheriff’s officer or county or municipal policeman is permitted to use previous service as a police officer to reduce actual age in order to meet maximum age requirement of 35 years for the position of a municipal police officer.

Municipal laws restrict the appointment of personnel to a municipal police or fire department to individuals age 35 and under.  No existing law provides similar age restrictions when police and fire personnel are appointed by a county, fire district, authority or the State. Because of the PFRS age restriction, however, officers appointed by these entities are required to join PERS.  If this bill is enacted, a PFRS enrollment disparity initiated with the enactment of Chapter 326, P.L. 2005 would continue because certain firemen hired over the age of 35 would again be allowed enrollment in the PFRS, however, their counterparts employed on the county and State level would not. In addition, the Age Discrimination in Employment ACT (ADEA) generally precludes age restrictions in the administration in an employer funded pension plan. This federal law, however, provides an exception in regards to police officers and firefighters.

S-2791 (Turner)
Requires spousal consent to election of certain pension payout options under TPAF, JRS and PERS.

Motion: Recommend to enact.

Discussion: The Commission supports this bill because it duplicates a provision that is required for qualified pension plans in private industry. The Employee Retirement Income Security Act (ERISA) provides that a pension plan must distribute benefits in the form of a qualified joint and survivor annuity, unless the participant elects otherwise and such waiver is subject to spousal consent, in order to maintain a tax-qualified status. A “qualified joint and survivor annuity” (QJSA) means an annuity:

  • For the life of the participant, with a survivor benefit for the life of a spouse that is not less than 50% and not more than 100% of the amount of the annuity payable during the joint lives of the participant and spouse, and
  • That is the actuarial equivalent of an annuity for the life of the participant.

Governmental pension plans are generally exempt from ERISA’s provisions. Although the State-administered plan do have a spousal notification procedure if a member elects to choose a pension benefit payment option that does not provide for the payment of a refund or annuity to a beneficiary upon the death of the retiree, the spouse has no recourse to prevent the participant’s selection. Consequently, the current procedures fall far short of the spousal protections offered under ERISA.


Pension and Health Benefits Review Commission
Vote Results
May 8, 2009

S-2653 (Ciesla/Smith)/A-3864 (Cryan)
Permits certain persons holding elective public office to remain eligible for enrollment in PERS.

Motion:  Recommend not to enact since the bill scales back cost savings pension reform and may be special legislation.

Discussion:  The enactment of P.L. 2007 c. 92 created the Defined Contribution Retirement Program (DCRP) requiring all public employees elected or appointed to a position after July 1, 2007 to become members of the DCRP. Membership in the DCRP for an elected individual is required regardless if the individual was previously an active member of the PERS (except if the individual was a member of PERS and reelected to the same position.) This and other pension reforms were recommended in order to slow down the spiraling costs of pension and health benefits. The enactment of this bill so recently after the reforms were enacted would serve to be counter-productive to their objectives. This bill has been drafted to apply to all elected officials that fall within its parameters, but it appears to be special legislation designed to impact only a few individuals. The Commission generally opposes all forms of special legislation.

S-1929 (Allen)
Permits purchase of PFRS credit for certain pre-enrollment temporary service.

Motion:  Recommend not to enact since it may increase employer pension costs and promotes disparity in the purchase provisions when compared to the other State-administered retirement systems.

Discussion:  The law regarding the purchase of temporary service is currently consistent in all the State retirement systems. In order to purchase temporary service, the service must have led without interruption to a permanent or regular appointment with an employer. This bill would allow PFRS members to purchase temporary service that did not lead to a permanent appointment, making the PFRS temporary service purchase provisions more liberal and inconsistent with the other State retirement systems. Although the bill provides that the purchase will be a full cost to the member, future cost-of-living adjustments (COLA) payable on the increased pension resulting from the purchase is an employer liability. The State and local employers who participate and make contributions to the pension system will be impacted.

S-1638 (Turner)
Allows certain retirees to reenroll in SHBP.

Motion: Recommend not to enact since it may increase the risk of adverse selection against the SHBP.

Discussion:  Adverse selection against the SHBP may occur if a former participant is allowed to re-enroll.  A retiree could drop the SHBP coverage for an inexpensive private insurance policy, or opt for no coverage at all, then request to re-enroll in the SHBP only when it is advantageous for them to do so. The reenrollment of a former SHBP retiree with extensive pre-existing medical conditions may result in higher premiums payable for all retirees in the group. This bill does not require proof of continuation of coverage upon SHBP reenrollment.

S-1215 (Bucco)
Allows members of PERS Prosecutors Part to purchase credit in Prosecutors Part for previous prosecutor service credited as regular PERS service.

Motion: Recommend not to enact since additional State pension and health benefit costs will result.

Discussion:  Although the bill provides that the purchase will be full cost to the member, future cost-of-living adjustments (COLA) payable on the increased pension resulting from the purchase is an employer liability. The State, which makes the employer pension contributions on behalf of all members in the Prosecutors part, which includes county and assistant county prosecutors, along with certain DLPS titles within the Division of Criminal Justice, would be liable for this increased pension cost. Also, the additional years of service acquired may accelerate the time a member becomes eligible for some special benefit, i.e. free health benefits when retired with 25 or more years of service credit. The cost of which is the responsibility of the employer.

A-1183 (Oliver)
Allows TPAF and PERS members to purchase up to one year of credit for official child-care leave.

Motion: Recommend not to enact since additional State and local employer pension and health benefit costs will result.

Discussion:  Although the bill provides that the purchase will be full cost to the member, future cost-of-living adjustments (COLA) payable on the increased pension resulting from the purchase is an employer liability. The State and local employers who participate and make contributions to the pension systems would be liable for this increased pension cost. Also, the additional years of service acquired may accelerate the time a member becomes eligible for some special benefit, i.e. free health benefits when retired with 25 or more years of service credit. The cost of which is the responsibility of the employer. In addition, since this bill does not apply to the PFRS purchase provisions its enactment would create further disparity among the various retirement systems.


Pension and Health Benefits Review Commission
Vote Results
March 27, 2009

A-2558 (Lampitt)
Makes part-time elected and appointed officials ineligible for publicly paid health care benefits if they are in any way eligible for other health care coverage.

Motion:  Recommend to enact since there would be potential health care savings.

Discussion:  The enactment of this bill is a first step in eliminating dual health benefit coverage for part-time elected and appointed officials. The provisions of this bill are limited to part-time elected and appointed officials. The Commission suggests that the bill should be expanded to impact all part-time State and local public employees.

A-2584 (O’Scanlon)
Prohibits certain public officers and employees from receiving dual health care benefit coverage.

Motion: Recommend to enact.

Discussion: The enactment of this bill would result in savings to the State.

A-3653 (Evans/Scalera)
Designates unmarried ex-spouse of marriage of 25 or more years as the widow or widower eligible for PFRS pension.

Motion: Recommend not to enact.

Discussion:  The enactment of this bill would create inequities involving the new spouse in the case where a retiree remarries. Under this bill, the new spouse will no longer be entitled to the survivor’s annuity. A more equitable approach to providing a benefit to the former spouse may be to pattern this benefit after federal rules governing private sector pension plans. The Retirement Equity Act of 1984 broadens the conditions under which spouses receive retirement benefits.  Under this act, Qualified Domestic Relation Orders (QDRO) was created to allow for a court ordered division of a member’s pension benefit between the retiree and an ex-spouse in the case of divorce. Federal rules regarding QDRO’s do not apply to governmental plans. Under current procedures regarding the State-administered retirement plans, a court order can divide a member’s pension benefit between the retiree and the ex-spouse, but it does not apply to the survivor’s benefit. The pension benefit to both the member and the ex-spouse would begin at the member’s retirement and cease at the time of the retiree’s death. 

A-3704 (Coutinho/O’Scanlon/DeAngelo)
Offers surviving spouse of TPAF or PERS member with 25 or more years of service choice of deferred pension instead of current return of contributions and non-contributory life insurance.

Motion: Recommend not to enact since there may be a more comprehensive system in naming the beneficiary and defining the level of benefit to be distributed.

Discussion:  A more equitable approach to providing benefits to the surviving spouse may be to pattern this benefit similar to that of ERISA standards for governing private sector retirement plans, AND OTHER MORE COMPREHENSIVE APPROACHES. Since the bill has a retroactive provision it indicates it may be special legislation.

A-3710 (Quigley/Johnson)
Requires health insurers, SHBP, and SEHBP to provide coverage for interpreter services for persons who have limited English proficiency or deafness.

Motion: Recommend not to enact since there would be cost considerations and it has not been demonstrated that there is a need for these services.

Discussion:  The enactment of this bill would increase both State and local health care cost to an additional $4 million per year. It continues the questionable practice of mandating health benefit coverage.

S-2682 (Oroho/Sweeney) For Discussion Only
Expands scope of review of Pension and Health Benefits Review Commission.

Discussion:  The Director of the Division of Pensions and Benefits addressed the Commission regarding the introduction of S-2682. The purpose of this bill is to require the Pension and Health Benefits Review Commission to review all legislation relating to the pension and health care plans or programs for State and other public employees. Currently, most, but not all, pension and health care legislation concerning public employees is reviewed by the commission.  Legislation that affects the financing, procedures, or operations of pension or health care plans or programs, including all defined benefit retirement plans or systems, defined contribution retirement plans or programs, or deferred compensation or other individual retirement account-type plans, or that mandates or permits public entities to pay for employee health care benefits in active service or in retirement, are not certified for review by the commission. 

This bill was not certified to the Commission since it does not modify pension or health benefit plans. If enacted the bill would expand the number of pension and health care bills certified to the Commission for review. Therefore, acknowledgement of the bill’s introduction seems appropriate and worth discussion.   


Pension and Health Benefits Review Commission
Vote Results
February 13, 2009

S-2303 (Oroho)
Repeals law allowing PFRS member to retire with PFRS pension and continue to receive salary for current PFRS-covered elective office.

Motion: Recommend to enact.

Discussion: The Commission supports the enactment of this bill because it would preclude a PFRS member from receiving both a public pension and a public salary simultaneously.

S-414 (Van Drew)
Broadens eligibility for certain veterans' benefits by eliminating requirement of service during specified dates or in specified locations.

Motion: Recommend not to enact since it will increase pension costs.

Discussion:  The bill will post additional costs to the various retirement systems. Originally, the Legislature’s intent was to provide veteran preference in the State to those who served during world wars or major national emergencies.  The liberalization in the definition of veteran as proposed by this bill detracts from the original intent regarding entitlement to this benefit.

A-3593 (Casagrande)
Allows only one PERS-covered position for PERS membership, contributions and service credit; provides for PERS designation of maximum compensation position among multiple positions held.

Motion: The Commission supports the concept of this bill which will provide limits in PERS to one covered position but recommends that the Legislature reviews the “full-time” employment issue as the standard for PERS membership eligibility.

Discussion: The Commission supports the concept of the bill but it continues to provide a piece-meal approach to fix membership eligibility issues.  If enacted as written, the bill does not totally eliminate pension “boosting”, i.e. the receipt of a higher pension resulting from a few years of covered employment at high salaries and many years of covered service at lower salaries, since PERS membership eligibility would continue to be predicated on minimal annual salary thresholds ($1,500 prior to November 2, 2008, $7,500 after). The Commission strongly recommends that if PERS membership were open to “full-time” positions only, then the ability to inflate a member’s pension through “boosting” would significantly decrease.

A-3370 (Conaway)
Requires health insurers that cover speech therapy and SHBP to provide coverage for certain services.

Motion: Recommend not to enact.

Discussion:  The bill ignores that these services are already covered by the SHBP when rendered by a physician and deemed medically necessary and at the appropriate level of care. The bill continues the questionable practice of mandating health benefit coverage.

A-3299 (Johnson)
Increases from $15,000 to $30,000 annual compensation in PERS-covered employment retiree may earn without reenrollment.

Motion: Recommend not to enact since it may violate the Internal Revenue code for tax-qualified status, WHILE INCREASING GOVERNMENT COSTS BY ENCOURAGING SIMULTANEOUS PAYMENTS OF PENSIONS AND SALARIES.

Discussion:  The enactment of this bill could be cause for the PERS to lose its tax-qualified status under the Internal Revenue Code. The U.S. Treasury Regulation §1.401 (a)-1 was amended to specify that pension plans that provide for in-service distributions prior to “normal retirement age” (i.e. age 62, or age 50 if members are predominately public safety officers) may jeopardize their qualified status. The new regulation is applicable to governmental plans for plan years beginning on or after January 1, 2011.  Cheiron, the consultant to the Commission will provide more detailed information to the Commission regarding this new federal regulation.

A-3116 (Coutinho)
Exempts TPAF retirees reemployed as mentor teachers or part-time science or math teachers from TPAF reenrollment.

Motion:  Recommend not to enact.

Discussion:  The bill’s exemption to the reemployment provisions of TPAF can create the perception of “double-dipping”, i.e. receiving a public pension and a public salary simultaneously. It also could be perceived as discriminatory, since it provides the exception only for retired science and math teachers and not to other areas of education and not to other members of the State-administered retirement systems who are subject to the return-to-employment pension provisions.  The enactment of this bill may violate U.S. Treasury Regulation §1.401 (a)-1 pertaining to “in-service” distributions prior to attaining “normal retirement age.”

A-2579 (O’Scanlon)/S-1322 (O’Toole)
Requires that ordinary disability retirement in certain State-administered retirement systems be granted only if member has qualified for federal Social Security Disability benefits.

Motion: Recommend not to enact since the federal Social Security standard provides no guarantee that decreased pension costs will result.

Discussion:  Currently, to qualify for a PERS and TPAF ordinary disability retirement, a member must be determined to be totally and permanently disabled by the Medical Review Board, a panel of three physicians engaged by the pension system Board of Trustees. The disability retirement must be approved by the pension system Board.  If the disability retiree is under age 60, the retiree is required to undergo an annual medical examination for a period of 5 years following retirement to determine whether the retiree continues to be totally and permanently disabled. Considering these procedures, there is no guarantee any decreased pension costs will result from the changes proposed by this bill.

 
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