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Pensions and Benefits
PENSION AND HEALTH BENEFITS
REVIEW COMMISSION 2010

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PENSION AND HEALTH BENEFITS REVIEW COMMISSION
2010 CALENDAR (REVISED)

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:

  • March 26, 2010
  • May 14, 2010
  • June 25, 2010 - CANCELLED
  • July 16, 2010 - Rescheduled from 6/25
  • October 1, 2010 Rescheduled from 9/17
  • November 19, 2010

Please Note: The Pension and Health Benefits Review Commission meeting originally scheduled for February 26, 2010 has been cancelled.

The Pension and Health Benefits Review Commission meeting originally scheduled for June 25, 2010 has been rescheduled for July 16, 2010.

The Pension and Health Benefits Review Commission meeting originally scheduled for September 17, 2010 has been rescheduled for October 1, 2010.


Meeting Agendas for 2010

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Vote Results for 2010

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MEETING AGENDAS


Pension and Health Benefits Review Commission
Agenda for March 26, 2010

The Pension and Health Benefits Review Commission will meet on Friday, March 26, 2010 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- 486 (Polistina/Amodeo/O’Scanlon)
Makes elected officials with compensation less than $50,000 ineligible for health care benefits on the 61st day after enactment.

A-1843 (Schaer/Wagner)
Requires contribution for health care benefits provided for certain local elected and appointed officials.

A-197 (Chiusano)
Prohibits elected officials and public employees from enrolling for health benefits with more than one public entity; provides civil action for treble expenses by public entity providing additional coverage.

A-539 (Handlin/Biondi)
Eliminates PERS membership for current and future part-time elected and appointed officials.

A-2064 (Moriarty)
Provides that public employee pension benefits are calculated on base salary exclusive of various forms of extra compensation.

A-2065 (Wagner/Quigley)/S-1391
Requires officers and employees of political subdivisions to contribute a portion of their base salary towards the cost of their health care coverage.



Pension and Health Benefits Review Commission
Agenda for May 14, 2010

The Pension and Health Benefits Review Commission will meet on Friday, May 14, 2010 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-2498 (Moriarty)
Prohibits certain TPAF and PERS members from receiving service credit while on leave with labor organization.

A-2499 (Moriarty)
Prohibits employees of certain organizations from enrolling in State-administered retirement system or health care plan of public employer.

A-2548 (Scalera)
Requires health insurers, SHBP and SEHBP to provide coverage for vision rehabilitation services to covered person experiencing sudden onset of blindness.

SR-41 (Weinberg)
Urges part-time members of State or local government boards, commissions, and authorities to waive portion of compensation received and reimburse public entity for pension contribution.

S-1770 (Van Drew)
Reinstates PFRS and SPRS accidental death benefits to certain surviving spouses who remarried.


Pension and Health Benefits Review Commission
Revised Agenda for July 16, 2010

The Pension and Health Benefits Review Commission will meet on Friday, July 16, 2010 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-1897 (Cunningham)
Provides one-time reduction of pension contribution of local public employer of employee who retires with pension reduced for dishonorable service in amount equivalent to certain previous contributions by that employer.

S-1875 (Oroho/O’Toole)/A-2614 (DiMaio/McHose)
Repeals law allowing PERS member to retire with PERS pension and continue to receive salary for current PERS-covered elective office.

A-2666 (Vainieri Huttle/Greenstein)/S-1834 (Weinberg)
Requires health insurers to cover oral cancer drugs and related support drugs on same basis as intravenous cancer medications and related support drugs.

A-2620 (O’Scanlon)
Calculates future service of active members at 1/60 of final compensation for TPAF and PERS pensions.

A-2613 (Chiusano/Burzichelli)
Eliminates certificated superintendent and administrator exceptions to TPAF retiree reenrollment requirement.

A-2951 (Dicicco/Munoz)/S-2174 (Doherty)
Bars certain employees of certain public agencies from participating in PERS; repeals law permitting PERS and TPAF members on leave who work for labor organization to purchase pension credit.


Pension and Health Benefits Review Commission
Agenda for October 1, 2010

The Pension and Health Benefits Review Commission will meet on Friday, October 1, 2010 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-2210 (Sacco)
Provides that 1.5% contribution required to be made by certain public employees will not take effect until expiration of collective bargaining agreement made applicable to such employees.

A-2800 (DiCicco)
Makes part-time elected officials and commission and authority appointees ineligible for PERS, DCRP and health benefits; requires pension credit forfeiture if employed former personal services contractor falsely certifies position as full-time.

A-2392 (Conaway/ Conners)
Requires SHBP to cover prostate cancer screening.

S-1339 (Van Drew)
Prohibits individual from holding simultaneously more than one elective public office.

S-2100 ( Sweeney/Ruiz)/A-2499 (Moriarty)
Prohibits new employees of certain organizations from enrolling in State-administered retirement system or health care plan of public employer.


Pension and Health Benefits Review Commission
Revised Agenda for November 19, 2010

The Pension and Health Benefits Review Commission will meet on Friday, November 19, 2010 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-1438 (Weinberg)/A-3257(Stender)
Increases health benefits continuation coverage to 36 months for certain persons covered under certain employer health benefits plans.

A-3246 (Quigley)/S-358 SCS (Weinberg/Vitale)
Requires managed care plans, SHBP, and SEHBP to provide for reasonable accommodation in accessing providers for persons with disabilities.

S-1984 (Beck)
Calculates future service of active members at 1/60 of final compensation for TPAF and PERS pensions.

S-2326 (Kean)
Increases mandatory retirement age for judges of the Division of Workers’ Compensation from age 70 to age 75.


VOTE RESULTS

Pension and Health Benefits Review Commission
Vote Results
March 26, 2010

A- 486 (Polistina/Amodeo/O’Scanlon)
Makes elected officials with compensation less than $50,000 ineligible for health care benefits on the 61st day after enactment.

Motion: Recommends bill sponsors reconcile this bill with P.L. 2010 c.2

Discussion: The Commission recommends that the bill sponsors reconcile this bill with P.L. 2010 c.2 which is part of a package of pension and health benefit reform bills. While A-486 uses a dollar threshold, Chapter 2 provides that enrollment in the SHBP is limited to persons who: 1) are full-time appointive or elective officer of the State or local government whose hours of work are fixed at 35 or more per week, a full-time employee of the State, or a full-time employee of an employer other than the State whose hours of work are fixed by the governing body at not less than 25 hours per week; or 2) an appointive or elective officer, an employee of the State, or an employee of an employer other than the State who has or is eligible for health benefits coverage in the SHBP on that effective date and continuously thereafter. The bill similarly limits enrollment in the SEHBP to persons employed full-time whose hours of work are fixed by the governing body at not less than 25 per week.

A-1843 (Schaer/Wagner)
Requires contribution for health care benefits provided for certain local elected and appointed officials.

Motion:  Recommends bill sponsors reconcile this bill with P.L. 2010 c.2

Discussion: The Commission recommends that the bill sponsors reconcile this bill with P.L. 2010 c.2 which is part of a package of pension and health benefit reform bills. While A-1843 effective on the 31st day after enactment and does not use a specific contribution amount, sections 1 through 6 of Chapter 2 would require, after the bill’s effective date and the expiration of any applicable binding collective negotiations agreement, that all active employees of local public and boards of contribution contribute 1.5 percent of base salary toward the cost of health care coverage under the SHBP and SEHBP or any other health benefit plan sponsored by the employer.

A-197 (Chiusano)
Prohibits elected officials and public employees from enrolling for health benefits with more than one public entity; provides civil action for treble expenses by public entity providing additional coverage.

Motion: Recommends enactment
 
Discussion:  The Commission supports this bill because its provisions eliminate dual coverage in the SHBP.  While this may provide nominal savings to the State and local SHBP participating employers, an even greater savings can be attained if legislation were enacted that would eliminate both dual and multiple SHBP coverage. Recently enacted legislation, P.L. 2010 c. 2 prohibits multiple coverage in the SHBP and the SEHBP in accordance with the rules and regulations promulgated by the State Health Benefits Commission and the School Employees’ Health Benefits Commission.

A-539 (Handlin/Biondi)
Eliminates PERS membership for current and future part-time elected and appointed officials.

Motion: Recommends bill sponsors reconcile this bill with P.L. 2010 c.1

Discussion:  Recently, enacted legislation P.L. 2010 c.1 shifts the basis for membership in the PERS and TPAF from the amount of compensation to the number of hours worked weekly for all public employees.  After its effective date, any person in public employment for which the hours of work are fixed at fewer than 35 per week for State employees, or 32 for political subdivision employees is ineligible to become a new member of the PERS and at fewer than 32 hours per week is ineligible to become a new member of TPAF. 

A-2064 (Moriarty)
Provides that public employee pension benefits are calculated on base salary exclusive of various forms of extra compensation.

Motion:  Recommends enactment with the additional language that specifically defines the term base salary.

Discussion: The Commission supports this bill but is concerned with the various definitions of the term base salary and what it can include in negotiated contractual agreements.  For instance, current regulations are not enough to prevent contracts from being negotiated that do  identify longevity pay or maintenance as part of the base salary.  Instead, specifically define the term base salary and when necessary as part of the contractual agreement include these additional increase arrangements as a part of base salary.  This would ensure that employee and employer pension contribution would be paid on the actual salary received and not on a lower salary.  In addition, it would eliminate pension boosting by restricting end of career salary hikes. 

A-2065 (Wagner/Quigley)/S-1391 (Weinberg)
Requires officers and employees of political subdivisions to contribute a portion of their base salary towards the cost of their health care coverage.

Motion: Recommends bill sponsors reconcile this bill with P.L. 2010 c.2

Discussion:  The Commission recommends that the bill sponsors reconcile this bill with P.L. 2010 c.2 which is part of a package of pension and health benefit reform bills. Sections 1 through 6 of Chapter 2 would require, after the bill’s effective date and the expiration of any applicable binding collective negotiations agreement, that all active employees of local public and boards of contribution contribute 1.5 percent of base salary toward the cost of health care coverage under the SHBP and SEHBP or any other health benefit plan sponsored by the employer.


Pension and Health Benefits Review Commission
Vote Results
May 14, 2010

A-2498 (Moriarty)
Prohibits certain TPAF and PERS members from receiving service credit while on leave with labor organization.

Motion: Recommends support with amendments, to include members of the PFRS and SPRS, and to require employers to adopt a policy supporting such leaves of absence, and to take a formal action to approve a specific leave of absence with labor organizations.
  
Discussion:  The Commission encourages the bill sponsor to amend the bill. First, to include the members of the PFRS and SPRS, without which there is a disparity among the various retirement systems.  In addition, the bill as written identifies the following requirements for service credit to be permitted in TPAF or PERS only: 1) the collective negotiations agreement in force when the leave commences contains a provision permitting leaves of absence, or 2) if the employer has a policy permitting leaves of absence, or 3) if the employer takes formal action approving the leave. The Commission recommends that the approval of a leave of absence by the employer be more specific: a) local employers should take  formal action by having their governing bodies approve a resolution authorizing a specific leave of absence for labor organizations, in order to ensure that the public is aware that the parties concerned are consenting to this special employment arrangement, and; b) state government should include the authority for leaves of absence for a labor organization in the collective bargaining agreement. 

Otherwise, the bill as written is solely a restatement of current requirements.   

A-2499 (Moriarty)
Prohibits employees of certain organizations from enrolling in State-administered retirement system or health care plan of public employer.

Motion: Recommends support with amendments, to make the bill prospective only and to seek legal guidance of tax counsel since this bill as written may jeopardize the tax qualified status of the retirement plans.

Discussion: The Commission supports the bill but is concerned with maintaining the tax qualified status of the retirement plans, if the plan were to allow termination of pension membership for employees with less than five years of service.  Current State law provides members of any of the State-administered pension plans with a non-forfeitable right to receive benefits upon the attainment of five years of service credit in the retirement system. In contrast, this bill would allow only employees of these entities with five or more years of pension system credit to continue their membership in PERS. Consequently, individuals employed by these entities for less than five years will be treated differently from a pension perspective, and that raises the tax question.  Advice of tax counsel should be sought prior to this bill’s enactment regarding the applicability of federal rules that could result in jeopardizing the continued qualification of the pension system.

A-2548 (Scalera)
Requires health insurers, SHBP and SEHBP to provide coverage for vision rehabilitation services to covered person experiencing sudden onset of blindness.
 
Motion: Recommend not to enact.

Discussion: The Commission is concerned that this bill would mandate the coverage for all health insurance policies issued in the State, including the State Health Benefits Program and the School Employees’ Health Benefit Program. Such mandates remove the right of SHBP and SEHBP to review medical procedures and charges, and such mandates generally tend to continue to place the health insurance industry outside of the “free enterprise” system and increases costs of health insurance for both the employer provided coverage and individual policies.

SR-41 (Weinberg)
Urges part-time members of State or local government boards, commissions, and authorities to waive portion of compensation received and reimburse public entity for pension contribution.

Motion: Recommends support of the resolution.

Discussion: The Commission supports this resolution since its objective is to curtail pension benefits costs for the State and local government employers. 

S-1770 (Van Drew)
Reinstates PFRS and SPRS accidental death benefits to certain surviving spouses who remarried.

Motion: Recommend not to enact since it creates a greater disparity among the retirement systems, it would apply to such a small population that it may be perceived as special legislation.

Discussion: The enactment of P.L. 2003, c.181 which was effective September 12, 2003 provides that a surviving spouse of PFRS and SPRS may remarry without losing the benefits. Since this bill is retroactive in nature it appears to be special legislation.  Further, since the bill impacts only PFRS and SPRS, its enactment would create a disparity among the other State-administered plans relating to the accidental death survivor’s pension. State and local employer pension costs will increase if this bill is enacted.  Additionally, State health benefit costs will increase, since SPRS and PFRS law requires that in the case of an accidental death, the State must pay for health benefit coverage for the surviving spouse and dependent children, even for local members of the PFRS.


Pension and Health Benefits Review Commission
Vote Results
July 16, 2010
 

S-1897 (Cunningham)
Provides one-time reduction of pension contribution of local public employer of employee who retires with pension reduced for dishonorable service in amount equivalent to certain previous contributions by that employer.

Motion: Recommend against enactment since the State-administered defined benefit retirement plans are pooled risk in nature and there is no separate accounting of assets and liabilities of the plan for each employer.

Discussion:  This bill pertains only to local employers that participate in the State-administered retirement plans. In multi-employer defined benefit plans such as the PERS and the PFRS, the assets and liabilities of these plans are pooled and annual employer contributions to the fund are apportioned proportionately among the individual participating employers based upon the size of each employer’s payroll.  There is no separate accounting of assets and liabilities of the plan for each employer, as positives and negatives are contractually shared equally.  Additionally, pension funding is predicated on the assumption that all employers share equally in the experience of the plan, i.e. the rates of retirement, withdrawal, death etc. apply to all employers uniformly.  One employer’s deviation from these assumptions warrants neither an increase nor a decrease in that employer’s future pension contribution requirement, but is shared by all employers in the plan.

S-1875 (Oroho/O’Toole)/A-2614 (DiMaio/McHose)
Repeals law allowing PERS member to retire with PERS pension and continue to receive salary for current PERS-covered elective office.

Motion: Recommend to support with amendments that all retired members of all public retirement systems shall not be permitted to collect a salary from a public employer including employment between and among the various retirement systems.

Discussion: The Commission supports the bill but recommends that the bill be expanded to eliminate all retired members from receiving a pension and collect a salary while in public employment.  For instance, key exemptions exist for retirees of state funded retirement systems pursuant to P.L. 1997, c. 23. This bill only impacts PERS members that retire with a PERS pension and continue to receive salary while in a current PERS-covered elective office.  State law has required that all public employment covered by the same retirement system be terminated in order to be eligible to retire. However,  an exception exists for elected officials who  are members of the Public Employees’ Retirement System, i.e., N.J.S.A. 43:15A-47.2 allows elected officials who are members of the PERS to retire from PERS, collect their pension and remain in the office to which they are elected and continue to receive a public salary so long as the PERS retirement allowance is not based solely on service in that elected office. A similar exemption exists, too, for those in the Police Fire Retirement System (PFRS) prior to P.L. 2007, c. 92 that created a defined contribution retirement plan. Also, in a related matter, the Commission supports the repeal of N.J.S.A. 43:15A-47.2 because its provisions may be in violation of Internal Revenue Code regulations. Treasury regulation §1.401(a)-1(b)(1)(i) disallows in-service distributions (pension distributions prior to termination of service) before attaining “normal retirement age”, generally defined as age 62.  PERS law allows Tier 1 members to retire upon attaining age 60, or at any age after 25 years of service.   Violation of these Treasury regulations may jeopardize the tax-qualified status of the PERS (qualified status allows employee contributions to the plan to be tax-deferred).

A-2666 (Vainieri Huttle/Greenstein)/S-1834(Weinberg)
Requires health insurers to cover oral cancer drugs and related support drugs on same basis as intravenous cancer medications and related support drugs.

Motion: Recommend against enactment

Discussion: The Commission does not support legislatively mandating health benefit coverage since mandates generally tend to place the health insurance industry outside of the “free enterprise” system and drive up the cost of health insurance for both the employer provided coverage and individual policies.

A-2620 (O’Scanlon)
Calculates future service of active members at 1/60 of final compensation for TPAF and PERS pensions.

Motion: Recommend to support with  a note that there may be a legal challenge reflecting the August 2006 opinions of the Attorney General and the Office of Legislative Services.

Discussion: The Commission supports the intent of the bill but the change to 1/60 for current members may be cited as a violation of contractual law. The Attorney General and the Office of Legislative Services advised that any legislation that detrimentally alters the pensions of active members in the State-administered retirement systems with at least five years of service, or of retired members “would be unconstitutional as violative of the federal and State constitutional proscription against impairment of the obligations of contracts.” The focus of their opinion was N.J.S.A. 43:3C-9.5, a State law that provides members a “non-forfeitable right” to receive upon retirement the level of pension benefits that was in place at the time five years of pension service was attained; P.L. 2010, c. 1 repealed it as to new members and those who reenroll.  Legal counsel advice should be sought prior to this bill’s enactment.

A-2613 (Chiusano/Burzichelli)
Eliminates certificated superintendent and administrator exceptions to TPAF retiree reenrollment requirement.

Motion: Recommend enactment and also include the PERS provision instituted by P.L. 2001 c. 355 that is not repealed by this bill.

Discussion: The Commission supports this bill since it will repeal the provisions of P.L. 2001, c. 355, which deviated from otherwise uniform State public pension policy regarding returning to public employment after retirement.  State pension laws applicable to the State-administered retirement systems, in general, uniformly require re-enrollment and suspension of pension benefits if a retiree is re-employed in a position covered by the pension system from which he/she was retired. In addition, this bill does not repeal PERS law, which was also amended by Chapter 355.  Similar to the TPAF change, it provided an exemption from the return to employment rule to a PERS retiree who becomes employed by the New Jersey Department of Education in a position of critical need as determined by the commissioner, or becomes employed by a board of education in a position of critical need as determined by the superintendent of the district on a contractual basis for a term of not more than one year.  Further, Treasury regulation §1.401(a)-1(b)(1)(i) disallows in-service distributions (pension distributions prior to termination of service) before attaining “normal retirement age”, generally defined as age 62.  PERS law allows Tier 1 members to retire upon attaining age 60, or at any age after 25 years of service.   Violation of these Treasury regulations may jeopardize the tax-qualified status of the PERS (qualified status allows employee contributions to the plan to be tax-deferred).

A-2951 (Dicicco/Munoz)/S-2174 (Doherty)
Bars certain employees of certain public agencies from participating in PERS; repeals law permitting PERS and TPAF members on leave who work for labor organization to purchase pension credit.

Motion: Recommends support with  a note to seek legal guidance of tax counsel since this bill as written may jeopardize the tax qualified status of the retirement plans.

Discussion: The Commission supports the bill but is concerned with maintaining the tax qualified status of the retirement plans, if the plans were to allow termination of pension membership for employees with less than ten years of service.  Current State law provides members of any of the State-administered pension plans hired prior to enactment of P.L. 2010, c. 1 with a non-forfeitable right to receive benefits upon the attainment of five years of service credit in the retirement system. In contrast, this bill would allow only employees of these entities with ten or more years of pension system credit to continue their membership in PERS. Consequently, individuals employed by these entities for less than ten years will be treated differently from a pension perspective, and that raises the tax question.  Advice of tax counsel should be sought prior to this bill’s enactment regarding the applicability of federal rules that could result in jeopardizing the continued qualification of the pension system.


Pension and Health Benefits Review Commission
Vote Results
October 1, 2010

S-2210 (Sacco)
Provides that 1.5% contribution required to be made by certain public employees will not take effect until expiration of collective bargaining agreement made applicable to such employees.

Motion: Recommend against enactment.

Discussion: The Commission recommends against enactment since the bill does not contain language providing these employers with the discretion of delaying the contribution for their non-aligned employees as was provided to the SHBP/SEHBP participating employers. The bill applies to public employers and their employees who do not participate in the SHBP or the SEHBP.  It addresses the differences in the application of the 1.5 percent employee contribution mandated by P.L. 2010, c. 2 toward employer provided health benefit coverage as it applies to non-aligned employees of participating and non-participating SHBP/SEHBP public employers.  The provisions of P.L. 2010, c. 2 allowed both participating and non-participating SHBP/SEHBP public employers to defer the implementation of the mandated 1.5 percent employee health benefit contribution until after the expiration of any collectively negotiated agreement applicable to their aligned employees. Chapter 2, did not contain language providing these employers with the discretion of delaying the contribution for their non-aligned employees as was provided to the SHBP/SEHBP participating employers. Consequently, all non-aligned employees of non-participating SHBP/SEHBP public employers were required to contribute toward their health benefit coverage on May 21, 2010.

A-2800 (DiCicco)
Makes part-time elected officials and commission and authority appointees ineligible for PERS, DCRP and health benefits; requires pension credit forfeiture if employed former personal services contractor falsely certifies position as full-time.

Motion: Recommend to enact with the amendment to eliminate the provision that elected and appointed officials whose hours of service are fixed at fewer than 35 per week will be ineligible for health care benefits.

Discussion:  The Commission supports the intent of the bill since the objective of the bill would be to reduce the incidence of the abusive pension practice of tacking and boosting.  Additionally, the elimination of pension and health benefits for part-time elected and appointed officials will reduce the aggregate annual employer benefit costs.  The Commission recommends a more consistent approach to the number of hours worked for the eligibility of health benefits.

A-2392 (Conaway/Conners)
Requires SHBP to cover prostate cancer screening.

Motion: Recommend against enactment.
 
Discussion:  The Commission opposes this bill since it will increase SHBP costs for all employers participating in the SHBP and it continues the questionable practice of mandating health benefits coverage. Since prostate cancer screening is already covered for members enrolled in NJ DIRECT if the procedure is performed by an in-network provider, the Commission questions the necessity of the bill. Mandating this coverage for out-of-network services provided under NJ DIRECT will increase the annual cost of the NJ DIRECT plan coverage by approximately 0.01%

S-1339 (Van Drew)
Prohibits individual from holding simultaneously more than one elective public office.

Motion:  The Commission’s recommendation is neutral on the enactment of this bill.

Discussion: Since the bill involves other non-pension issues that may need to be addressed. A legal opinion should be sought prior to the bill’s enactment regarding the ability to waive compensation and the federal tax ramifications of the constructive receipt rule.

S-2100 (SCS) (Sweeney/Ruiz)
Prohibits new employees of certain organizations from enrolling in State-administered retirement system or health care plan of public employer.

Motion:  Recommend enactment subject to the advice of tax counsel.

Discussion: The entities targeted by this bill are considered local participating PERS employers. Participation in a State-administered retirement system is required for a local employer to participate in the SHBP. Each participating local employer receives an annual employer pension bill and a monthly SHBP bill  from the Division of Pensions and Benefits representing that local employer’s share of contributions.  Since pension system assets and liabilities relating to local PERS employers are kept separate from those relating to the State, no State funds are currently contributed toward the pension liabilities or health benefit coverage of any local employer participating in PERS. Advice of legal tax counsel should be sought since this bill may jeopardize the tax qualified status of the retirement plan.


Pension and Health Benefits Review Commission
Vote Results
November 19, 2010

S-1438 (Weinberg)/A-3257(Stender)
Increases health benefits continuation coverage to 36 months for certain persons covered under certain employer health benefits plans.

Motion: Recommend against enactment since it will increase State and local employer health benefit costs.

Discussion:  The enactment of this bill will require that all COBRA eligible members will be eligible for up to 36 months of health benefit coverage. This benefit change will impact employees who lose employment with the State or local employers.  The current economic recession means that there may be more employee lay-offs as governments try to balance their budgets, and employees who lose their job will be more likely to remain unemployed for the full duration of COBRA coverage. In addition, the federal subsidy for COBRA participants in plan year 2010 which provided a 65% subsidy to the SHBP/SEHBP to decrease the cost of the coverage resulted in increased participation in COBRA. For these reasons, it is assumed that COBRA enrollment will have an increase as a result of this mandate, estimated at 15%. The impact of S-1438 is estimated to be $3 million for the combined SHBP/SEHBP.

A-3246 (Quigley)/S-358 SCS (Weinberg/Vitale)
Requires managed care plans, SHBP, and SEHBP to provide for reasonable accommodation in accessing providers for persons with disabilities.

Motion: Recommend against enactment since it will increase State and local employer health benefit costs and there have been no complaints within the SHBP/SEHBP that such accommodations are necessary.

Discussion:  The enactment of this bill would circumvent the cost benefits inherent in managed care plans by allowing an insured individual to obtain treatment from a provider who does not participate in the managed care plan’s network under the same financial terms as if the provider did participate in the plan’s network. The out-of-network provider fees in excess of negotiated network provider fees would be absorbed by the insurer, and eventually passed along to employers participating in the plan in the form of higher premiums.  

S-1984 (Beck)
Calculates future service of active members at 1/60 of final compensation for TPAF and PERS pensions.

Motion: Recommend to enact with an amendment to include both Veteran and Disability pensions.

Discussion: The Commission supports the enactment of the proposed legislation since it will slow the rate of future State pension cost increases. The bill provides that the multiplier of final compensation used in the calculation of the deferred, early, and service retirement allowances for members of the Teachers’ Pension and Annuity Fund and the Public Employees’ Retirement System will change from 1/55 to 1/60 for service credited on and after January 1. 2011. The proposed bill should be amended to include both Veteran and Disability pensions.

S-2326 (Kean)
Increases mandatory retirement age for judges of the Division of Workers’ Compensation from age 70 to age 75.

Motion: Recommend to enact since there are no additional cost associated with the bill.

Discussion: The Commission supports the intent of the bill but feels that this is more a public policy issue. The enactment of this bill may allow the majority of judges to work longer, and shortening the time over which they will receive a pension.


 
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