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Pensions and Benefits
RULE CHANGES
2002
Proposed Rules Public Notices Adoptions

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The Division of Pensions and Benefits posts proposed rules — new rules, amended rules and readoptions of existing rules — on this Web site to inform members, retirants, employers and other interested parties.

Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code.

If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. NJAC refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

Proposed changes are either in bold print or are underlined. Deletions are bracketed [so].


Public Notices

There are no Public Notices for 2002.


Proposed Rules

Proposed Amendment: N.J.A.C. 17:5-4.3 Methods of Repayment. Cite as 34 N.J.Reg. 2958(a) [SPRS]

Proposed Amendment: N.J.A.C. 17:2-2.3 Ineligible Persons. Cite as 34 N.J. Reg. 1364(a) [PERS]


Adoptions

Amendment: N.J.A.C. 17:7-2.3 Part-time Faculty Members. Cite as 34 N.J. Reg. 825(a) [ABP] Adopted 11/18/02

Readoption with Amendments: N.J.A.C. 17:3;
Repeals: N.J.A.C. 17:3-3.2, 5.7 and 6.23;
Repeals and new Rules: N.J.A.C. 17:3-2.1, 2.3 and 6.21;
Recodifications with Amendments: N.J.A.C. 17:3-3.10 and 3.11 as 3.11 and 3.10, respectively; 3.13 and 3.14 as 3.14 and 3.13, respectively; and 6.2 and 6.3 as 6.3 and 6.2, respectively
Cite as 34 N.J. Reg. 3782(c) [TPAF] Adopted 11/4/02

Amendment: N.J.A.C. 17:2-4.9 and 6.4 Eligibility for Loan; Outstanding Loan. Cite as 34 N.J. Reg. 2970(b) [PERS] Adopted 8/19/02

Amendment: N.J.A.C. 17:2-6.1, 6.10 and 6.17 Applications; Involuntary Disability Applicaiton; Approved Allowance. Cite as 34 N.J. Reg. 2971(a) [PERS] Adopted 8/19/02

Amendment: N.J.A.C. 17:2-6.21 and 6.25 Determination of Last Year's Salary; Veterans Reported on a Biweekly Basis. Cite as 34 N.J. Reg. 2971(b) [PERS] Adopted 8/19/02

Amendment: N.J.A.C. 17:2-7.1 Honorable Service; Interfund Transfers; State-Administered Retirement Systems. Cite as 34 N.J. Reg. 2972(a) [PERS] Adopted 8/19/02

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STATE POLICE RETIREMENT SYSTEM
METHODS OF REPAYMENT

Proposed Amendment: N.J.A.C. 17:5-4.3

Cite as 34 N.J.Reg. 2958(a)

The agency proposal follows:

Summary

The State Police Retirement System proposes to eliminate the minimum payment requirement for the initial partial lump sum payment for purchases. Currently, if a member wishes to make an initial partial lump sum payment toward a purchase, that sum must be at least $250.00. Many years ago, when the $250.00 minimum was adopted, it represented a large percentage of the entire purchase cost. Now, in many cases, it is less than the monthly minimum payment amount of one-half of a full regular pension deduction. Computer systems are also now more advanced and more flexible, and can calculate repayment schedules based on any partial lump sum payment. Therefore, the SPRS proposes to eliminate the requirement that any initial partial lump sum payment toward a purchase be $250.00 or more, and will accept any amount as an initial partial lump sum payment. A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:5-4.3 Methods of repayment

(a) Methods of repayment include the following:

1. (No change.)

2. Partial lump sum [of $250.00 or more]; balance by extra payroll
deductions;

3.-4. (No change.)


TEACHERS' PENSION AND ANNUITY FUND

Readoption with Amendments: N.J.A.C. 17:3
Repeals: N.J.A.C. 17:3-3.2, 5.7 and 6.23
Repeals and new Rules: N.J.A.C. 17:3-2.1, 2.3 and 6.21
Recodifications with Amendments: N.J.A.C. 17:3-3.10 and 3.11 as 3.11 and 3.10, respectively; 3.13 and 3.14 as 3.14 and 3.13, respectively; and 6.2 and 6.3 as 6.3 and 6.2, respectively

Cite as 34 N.J. Reg. 3782(c)

Adopted November 4, 2002

Summary

The Board of Trustees of the Teachers' Pension and Annuity Fund is responsible for reviewing the administrative rules within N.J.A.C. 17:3. When they become aware of a change in the laws or a court decision that possibly could affect the Teachers' Pension and Annuity Fund, the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the division of Pensions and Benefits, and the Board's staff to ascertain if the current rules are necessary and/or cost efficient. Accordingly, the Board of Trustees of the Teachers' Pension and Annuity Fund proposes to readopt the current rules within N.J.A.C 17:3, which expire on November 13, 2003 with the following amendments, deletions and new rules. Because this notice of proposal was submitted to the Office of Administrative Law prior to that expiration date, that date has been extended 180 days to May 11, 2004, pursuant to N.J.S.A. 52:14B-5.1c. The current rules deal with the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects associated with the Teachers' Pension and Annuity Fund.

Members, participating employers, retirees and survivors of retirees rely on the efficient operation of the retirement system to administer retirement benefits and to provide the information they need regarding individual accounts. They rely upon the presence and predictability of the rules that guide the administration of benefits and the stability of the Fund. The protections and guarantees that these rules afford the members mandate the rules' continued existence. The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the Teachers' Pension and Annuity Fund. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66(1978), the chapter was readopted in 1983. Pursuant to Executive Order No. 66, Chapter 3 expired on May 16, 1988 and was adopted as new rules effective August 15, 1988. Chapter 3 was adopted as new rules in 1993 and was readopted in 1998.

Following is a discussion of the proposed amendments, repeals and new rules.

Subchapter 1. Administration

The Board proposes that the word "chairman" be changed to the gender neutral "chairperson" throughout N.J.A.C. 17:3. The Board also proposes to eliminate the date reference regarding Roberts' Rules of Order and add "Second Edition" after the reference to Roberts' Rules to accurately reflect the edition used by the Board.

N.J.A.C. 17:3-1.2 will not change.

The proposed amendments to N.J.A.C. 17:3-1.3 would change "chairman" to "chairperson"; "secretary" would also be changed to "Secretary" throughout this chapter. Elections now take place in July; therefore, the Board proposes to change "June" to "July" throughout this rule.

The proposed amendments to N.J.A.C. 17:3-1.4 would initially capitalize "County Superintendent" in paragraph (f)1.

Proposed amendments to N.J.A.C. 17:3-1.5 would change "certifying agent" to "certifying officer" throughout this chapter because the participating employers are not agents of the Division. The word "prescribed" in subsection (b) would be changed to "described" prior to the statutory reference to better reflect current terminology and "Fund" would be initially capitalized. N.J.A.C. 17:3-1.5(d) would be added, stating: "The certifying officer may be required to sign a statement, verifying that any reported information is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the retirement Fund." This language will impress upon the certifying officers the importance of accuracy in the information they provide the Division.

The Board proposes, at N.J.A.C. 17:3-1.6, to add subsection (c) dealing with beneficiary information. The confidentiality of beneficiary information appears at N.J.A.C. 17:1-4.1, Records, in the General Administration chapter, but the Board believes it also belongs in the TPAF rules. Advice from the Attorney General's Office has been interpreted to permit the Division to release beneficiary information once a member's death has been reported to the Fund; therefore, proposed new N.J.A.C. 17:2-1.6(c) would provide as follows: "The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released after the member's death has been entered into the reporting system." Existing subsection (c) would be recodified as (d). Proposed amendments at new (d) would establish the conditions under which the Division will release medical records.

A proposed amendment to N.J.A.C. 17:3-1.7 would change "his" to the "claimant's." The required notice is proposed to be expanded through the efforts of the Board Secretary and the Attorney General's Office to include more information regarding the appeals process. These new paragraphs are to replace the existing notice.

The proposed amendment to N.J.A.C. 17:3-1.8(a)2 would delete the word "his" while N.J.A.C. 17:3-1.9 and 1.10 will remain unchanged.

Proposed amendments to N.J.A.C. 17:3-1.11(a) regarding proof of age would delete "may be required" and replace it with "shall," because a member's age is required information. The next sentence would be deleted as the Division no longer targets those within six years of enrollment for birth date evidence. A new sentence detailing acceptable proofs of age would appear next, to establish examples of acceptable proofs. A proposed amendment to N.J.A.C. 17:3-1.11(b) would make the provision of evidence of birth date mandatory.

The proposed amendments to N.J.A.C. 17:3-1.12 would eliminate the word "State" from the section heading. In subsection (a), "State employees paid by centralized payroll" is replaced with "employees whose employers report salary and contributions on a biweekly basis" because the computer reporting systems of employers are expected to be advanced enough at this time so as to permit the Division to request on-line reporting of information instead of paper-based reporting. "His" would be changed to "the member's."

A proposed amendment to N.J.A.C. 17:3-1.13 would add a subsection (b) which will detail the contribution rate changes which have been enacted recently.

Specifically, the provisions of P.L. 1994, c.62, which provided for a flat five percent rate of contribution regardless of age at enrollment, and the provisions of P.L. 2001, c.133 which provided for a three percent rate of contribution subject to change based on the Treasurer's determination would be explained. Existing subsection (b) will be deleted because its subject matter will be addressed in amended subsection (a).

Subchapter 2. Enrollment

The Board proposes to repeal N.J.A.C. 17:3-2.1 and replace it with a new rule also defining eligible positions. The existing rule attempted to list all the positions eligible for enrollment in the TPAF. Because boards of education have created additional titles which are eligible for enrollment, it is difficult to keep this list up-to-date. By listing the general eligibility requirements instead of specific titles, the Board believes that this new rule will be more easily applicable to any new positions. A teacher who works in a public, accredited evening school, regardless of location, has been eligible for enrollment in the Fund for many years. Therefore, the Board proposes to eliminate the references to specific evening schools. The Board also proposes to delete references to the Federal Elementary and Secondary Education Act of 1965. The proposed new rule would also list the eligibility requirements of the Fund in one location instead of in their different statutory cites (specifically N.J.S.A. 18A:66-2 and 4).

The Board proposes to amend N.J.A.C. 17:3-2.2 by eliminating references to titles found in repealed N.J.A.C. 17:3-2.1 and to provide for the Board to review the eligibility for enrollment of any position not meeting the requirements of proposed N.J.A.C. 17:3-2.1. The Board proposes to repeal N.J.A.C. 17:3-2.3, Full-time. The requirement that a teacher be full-time to be eligible for enrollment was eliminated in 1986 by P.L. 1986, c.24; therefore, the Board does not see any reason to retain this definition. The Board does believe that the language regarding optional employees found at subsection (c) should be retained because there are still some teachers who chose not to enroll when the Fund began. Therefore, this subsection has been moved to subsection (b) of proposed new rule N.J.A.C. 17:3-2.8, Enrollment date, to capture this information. The Board proposes new rule, N.J.A.C. 17:3-2.3, Multiple enrollees, which will state when enrollment is required, if an employee is a teacher in more than one location.

N.J.A.C. 17:3-2.4 would be amended to add "or part-time" after "full-time" position because this rule does apply to both types of employment. Gender specific pronouns would be removed.

N.J.A.C. 17:3-2.5 would remain unchanged.

The proposed amendment to N.J.A.C. 17:3-2.6 would add the provision that this rule does not apply to those certificated administrators affected by P.L. 2001, c.355. The New Jersey Department of Education determines who is a certified administrator based on the requirements found at N.J.A.C. 6:11- 9.3.

The Board proposes to amend N.J.A.C. 17:3-2.7 by substituting "age 60" for "the normal retirement age," to clarify this requirement. Gender-neutral language would be added. New subsection (d) would be added to state that members returning after July 1995 would be assigned the flat rate of contribution in effect when they return to employment.

Proposed new rule, N.J.A.C. 17:3-2.8, Enrollment date, would clarify what date a member is enrolled in the Fund based on when the member begins employment. This proposed new rule mimics the one found in the Public Employees' Retirement System rules at N.J.A.C. 17:2-2.4.

Subchapter 3. Insurance and Death Benefits Proposed amendments to N.J.A.C. 17:3-3.1 include the addition of the clarification that everyone under age 60 at enrollment is required to participate in contributory insurance, and the elimination of the word "eligible" before "compulsory enrollees" because it is redundant. If enrollment is compulsory, members are presumed eligible. "Of" would be changed to "for." New enrollees no longer have to prove insurability if they are under age 60 and their application was filed more than a year after they first became eligible.

Therefore, the Board proposes to eliminate this reference. The Board proposes to add the "under age 60" clarification throughout this rule. Subsection (c) is covered under subsection (a). Therefore the Board proposes to repeal this subsection. Existing subsection (d) would become subsection (c), gender neutral terms would be added and the phrase "and meeting the eligibility requirements of the retirement system underwriter" would be added to clarify existing Division practice.

The Board proposes to repeal N.J.A.C. 17:3-3.2 because subsection (a) is included in proposed new rule N.J.A.C. 17:3-3.9, and subsection (b) is included at new subsection (a) of the proposed recodification of N.J.A.C. 17:3-3.3.

The Board proposes to recodify N.J.A.C. 17:3-3.3 as N.J.A.C. 17:3-3.2 so that the TPAF rules more closely match the Public Employees' Retirement System rules. The proposed amendments to N.J.A.C. 17:3-3.3 would create a new subsection (a) with the language formally found at N.J.A.C. 17:3-3.2 regarding 10-month members being credited with three months' participation if enrolled in September. Subsection (a) would become subsection (b) and the first sentence would be deleted because it is the same as N.J.A.C. 17:3-3.10.

Amendments to new subsection (b) would clarify what salary is used to calculate insurance death benefits. The phrase "upon which contributions to the annuity savings fund were made" would be switched to the bottom of the paragraph, making it clearer as to which months or biweekly pay periods to use. "His" would be changed to "the member's." The last line of new subsection (b) would become new subsection (c) which more clearly states that months or pay periods in which no pay is received will not be used in the calculation of death benefits. Subsection (b) would become subsection (d) and "he" would be changed to "the member." "Month" would be changed to "monthly" to be grammatically correct. Subsection (c) would become subsection (e) and would be combined with existing subsection (e) because they are essentially the same except for the first line of existing subsection (e) which has been added to subsection (c).

Any gender pronouns will be replaced with "the member." Subsection (d) would be deleted because it is substantially similar to new subsection (b). Subsection (f) would be amended to delete the first sentence, "Where a post-audit of insurance claim payments indicates the pension contributions reported by an employer were incorrect and resulted in the overpayment of an insurance claim to a member's designated beneficiary or estate, the employer will be billed for the value of the overpayment of the insurance benefits," as this is no longer Division practice. Subsection (g) remains unchanged, while the word "ten" in subsection (h) would become the numeral 10 to be consistent. Subsections (i) and (j) would have the word "State" deleted before employees and biweekly payrolls because the Division is expecting some local employers to report salary and contributions on a biweekly basis in the future instead of just the state locations. Subsection (k) would be amended to delete the words "or retirement," as this section does not deal with retirement. The last sentence would be deleted because it is now covered in new subsection (c).

N.J.A.C. 17:3-3.4 is proposed to be recodified as N.J.A.C. 17:3-3.3 and is amended to correct the words "per cent" into one word, "percent," and adds the decimal (.004) to eliminate any confusion.

N.J.A.C. 17:3-3.5 is proposed to be recodified as N.J.A.C. 17:3-3.4.

N.J.A.C. 17:3-3.6 is proposed to be recodified as N.J.A.C. 17:3-3.5 and amended to add "life insurance coverage" to the section heading and first line of the rule to clarify what type of coverage is affected by this rule.

N.J.A.C. 17:3-3.7 is proposed to be recodified as N.J.A.C. 17:3-3.6 and amended to replace "of" with "subsequent to" and "as of" to "the first of the month subsequent to the date"; in addition, "immediately preceding the month" is deleted due to statutory changes which provide for benefits to be payable for the entire month in which a member or beneficiary dies.

N.J.A.C. 17:3-3.8 is proposed to be recodified as N.J.A.C. 17:3-3.7 and amended to add the word "the" before "contributory" and replace "insurance" with "coverage" to make this rule similar to that found in the PERS rules at N.J.A.C. 17:2-3.7.

N.J.A.C. 17:3-3.9 is proposed to be recodified as N.J.A.C. 17:3-3.8 and combine subsections (a) and (b) into one paragraph. Gender specific pronouns are to be removed and the form of the citation to N.J.A.C. 17:3-3.1 will be corrected.

Proposed new rule N.J.A.C. 17:3-3.9, Retired life insurance coverage, codifies a long standing requirement that a member must have 10 or more years of pension credit or must retire on a disability retirement to be eligible for a paid-in-full death benefit (see N.J.S.A. 18A:66-69). It also makes clear the amount of the death benefit.

The proposed amendments to N.J.A.C. 17:3-3.11 would recodify it as N.J.A.C. 17:3-3.10 and would add the clarification that contributory insurance will be in effect for up to two years for a leave of absence for the personal illness of a member without premium payment pursuant to N.J.S.A. 18A:66-38. Proposed subsection (b) would clarify that insurance premiums must be paid in advance by the member and that it is the member's responsibility to make arrangements directly with the Division to continue these premium payments. This requirement of insurance premiums was moved from N.J.A.C. 17:3-3.11(a)3. "Up to one year" would be added before "to fulfill a residency requirement for an advanced degree" and existing paragraph (a)2 would be merged into paragraph (a)1 to be similar to the codification of the PERS rules found at N.J.A.C. 17:2-3.10.

N.J.A.C. 17:3-3.10 is proposed to be recodified as N.J.A.C. 17:3-3.11.

The proposed amendments to N.J.A.C. 17:3-3.12 include amending subsection (b) to indicate that "When a member achieves multiple status by becoming employed by one or more additional employers in an eligible position or positions and files an enrollment application, the beneficiaries designated on the most recently submitted enrollment application supersede any older designations of beneficiaries on file." This is existing Division practice. The Division no longer requests the member file new designations of beneficiaries if the beneficiaries on an enrollment application from a multiple location do not agree with the previous enrollment. N.J.A.C. 17:3-3.12(c) would be amended to change the word "interstate" to "intestate" succession.

N.J.A.C. 17:3-3.13 is proposed to be recodified as N.J.A.C. 17:3-3.14 to better mirror the PERS rules and would change the word "withdraws" to "cancels" to match the wording in PERS.

Existing N.J.A.C. 17:3-3.14 is proposed to be recodified as N.J.A.C. 17:3-3.13 to correspond with the PERS code.

Subchapter 4. Membership

N.J.A.C. 17:3-4.1 remains unchanged.

The Board proposes to amend N.J.A.C. 17:3-4.2 by replacing gender specific language and by clarifying the period of time that the member may obtain credit for a leave.

Proposed amendments to N.J.A.C. 17:3-4.3 include replacing subsection (a) with the language found in the PERS rules at N.J.A.C. 17:2-4.3 which makes it clearer to the member which service would be credited for a 10-month member.

Subsection (d) would be amended by making it more grammatically correct.

N.J.A.C. 17:3-4.4 and 4.5 remain unchanged.

N.J.A.C. 17:3-4.6 would be amended to correspond to the tolerance set by N.J.A.C. 17:1-1.10(e) which is $2.00 per quarter and not $3.00 per year.

The Board proposes to repeal N.J.A.C. 17:3-4.7. The statute on which this is based, N.J.S.A. 18A:66-20, deals with excess contributions made prior to January 1, 1956. There are more than likely no members who fall under this section, but if there were, their rights would be preserved by the statute.

Proposed amendments to N.J.A.C. 17:3-4.8 would make this rule applicable only to periods of military leave prior to August 1, 1974. Attorney General Formal Opinion 1975, No. 9 limited the applicability of N.J.S.A. 38:23-6 to periods of war or national emergency prior to August 1, 1974.

Proposed amendments to N.J.A.C. 17:3-4.9 would clarify what the member's maximum outstanding loan balance can be. New Internal Revenue Service regulations, effective January 1, 2002, have resulted in changes to the Division's loan policies. Specifically, 26 U.S.C. § 72(p) requires that loan balances not exceed $50,000.

Proposed amendments to N.J.A.C. 17:3-4.10 would expand the section heading to "Waiver of retirement benefits upon withdrawal." The following sentence will be added to clarify when an estimate of retirement benefits is required before a waiver may be signed: "If a member is eligible to begin receiving a monthly retirement allowance (age 60 or more, or 25 years or more of credited service), the Division shall inform the member of the estimated amount of the retirement allowance and shall require the member to sign a waiver of such benefits, should the member still wish to withdraw."

The proposed amendment to N.J.A.C. 17:3-4.11 would make it gender neutral.

The proposed amendments to N.J.A.C. 17:3-4.12 would add "pension and contributory insurance" before "deduction" to clarify what type of deduction is meant. In addition, subsection (b) is to be amended to establish that service credit shall not be given when deductions are not taken, and to address employers who report on either biweekly or monthly bases.

The proposed amendment to N.J.A.C. 17:3-4.13 changes "until they return to service" to "until the day they return to service" to clarify when coverage is in effect.

Subchapter 5. Purchases and Eligible Service

The proposed amendment to N.J.A.C. 17:3-5.1 would add the clarification that active members must either be contributing to the Fund, or must have contributed within the last two years, to make a purchase. In subsection (c), the Board proposes to delete the word "former" before service. Dishonorable service should not be purchasable regardless of the type of service, and should not be limited to former service.

Subsection (a) of N.J.A.C. 17:3-5.2 is proposed to be deleted because it has not been Division practice for many years. In fact, the corresponding PERS rules on this subject was deleted in 1987. Members used to be enrolled four months after their date of regular appointment but could elect to receive credit for those first four months on their enrollment applications. Before 1987 members were enrolled as of their date of regular appointment without the four month lapse. Any other purchase of temporary service leading to enrollment is covered under N.J.A.C. 17:3-5.5. Subsection (b) would remain without the letter designation and any gender specific pronouns would be changed to "the member."

The proposed amendments to N.J.A.C. 17:3-5.3 would make everything plural and would replace gender pronouns with "they."

The proposed amendments to N.J.A.C. 17:3-5.4 would delete the word "purchases" from the section heading because this section deals with back deductions and not purchases. "His" would be changed to "the" and "make retroactive contributions" would replace "purchase membership credit retroactive."

N.J.A.C. 17:3-5.5 remains unchanged.

The Board proposes in N.J.A.C. 17:3-5.6 to add "for purchases" after "methods of payment" to clarify that these methods of payment only apply to purchases.

The Board proposes to repeal N.J.A.C. 17:3-5.7 as the purchase of military time is adequately covered under N.J.A.C. 17:3-5.5.

N.J.A.C. 17:3-5.8 remains unchanged.

The Board proposes to change "retirement system" to "Fund" in N.J.A.C. 17:3-5.9.

Subchapter 6. Retirement

P.L. 2001, c.120 (N.J.S.A. 43:15A-50) provides for the creation of a fifth option which members may select to receive their retirement benefits. This fifth option provides four additional payment options that provide a lifetime pension to a beneficiary upon the death of a member. Under this fifth option, a member may choose an actuarially reduced retirement allowance in order to provide a beneficiary an allowance equivalent to the full amount, three-quarters, one-half or one-quarter of the reduced allowance. Unlike current options, if the beneficiary dies before the retiree who has selected one of these new options, the retiree's allowance increases to the maximum option. These selections under the new, fifth, option will be referred to as Options A, B, C and D. Therefore, the Board proposes to amend N.J.A.C. 17:3- 6.1 by adding a new subsection (c), which will define these new options as well as the existing options. Subsections (c), (d) and (e) are proposed to be recodified as (d), (e) and (f). The Board also proposes to amend existing subsection (c) by adding the new Options A, B, C, and D after Options 2, 3 and 4. Subsection (d) would be amended to add "may be" before "either hospital records."

N.J.A.C. 17:3-6.2 is proposed to be recodified as N.J.A.C. 17:3-6.3 to better correspond with the PERS and PFRS rules. N.J.A.C. 17:3-6.2(b) is proposed for deletion because N.J.A.C. 17:3-3.14, Benefits payable under P.L. 1984, c.96 as amended by P.L. 1995, c.221, is now in effect.

N.J.A.C. 17:3-6.3 is proposed to be recodified as N.J.A.C. 17:3-6.2 and is proposed to be amended to clarify that a written request is necessary to amend the retirement application. N.J.A.C. 17:3-6.2(b) would be amended to clarify that only a change in retirement option or date must go to the Board for approval. Existing subsection (c) is proposed for deletion, as it is no longer valid since the passage of P.L. 1995, c.221. Subsection (d) is proposed for recodification as N.J.A.C. 17:3-6.2(c) and an amendment clarifying that a member may retire on their 60th birthday if that birthday is the first of the month would be added. Subsections (e) and (f) are proposed to be recodified as (d) and (e). "Fund" would become "Division" and any gender specific pronouns removed.

N.J.A.C. 17:3-6.4 would be amended to correct the Administrative Code reference due to the recodification of N.J.A.C. 17:3-6.3. Paragraph (a)2 is proposed to be deleted because the Division will no longer hold a member's retirement check until a loan is satisfied. Paragraph (a)3 would become paragraph (a)2 and the reference to "Option I" in subsection (b) would be corrected to read "Option 1." There is no option I.

N.J.A.C. 17:3-6.5 will remain unchanged.

N.J.A.C. 17:3-6.6 would change the first "his or her" to "the member's," and change "his or her employment" to "that employment" in the first sentence.

N.J.A.C. 17:3-6.7 is proposed to be amended to clarify that the applicant must be a member to file, unless they fall under the exception stated in

N.J.A.C. 17:3-6.15. The term "ordinance disability" would be corrected to "ordinary disability."

N.J.A.C. 17:2-6.8 is proposed to be amended to change "for" the Board to "by" the Board. "He" would become "the applicant."

The proposed amendments to N.J.A.C. 17:3-6.9 would change "his" to "the member's" or "the applicant's." The Division requires a doctor to certify that a member is physically or mentally incapacitated; therefore, the requirement that the employee and employer certify this information would be deleted. Because any medical information must be updated in order to file for disability retirement again, subsection (b) would be deleted. The "(a)" designation of the first paragraph would no longer be necessary.

The proposed amendments to N.J.A.C. 17:3-6.10 would include the re-heading of the section to "Involuntary disability application" to better reflect its subject. Gender specific pronouns would be replaced, and the requirement that the certifying officer sign the application would be added to correspond to existing Division requirements. Paragraphs (a)2 and 3 would be repealed and replaced with the requirement that the employer submit a written statement and all medical evidence because the medical panel will determine if a member is permanently and totally disabled and whether the disability is a direct result of an event. Paragraphs (a)4, 5, 6 and 7 would be recodified to paragraphs (a)3, 4, 5 and 6. New paragraph (a)5 would be amended by changing "maximum retirement allowance (without option)" to "the maximum retirement option." The Division, until recently, did not classify the maximum retirement allowance as an option. The Division will no longer refer to the maximum llowance as "without option" and has renamed it the "maximum option."

The proposed amendments to N.J.A.C. 17:3-6.11 would add "reduction" to the section heading to better reflect the topic of this section. The order of subsections (a) and (b) would be reversed and age 55 would be changed to age 60 because anything under 60 is defined as "early." Early retirement is defined at N.J.S.A. 18A:66-37 and requires 25 years creditable service. Therefore, the Board also proposes to add this requirement to better define "early retirement." One quarter of one percent would be spelled out.

N.J.A.C. 17:3-6.12 is proposed to be amended to include a sentence explaining when a member's 60th birthday is the first of a month and a timely application has been filed, retirement becomes effective on that date. The proposed amendment to N.J.A.C. 17:3-6.13 would delete the reference to "under the normal retirement age of 60" because disability retirants are no longer precluded from filing a disability retirement after they turn 60. The gender specific pronouns would become "the retirant." The proposed amendments to N.J.A.C. 17:3-6.14(a) requires a written request from the Division when requiring all disability retirants to file a report. The "tag lines" are removed from each paragraph in subsection (b), changing the word "contract" to "position." The proposed amendments to N.J.A.C. 17:3- 6.14(b)3 (former (b)2ii) would also delete the last line and add that reduction will be dollar for dollar and that the Board will determine the length of the repayment. The amendments at N.J.A.C. 17:3-6.15(c) would more clearly state the earliest disability retirement date possible under this section.

N.J.A.C. 17:3-6.16 is reserved.

The amendment at N.J.A.C. 17:3-6.17 would also replace the reference to "allowance (maximum or option)" because, as stated above, the maximum allowance is now called the maximum option; therefore, it does not need to be distinguished by the use of a parenthetical phrase.

The proposed amendment to N.J.A.C. 17:3-6.18 would include changing "option detailing when travel would be considered work related in determining accidental disability and death benefits.

The proposed amendments to N.J.A.C. 17:3-6.20 would include the addition of I" to "option 1." There is no "option I." The word "regular" would be added before monthly allowance to better clarify what benefit amount is used to reduce the reserve amount.

The Board proposes to add the new rule N.J.A.C. 17:3-6.19, Work-related travel; accidental disability retirement and accidental death benefit coverage. This rule would mirror those found in the PERS rules at N.J.A.C. 17:2-6.27, PFRS rules at N.J.A.C. 17:4-6.17 and SPRS rules at N.J.A.C. 17:5-5.16 the words "reported monthly" to the section heading concerning monthly compensation. The rule would be reorganized into subsections (a), (b), (c) and (d) to mirror those found in the PERS rules at N.J.A.C. 17:2-6.20. The word "pensionable" would be added before "service" to clarify that only months in which service credit accrued will be counted. The phrase "including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees" would be added after "service" to indicate that this type of salary is, and has been, includable. Existing subsection (c) would be deleted, as the clarification above makes it clearer that only months in which service credit is received, count.

The proposed amendments to N.J.A.C. 17:3-6.21 include the addition of "paid on a monthly basis" to the section heading after "veterans," and the deletion of veteran one-half pay retirement because this rule now deals with both veterans with 35 years and those who will receive half-pay (now 54 percent of salary). The format has been changed to better correspond to the rest of this section in which the Division splits 10-month and 12-month employees. The first two subsections will deal with the last year's salary of veterans with 35 or more years of creditable service, while the last two subsections deal with veterans with 20 years, age 62 or more, or 25 years, age 55 or more. Veterans retiring on 54 percent of salary may now use either the last 10 or 12 months of salary or the salary in a consecutive 10 or 12-month period in which the highest salary was attained; therefore, the amendment includes language regarding this choice.

The proposed amendments at N.J.A.C. 17:3-6.22 include the addition of "retired members or beneficiaries" instead of "person" and "retroactive" before "payments' " as the Division does not pay amounts waived retroactively.

The proposed repeal of N.J.A.C. 17:3-6.23 is necessary because the Teachers' Retirement Fund Benefits apply only to those who contributed prior to 1919 and no new retirements will be calculated using this benefit.

The proposed amendment to N.J.A.C. 17:3-6.24 would delete the reference to N.J.A.C. 17:3-2.3 which the Board has proposed to repeal.

Proposed amendments to N.J.A.C. 17:3-6.25 would change much of the existing language and replace it with that developed for the PERS at N.J.A.C. 17:2- 6.26. Proposed amendments would include the deletion of references to specific membership directories from which physicians are to be designated by the Board to conduct medical examinations and would require those physicians to be independent except in the case of abbreviated life expectancies.

N.J.A.C. 17:3-6.26 is amended to delete "State" before "employees" because more employers are expected to report on a biweekly basis, and this rule would apply to them as well. "Pensionable pay periods" would replace "pays" to indicate that only pay periods that received pension credit could be used in the determination. This clarification would allow for the deletion of the last sentence, "The biweekly pay periods for which no contributions were made shall be zero." "Prescribed" would be replaced with "covered" to reflect more common word usage.

The proposed amendment to N.J.A.C. 17:3-6.27 would delete "State employees" and "centralized payroll" and add "on a biweekly basis:" because more employers are expected to report on a biweekly basis, and this would apply to them. The format has been changed to better correspond to the rest of this subsection in which the Division splits 10-month and 12-month employees. The first two subsections will deal with the last year's salary of veterans with 35 or more years of creditable service, while the last two subsections deal with veterans with 20 years, age 60 or 25 years, age 55 or more. Subsections (c) and (d) were added due to new legislation which allows a veteran retiring on 54 percent of salary to use either the last 10 or 12 months of salary or the salary in a consecutive 10-or 12-month period in which the highest salary was attained.

Subchapter 7. transfers

The Board proposes to add "honorable service" to the section heading of N.J.A.C. 17:3-7.1 to better reflect the subject matter of this rule. The Board also proposes to amend subparagraph (b)5ii to reflect three or less years of concurrent service instead of two or less years. This amendment is due to the enactment of P.L. 2001, c.341.

Proposed N.J.A.C. 17:3-7.2 would clarify when a member is eligible to do an intrafund transfer and would be the same as that found in the PERS rules at N.J.A.C. 17:2-7.2. A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars. Full text of the proposed readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:3.Full text of the proposed repeals may be found in the New Jersey Administrative Code at N.J.A.C. 17:3-2.1, 2.3, 3.2, 5.7, 6.21 and 6.23.

Full text of the proposed amendments follows:

SUBCHAPTER 1. ADMINISTRATION

17:3-1.1 Board meetings

(a) (No change.)

(b) The [chairman] chairperson may call for special meetings when necessary.

(c) The current rules within Roberts' Rules of Order, Second Edition, [effective as of April 4, 1994] as well as future amendments thereto, are adopted and incorporated herein by reference as the source to be used by the Board of Trustees of the Teachers' Pension and Annuity Fund in the conduct of its monthly meetings.

17:3-1.3 Officers and committees

(a) The members of the Board shall elect a [chairman] chairperson for the forthcoming year at its regular meeting in [ June] July.

(b) The [chairman] chairperson of the Board shall preside at all meetings or in the absence of the [chairman] chairperson, such presiding officer as the Board shall determine.

{Running Header:17:3-1.3 }

(c) The [chairman] chairperson and the [ secretary] Secretary of the Board shall have the power to act for the Board in all matters which may be referred to them by the Board.

(d) (No change.)

(e) The Committee shall be appointed at the [June] July Board meeting by the [chairman] chairperson elect for the forthcoming fiscal year.

(f) (No change.)

(g) The Finance Committee shall review all investment transactions and financial reports referred to it by the [secretary] Secretary for presentation to the Board at its regular monthly meeting.

(h) (No change.)

(i) The Procedures and Policies Committee shall consider all cases referred to it by the [secretary] Secretary and submit its recommendations to the Board at its next meeting.

17:3-1.4 Election of member-trustee

(a)-(b) (No change.)

(c) The [chairman] chairperson of the convention will be a member of the Board of Trustees elected by the Board.

(d) The [secretary] Secretary of the Board shall act as the [secretary] Secretary of the convention.

(e) (No change.)

(f) The delegates shall be selected from the membership of each county. The selection date shall be determined by the Board.

1. Notice of the time and place of the county meeting shall be issued by the [county superintendent] County Superintendent at least 10 days before the date of the meeting.

2. The County Superintendent, within five days after the meeting, shall forward to the [secretary] Secretary of the Board a certificate containing the membership numbers, retirement numbers, names, addresses and school districts of the delegates and alternates.

(g)-(h) (No change.)

(i) The [secretary] Secretary of the Board shall forward to

each delegate and alternate his or her identification for admission to the convention, a copy of the election rule, convention agenda, annual report of the Board of Trustees for the preceding fiscal year and the name of the trustee whose term is expiring.

(j) (No change.)

(k) The [secretary] Secretary of the Board shall also notify each delegate and alternate of the names of the candidates to be nominated for trustee that have been registered.

(l)-(w) (No change.)

17:3-1.5 Certifying [agent] officer (employer)

(a) The secretary of each local board of education shall be the certifying [agent] officer for the respective school district.

(b) The secretary, as the certifying [agent] officer, shall be responsible for the duties [prescribed] described by N.J.S.A. 18A:66-32 and all other duties relating to matters concerning the [fund] Fund.

(c) In locations other than boards of education, the chief fiscal officer or the personnel officer shall serve as the certifying [agent] officer for such units.

(d) Upon request of the Board, the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the retirement system.

17:3-1.6 Records

(a) The minutes of the Board are a matter of public record and may be inspected during regular business hours in the office of the Board [ secretary] Secretary.

(b) (No change.)

(c) The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released after the member's death.

[(c)](d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board of Trustees. The division will release a copy of the examining physician's medical report to the member, the member's attorney or any person authorized by the member in writing to receive a copy of such report. In no event will the report be released to any individual not authorized in writing to receive the report.

17:3-1.7 Appeal from Board decisions

The following statement shall be incorporated in every written notice setting forth the Board's determination in a matter where such determination is contrary to the claim made by the claimant or [his] the claimant's legal representative:

["If you disagree with the determination of the Board of Trustees in this matter, you may appeal by sending a written statement to the Board within 45 days from the date of this letter informing the Board of your disagreement and all of the reasons therefor. If no such written statement is received within the 45-day period, this determination shall be considered final."]

"(a) If you disagree with the determination of the Board, you may appeal by submitting a written statement to the Board within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for your disagreement with the Board's determination and shall include any relevant documentation supporting your claim. If no such written statement is received within the 45-day period, the determination by the Board shall be final.

(b) The Board shall determine whether to grant an administrative hearing based upon the standards for a contested case hearing set forth in the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1-1 et seq.

(c) Administrative hearings shall be conducted by the Office of Administrative Law pursuant to the provisions of N.J.S.A. 52:14B-1 et seq. and N.J.A.C. 1:1-1.

(d) If the granted appeal involves solely a question of law, the Board may retain the matter and issue a final determination which shall include detailed findings of fact and conclusions of law based upon the documents, submissions and legal arguments of the parties. The Board's final determination may be appealed to the Superior Court, Appellate Division.

(e) If the granted appeal involves a question of facts, the Board shall submit the matter to the Office of Administrative Law."

17:3-1.8 Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances and such suspensions shall continue during the period in default:

1. (No change.)

2. If a disability retirant fails to timely file a report with the Fund of [his] annual earned income;

3.-4. (No change.)

17:3-1.11 Proof of age

(a) All members [may be required to] shall establish proof of their age with the Fund. [A person enrolling in the Fund may be requested to submit proof of his or her age at the time of such enrollment; and will be required to submit such proof of age before a period of six years has been elapsed from date of employment.] Acceptable proofs of age include birth or baptismal certificates, passports, naturalization papers, Biblical records, affidavits of older members of the immediate family or primary school records.

(b) In the event a member dies before satisfactory evidence of [ his] the member's date of birth has been filed with the Fund, appropriate evidence [may] shall be required before any death claim is processed for settlement.

(c) (No change.)

17:3-1.12 [State employees] employees; biweekly salaries

(a) Retirement and death benefits as well as service credit will be determined on the basis of biweekly pay periods for [State] employees [paid by centralized payroll] whose employers report salary and contributions on a biweekly basis. This biweekly schedule should conform to the biweekly reporting schedule issued by the State's Centralized Payroll Office.

(b) In the event a member is reported on a combination of monthly and biweekly pay periods, [his] the member's last year's salary or final compensation as well as [his] the member's service credit will be computed on a proportional basis.

17:3-1.13 Nearest attained age; enrollment; retirement

(a) [An individual] members who [is] are six months or more past [his or her] their most recent birthdate at the time of [his or her] enrollment or retirement will have [his or her] their pension contribution rate and retirement factor based upon [the] their age on [his or her] their next birthday.

[(b) Retired members will have their retirement benefits as well as their survivors' benefits calculated upon the basis of the factors applicable to their age on their next birthday.]

(b) A flat five percent pension rate of contribution was enacted by P.L. 1994, c.62 for all employees enrolled on or after July 1, 1994. For members enrolled prior to July 1, 1994 whose previous full rate of contributions was six percent or more, the five percent contribution rate became effective on July 1, 1995. For members enrolled prior to July 1, 1994 whose previous full rate of contributions was less than six percent, their rate of contributions became four percent on July 1, 1995 and then five percent on July 1, 1996. Effective January 1, 1998 the rate of contribution became four and one half percent. Pursuant to the provisions of P.L. 2001, c.133 the contribution rate as of January 1, 2002 is three percent. This rate is subject to change based on the Treasurer's determination in accordance with N.J.S.A. 18A:66-18b.

SUBCHAPTER 2. ENROLLMENT

17:3-2.1 Enrollment eligibility

(a) Any person appointed by the State, local board of education, or charter school to a position listed in the definition of "teacher" found at N.J.S.A. 18A:66-2(p) or as a regular, full-time or part-time employee in a position that meets the following conditions shall be required to become a member of the Fund effective as of the date of their employment:

1. The position requires a valid certificate issued by the State Board of Education, and the person employed holds this valid certificate;

2. The position is covered by Social Security; and

3. The salary for the position is $500.00 or more within a year.

(b) An employee in an unclassified administrative position within the State Department of Education who possesses a valid certificate issued by the State Board of Education is eligible for participation in the Fund.

(c) An employee meeting the conditions stipulated in (a) above who is paid on an hourly or per diem basis is eligible for membership in the fund.

(d) Any person meeting the requirements of (a) above, who is appointed to a regular full-time or part-time position in an accredited evening high school or vocational school after September 1, 1989 shall be eligible for enrollment in the Fund with the following limitation. Individuals teaching at a vocational school may substitute the directly applicable "occupational license" as required by the Department of Education for the certification stipulated in (a)1 above.

1. Prior to September 1, 1989, only individuals appointed to regular full-time positions in accredited evening high schools, as determined by the State Board of Education, were eligible for enrollment in the Fund. A minimum of five periods per evening was required to qualify as a full-time employee. The accredited evening high schools were Camden, East Orange, Newark, Bayonne, Jersey City, Trenton, Woodbridge, Asbury Park, Morristown, and the Belleville Cerebral Palsy Center.

(e) N.J.S.A. 18A:66-2(p) specifically excludes substitute teachers from enrollment in the Fund. The statute also permits the Board of Trustees to determine whether any person is a teacher as defined in this article. The following positions have been determined by the Board to be ineligible for enrollment in the Fund:

1. Temporary positions;

2. Substitute and replacement teacher positions;

3. Permanent or long term substitute positions;

4. Independent contractors and consultants; and

5. On call homebound instructor positions.

17:3-2.2 Documentation required

If a person is appointed to a [title] position which does not [specifically appear in section 2.1 (Eligible positions) of this chapter] meet the eligibility requirements for membership in the Fund as specified in N.J.A.C. 17:3-2.1, the position shall be referred to the Board of Trustees for their determination as to the person's eligibility for participation in the Fund. [in] In order to determine such person's eligibility for enrollment, [his] the employer shall be required to support the enrollment application with a statement setting forth the duties, qualifications, tenure rights and State Board Certification requirements of the position.

17:3-2.3 Multiple enrollees

A "teacher" employed in two or more positions that meet the eligibility requirements for enrollment in the Fund as stated in N.J.A.C. 17:3-2.1 must enroll in the Fund through each of the positions.

17:3-2.4 Emergency or provisional certificate

(a) Any teacher employed under an emergency or provisional certificate, who is appointed to a regular full-time or part-time position under contract, shall be eligible for enrollment as of the date of employment.

(b) In the event a teacher does not qualify for a regular teaching certificate before [his] the emergency or provisional certificate expires and such teacher is continued in employment as a substitute or temporary employee, such member:

1.-3. (No change.)

4. Will not be covered for either the non-contributory or contributory insurance during the period of substitute service, in which event such member may exercise [his] group life insurance conversion rights.

17:3-2.6 Ineligible positions; interim appointment to Boards of Education for those not covered by the provisions of P.L. 2001, c.355 (N.J.S.A. 18A:66- 53.2b)

(a) Any person, who is not covered by the provisions of P.L. 2001, c.355 (N.J.S.A. 18A:66-53.2b), whose benefit has become due and payable as provided by N.J.A.C. 17:3-6.3 from the Teachers' Pension and Annuity Fund who is temporarily appointed to any position listed in N.J.A.C. 17:3-2.1 or the functional equivalent thereof shall be ineligible for enrollment in the retirement system if the total time for all interim appointments with one board of education does not exceed six months. If the total time for all the interim appointments with one board of education exceeds six months, the individual shall be declared an employee for pension purposes and shall be enrolled in the Fund effective the first day of the seventh month of service.

(b) (No change.)

17:3-2.7 Enrollment following deferred retirement

(a) The membership account under which a member elected deferred retirement, who resumes regular service prior to [the normal retirement age] age 60, shall be reinstated.

[1. He](b) If the member returned to employment prior to July 1, 1995, the member shall be assigned [his] the original rate of contribution if [he] the member resumes service before a period of two years has elapsed since [he] the member last made a contribution to [his] the account.

[2.](c) If there has been a lapse of more than two years, a commuted rate shall be assigned. Such commuted rate of contribution shall be determined by adding the lapsed period to [his] the member's age as of the date of [his] original enrollment.

(d) Members who return to employment after July 1, 1995 shall be assigned the flat contribution rate in effect at the time of their return to employment.

17:3-2.8 [(Reserved)] Enrollment date

(a) New employees in the classified service shall be considered as beginning their service on the date of their regular appointments.

1. For employers who report on a monthly basis, the compulsory enrollment date shall be fixed as the first of the month for an employee whose regular appointment date falls between the first through the 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an employee whose regular appointment date falls between the 17th and the end of the month.

2. For employers who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the pay period for an employee whose appointment date falls on the first through seventh day of the biweekly pay period. The compulsory enrollment date shall be fixed as the first day of the following biweekly pay period for an employee whose appointment date falls on any subsequent date within that pay period.

(b) The compulsory enrollment of "teachers" was not in effect until

January 1, 1956. Any employee, other than a veteran, who was employed prior to January 1, 1956 was given the option to enroll or not enroll and that employee continues to retain this option provided there has been no change in employer since January 1, 1956. If an employee is an optional enrollee, and wishes to enroll in the Fund, the employee shall be enrolled as of the first of the month following the receipt of the enrollment application for those whose employers report on a monthly basis or the first day of the next biweekly pay period for those whose employers report on a biweekly basis.

(c) An employee in the unclassified service shall be considered as beginning service on the date of the original appointment.

1. For local employers not covered by Civil Service, a regular appointment shall constitute the first day of work after the date the employee originally accepted employment in a regular budgeted position.

2. For employers who report on a monthly basis, the compulsory enrollment date shall be fixed as the first of the month for an employee whose beginning employment date falls between the first through 16th of the month and the compulsory enrollment date shall be fixed as the first of the following month for an employee whose beginning employment date falls between the 17th and the end of the month.

3. For employers who report on a biweekly basis, the compulsory enrollment date shall be fixed as the first day of the pay period for an employee whose date of hire falls on the first through seventh day of the biweekly pay period. The compulsory enrollment date shall be fixed as the first day of the following biweekly pay period for an employee whose date of hire falls on any subsequent date within that pay period.

SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS

17:3-3.1 Compulsory and optional enrollment

(a) For the purpose of contributory insurance, all [eligible] compulsory enrollees, including veterans, under age 60 at the time their enrollment application is filed, shall be required to participate in the contributory insurance program for one year (12 calendar months) from the date of enrollment, or the effective date of insurance premium deduction, whichever is later. Proof of insurability shall be required [of] for all compulsory [enrollees who filed an enrollment application beyond the year they first became eligible for membership] and optional enrollees, age 60 or older, in order to qualify for noncontributory and contributory insurance coverage.

(b) Optional enrollees under age 60 may qualify for noncontributory and contributory insurance coverage[,] only if they were actively at work performing all of the duties that the position requires at the time they made application for enrollment, and such application was filed within one year from the date they first became eligible for enrollment in the [fund] Fund. If an application for an optional enrollee is not received within one year after [he] the optional enrollee became eligible for enrollment, evidence of insurability will be required for the noncontributory and contributory coverage.

[(c) One year of insurance premiums will be required from the date the member's insurance premiums are effective, whereas insurance benefits will be effective on the date the member is enrolled in the System.]

[(d)](c) When proof of insurability is required, the member's opportunity to prove such insurability shall expire one year (12 months) from the date the initial written notice is sent advising [ him] the member that [he] the member must prove

insurability by taking a medical examination and meeting the eligibility requirements of the Fund underwriter.

17:3-[3.3]3.2 Computation of insurance benefits

(a) A 10-month member will be credited with three months' participation if the member is enrolled in the contributory insurance program in September.

[(a)](b) [Any member who is reported on a 10-months basis and who has not resigned or been discharged, shall be covered by his insurance benefits for the months of July and August provided he has filed a contract of employment for the next school year, or where the member has tenure. The death benefits] A member's insurance death benefit shall be based [on] upon the base salary [upon which contributions to the annuity savings fund were actually made during] that is attributable to the 12 [-]months or 26 biweekly pay periods immediately preceding [his] the member's death upon which contributions to the annuity savings fund were made. [The salary, in the month or biweekly pay period in which no salary was paid, shall be counted as zero.]

(c) For the purpose of calculating the member's insurance death benefit, months or pay periods in which no salary was paid shall not be used in the calculation.

[(b)](d) Full salary credit will be given for the [ month] monthly or biweekly pay period in which a member dies, if [he] the member was paid salary to date of death and the salary paid was sufficient to permit a full normal [month's] monthly or biweekly pension and insurance contribution deduction, provided such deduction was made by the employer.

[(c)](e) If a member dies [within] during the first year following the member's date of [his] enrollment, or if the member has contributed pension contributions for less than a year although the member's enrollment has been in effect for more than a year, the contributory insurance benefit shall be two times the member's annual base salary on which [he] the member contributed or would have contributed immediately prior to [his] death. The noncontributory insurance benefit shall be 1 1/2 times the actual base salary upon which contributions to the Annuity Savings Fund were due from the date of enrollment to the date of death.

[(d) For a member dying after the first year following his date of enrollment, both noncontributory and contributory insurance benefit shall be determined on the base salary on which contributions to the annuity savings fund were made or would have been made during the 12-month or 26 biweekly pay periods preceding death.]

[(e) If a member has contributed pension contributions for less than a year but his enrollment has been in effect for more than a year, only those wages upon which pension contributions were based can be used as salary to determine the value of the noncontributory insurance benefit, whereas the contributory insurance benefit will be based on the member's annual salary on which he last contributed.]

(f) [Where a post-audit of insurance claim payments indicates the pension contributions reported by an employer were incorrect and resulted in the overpayment of an insurance claim to a member's designated beneficiary or estate, the employer will be billed for the value of the overpayment of the insurance benefits.] Where post-death audits establish the insurance benefits were underpaid, an additional check [would] shall be sent to the beneficiary for the value of the underpayment.

(g) (No change.)

(h) Members who prove their insurability for the group life insurance benefits shall have their insurance benefit calculated on the basis of the salary upon which pension contributions were based during their last year ([ten and] 10 or 12 months) of service prior to death, regardless of their effective date of insurance coverage.

(i) In computing the salary upon which pension contributions were based during a member's last year of service, in the case of a 12-month [State] employee reported 12 months a year on a biweekly basis, a total of 26 biweekly pays will be used, including any retroactive salary payments made within the prescribed period. The total salary will be adjusted by multiplying the total by the factors supplied by the actuary; such adjustment will compensate for [State] biweekly payroll schedules.

(j) In computing [subsection] (i) [of this Section] above in the case of [State] employees reported on a 10-month basis, the total biweekly pays will include those pay periods in the third quarter of each year in which [the] a member does not receive salary. The adjustment as specified in [subsection] (i) [of this Section] above shall not be made.

(k) If a member was reported on a biweekly basis or any combination of [ ten] 10 and 12-month contract years, the last year's salary prior to death [or retirement] shall be determined on a proportional basis. [The biweekly pay periods for which no contributions were made shall be counted as zero.]

17:3-[3.4]3.3 Contributory insurance rate

Effective January 1, 1980, the contribution group life insurance rate of contribution for all participating members shall be 4/10 of one [per cent] percent (.004) of the member's base or contractual salary.

17:3-[3.5]3.4 (No change in text.)

17:3-[3.6]3.5 Leave for illness; life insurance coverage

(a) [Coverage] Life insurance coverage during a leave of absence without pay due to illness shall apply only to the personal illness of the member.

(b) A leave of absence on account of another person's illness will not entitle the member to continued life insurance coverage.

17:3-[3.7]3.6 Survivor benefits

(a) Payment of benefits to eligible survivors shall become effective on the first of the month [of] subsequent to the member's death and shall terminate [as of] on the first of the month [in] subsequent to the date on which the survivor no longer qualifies for such benefits.

(b) In the instance of an active member who [dies] died in the performance of duty (accidental death), the initial pension payment will be for the month following the month in which the member died, and the last payment will cover the month [immediately preceding the month] the survivor dies or ceases to qualify for the continuance of benefits.

{Running Header:17:3-3.7 }

17:3-[3.8]3.7 Withdrawal application; contributory insurance

A properly executed contributory insurance withdrawal application must be in the possession of the Fund before termination of the contributory [insurance] coverage can be effected. Such withdrawal application cannot be retroactive.

17:3-[3.9]3.8 Withdrawal and return; contributory insurance

[(a)] Withdrawal from contributory insurance coverage shall apply only to the membership account under which the cancellation was exercised.

[(b) A] Any person, who has canceled [his] contributory insurance coverage and withdraws from membership in the Fund, shall, upon [his] subsequent re-enrollment in the Fund, be subject to the provisions of [Section 3.1 (Compulsory and optional enrollment) of this Chapter] N.J.A.C. 17:3-3.1.

17:3-3.9 Retired life insurance coverage

If a member's date of TPAF enrollment was on or after July 1, 1970, noncontributory life insurance shall be payable after the death of a retired member, only if the member established 10 or more years of pension membership credit at the time of retirement, or retired on a disability retirement. The noncontributory life insurance coverage for service, early, veteran and deferred retirements as well as disability retirements where the retiree is age 60 or older shall equal [FN3]/16 of the retiree's last 10 months of salary if formerly employed on a 10-month basis, or 12 months of salary if formerly employed on a 12-month basis. Contributory group life insurance coverage shall equal [FN4]/16 of the retiree's last 10 months of salary if formerly employed on a 10-month basis, or 12 months of salary if formerly employed on a 12-month basis. No premium payments are required to continue the coverage after retirement.

(Agency Note: N.J.A.C. 17:3-3.10 is proposed for recodification as N.J.A.C. 17:3-3.11.)

17:3-[3.11]3.10 Contributory insurance premiums; leave of absence

(a) Contributory insurance coverage will be in effect for up to two years while a member is on an official leave of absence [without pay] for the personal illness of the member without premiums paid by the member.

(b) Contributory insurance coverage will be in effect while a member is on an official leave of absence without pay for the following reasons, provided that insurance premiums are paid in advance by the member. It is the member's responsibility to make arrangements directly with the Division to continue these premium payments:

1. [To] Up to one year to fulfill a residency requirement for an advanced degree; or

[2. As] as a full-time student at an institution of higher education; and

[3.]2. Up to 93 days [while] on an official leave for any other reason[, provided insurance premiums are paid in advance of the date the leave was granted].

17:3-[3.10]3.11 (No change in text.)

17:3-3.12 Beneficiary designation; pension contributions

(a) Only a primary and a contingent designation of beneficiary may be made by the member [of] for the payment of such member's accumulated pension contributions.

(b) [Multiple members of a retirement system are required to file new beneficiary forms when the beneficiary nomination on the multiple enrollment forms do not agree.] When a member establishes multiple status by becoming employed by one or more additional employers in an eligible position or positions and files an enrollment application, the beneficiaries designated on the most recently submitted enrollment application supersede any older designations of beneficiaries on file with the Division of Pensions and Benefits.

(c) All beneficiaries must be specifically named. The designation "children," unless otherwise qualified by the member shall mean all individuals, including natural or adopted children, entitled to take from the member by the New Jersey laws of [interstate] intestate succession, N.J.S.A. 3A:2A- 1 et seq., and excludes all persons who are only stepchildren, foster children, grandchildren or any more remote descendants.

(Agency Note: N.J.A.C. 17:3-3.13 is proposed for recodification as N.J.A.C. 17:3-3.14.)

17:3-[3.14]3.13 (No change in text.)

17:3-[3.13]3.14 Acceptable designations of beneficiaries

(a) The beneficiary designation on a duly executed retirement application that is filed with and accepted by the Division supersedes any older designation of beneficiary on file. The designation is effective upon acceptance by the Division, even if the retirement date on the application is in the future or the member [withdraws] cancels the retirement application.

1.-2. (No change.)

(b) (No change.)

SUBCHAPTER 4. MEMBERSHIP

17:3-4.2 Leave with pay

(a) If a member is granted a leave of absence during the course of a school year with sufficient salary to cover a full normal contribution, including any arrears or loan payments, the privilege of the member to obtain credit [for] on the basis of such [leave] salary shall not extend beyond six months from the date of the leave.

(b) If the leave with pay extends beyond six months, the member will receive credit and will be required to make contributions only if [ he] the member is receiving 50 percent or more of [ his] the regular base [or contractual] salary.

17:3-4.3 School year members; 10 and 12 months

[(a) Members whose salaries for a school year are considered as a full year's compensation shall be given service credit in the proportion that the time employed bears to the duration of the school year, but not more than one year's salary credit shall be given during any consecutive 12 months.]

(a) A 10-month member will be credited with three months' participation for the third quarter if the member is enrolled in the Fund in September.

(b) Members whose contracts require them to work 10 months of the year and who are employed and are compensated for employment for the full normal school year by the board of education are entitled to receive 12 months of service credit. Members will not receive service credit for months during the normal school year when they are not actively employed and did not receive salary.

(c) A 12-month member is presumed to work each month of the fiscal year.

(d) Not more than one year's service credit will be given during any period of 12 consecutive months.

[(b)](e) If a member terminates a position that requires less than 12 months to constitute one full year of service at the end of the normal academic school year and accepts a 12 month position with the same employer or another employer that participates in the Teachers' Pension and Annuity Fund and begins employment on or before the date that was established by the previous year's contract position[. Such], such member will receive service credit within the Teachers' Pension and Annuity Fund for the period between the end of the previous contract and the employment date of the new 12-month position.

17:3-4.6 Minimum adjustment

In order to facilitate the reconciliation of a member's account, no rebates or additional contributions shall be made where an adjustment involves an amount of [$3.00 or less] $2.00 or less during a calendar quarter.

17:3-4.7 (Reserved)

17:3-4.8 Military leave prior to August 1, 1974

(a) Military leave, prior to August 1, 1974, contributions remitted by an employer on behalf of an employee, who does not return to the payroll for the minimum 90-day period required by N.J.S.A. 18A:66-34, shall be retained by the [fund] Fund. Such contributions shall be transferred from the Annuity Savings Fund to the Contingent Reserve Fund. Military leave contributions remitted by an employer shall be based on the employee's salary at the time [he] the member entered military service.

(b) Payroll as referred to in (a) above, shall be interpreted to mean any public school payroll in New Jersey, not necessarily the payroll of the employer where the member was employed when [he] the member entered military service.

17:3-4.9 Eligibility for loan

Only active contributing members of the [fund] Fund may exercise the privilege of obtaining a loan [and the maximum loan]. The member's total outstanding loan balance shall [be] not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $50,000.

17:3-4.10 Waiver [required] of retirement benefits upon withdrawal

Any member, who makes application for withdrawal from the [fund] Fund, who may otherwise be eligible to make application for [a] retirement [benefit] benefits, shall be required to execute and file a statement with the [fund] Fund setting forth the benefits [he] the member is waiving in favor of withdrawal, before [his] the application for withdrawal may be processed. If a member is eligible to begin receiving a monthly retirement allowance (age 60 or more, or 25 years or more of credited service), the Division shall inform the member of the estimated amount of the retirement allowance and shall require the member to sign a waiver of such benefits, should the member still wish to withdraw.

17:3-4.11 Termination; withdrawal

(a) [Under the terms of the statutes] Pursuant to N.J.S.A. 18A:66-34, a member may withdraw from the [fund] Fund only if [he] the member terminates all employment.

(b) No application shall be approved, if:

1. The member is on official leave of absence and [his] the membership is subject to continuance under N.J.S.A. [18A:66.8] 18A:66-8;

2. The member certifies that [his] the member's employment contract has not expired, or that [he] the member has executed another contract to work in a position subject to TPAF coverage;

3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if [he] the member has formally resigned from [his] the position or there is no legal action contemplated or pending and the dismissal has been adjudged final.

17:3-4.12 Deductions

(a) A full pension and contributory insurance deduction shall be taken for the TPAF in any payroll period (monthly or biweekly) in which the member is paid a sufficient amount to make a full normal deduction[, plus]. If wages are sufficient, deductions should also be made for any other arrears or loan deductions then in effect.

(b) No deductions shall be taken, nor service credit given, in any pay period for employers who report on a biweekly basis or in any month, for employers who report on a monthly basis, in which the employee's salary is not sufficient to cover the required deductions for the TPAF.

17:3-4.13 Active employment; membership requirement

All employees, otherwise eligible, who are not actively employed on the date of their enrollment, will not be covered by the group life insurance program until the day they return to service.

SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE

17:3-5.1 Eligibility for purchase

(a) Only active members of the Fund who are currently contributing, or who have contributed within the last two years to the Fund, shall be eligible to make application for purchase of credit. Active members who are not currently contributing to the Fund shall purchase their requested service in a lump sum.

(b) (No change.)

(c) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees shall disallow the purchase of all or a portion of [former] service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.

17:3-5.2 New enrollment [purchases or rates] contribution rate adjustment

[(a) Members who file an application for enrollment and indicate they want to purchase the period between their regular appointment and their compulsory date of enrollment will have such purchase calculated on the basis of their net pension rate of contribution and salary as of their date of their regular appointment. If more than one year has elapsed from the date of compulsory enrollment, the purchase of all service will be based on the member's current salary times the full pension rate of contribution.]

[(b)] Upon enrollment or reenrollment, a veteran shall contribute at the percent rate applicable to the age resulting from the subtraction of [ his or her] years of prior service (pre-1955) from the date [he or she] the member began [his or her] the member's present employment or the date of enrollment, whichever is later, provided that

the member submits satisfactory evidence of prior public employment in New Jersey.

17:3-5.3 Reestablishing military leave credit

[Any veteran] Veterans who terminated membership before January 1, 1955, and whose withdrawal of contributions included contributions paid by [his or her] their employers during a period of military leave, shall receive veteran prior service credit for only the periods during which [he or she] they actually contributed. [He or she] They can receive additional membership credits for the periods of [his] military leave if [he] they redeposit[s] the amounts of employer contributions, plus regular interest to the date of [his] their authorizations of such purchase s.

{Running Header:17:3-5.4 }

17:3-5.4 Compulsory [purchases] contributions (back deductions)

An employee who was required to enroll and whose application was filed beyond [his] the compulsory date of enrollment, will be required to [purchase membership credit retroactive] make retroactive contributions to the date of compulsory enrollment. [ Purchases] Contributions will be calculated on the basis of the member's current salary at the [full] current pension rate of contribution assigned as of [his] the compulsory date of enrollment with regular interest.

17:3-5.6 Methods of payment

(a) Methods of payment for purchases include the following:

1.-3. (No change.)

[4.](b) Extra payroll deductions will include regular interest for the term of the installment.

17:3-5.7 (Reserved)

17:3-5.9 Lump-sum purchases

If a purchase is paid in a lump sum, the member shall receive full credit for the amount of service covered by the purchase upon receipt of the lump-sum payment. The service may be used for any purpose for which it is authorized under the Teachers' Pension and Annuity Fund Law (N.J.S.A. 18A:66-1 et seq.) and the rules of the [retirement system] Fund.

SUBCHAPTER 6. RETIREMENT

17:3-6.1 Applications

(a)-(b) (No change.)

(c) A member shall, on the retirement application, select one of nine ways (options) to receive retirement benefits. Each option provides the member with a lifetime monthly retirement benefit. Once a retirement benefit becomes due and payable as defined by N.J.A.C. 17:3-6.2, the option cannot be changed. Except under the Maximum Option and Option 1, once a member designates a beneficiary, that beneficiary cannot be changed. P.L. 2001, c.120 provides for additional payment options that allow the member to choose an actuarially reduced retirement allowance in order to provide a beneficiary with an allowance equivalent to the full amount, three-quarters, one-half or one- quarter of the reduced allowance. If the beneficiary dies before the retiree, the retiree's allowance will increase to the maximum amount. These additional payment options shall be known as Options A, B, C, and D as defined below. The options, as established by N.J.S.A. 43:15A-50, include the following:

1. Maximum Option provides the largest allowance for the member but does not include a pension benefit paid to a beneficiary upon the member's death.

2. Option 1 provides a reducing retirement reserve to one or more beneficiaries. At retirement, a reserve amount is established to pay the member's lifetime retirement allowance. This reserve is reduced each month by the member's original monthly retirement allowance. Upon the member's death, the beneficiary or beneficiaries receive the balance of the reserve, if any.

3. Option 2 provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary.

4. Option 3 provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly allowance to a beneficiary.

5. Option 4 provides, upon the member's death, a lifetime monthly retirement allowance to one or more beneficiaries. The member determines the retirement allowance which in the aggregate cannot be more than the Option 2 allowance.

6. Option A provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

7. Option B provides, upon the member's death, a lifetime monthly retirement allowance equal to 75 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

8. Option C provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

9. Option D provides, upon the member's death, a lifetime monthly retirement allowance equal to 25 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

[(c)](d) Before an application for retirement may be processed, the Division must receive proof of the member's age, if none is already in the member's record, proof of the beneficiary's age, if the member elected Option A, B, C, D, 2, 3 or 4, and a completed Certification of Service and Final Salary form from the employer setting forth the employment termination date, and the salaries reported for contributions in the member's final year of employment.

[(d)](e) In addition to the foregoing requirement an application for disability retirement must be supported by at least two reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician.

[(e)](f) Retired members, who return to public employment, shall have their previous retirement allowances cancelled and be reenrolled in the Fund pursuant to N.J.S.A. 18A:66-40 for those who retired on disability retirements or N.J.S.A. 18A:66-53.2 for those who retired on early, service, veteran or deferred retirements. A member who ceases covered employment and retires again must file a new retirement application with the Division in accordance with (a) through [(d)](e) above in order to initiate payment of the retirement allowance. The previous retirement allowance shall then be reinstated, and the new retirement allowance, based upon the member's subsequent covered employment, shall commence. The previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.

{Running Header:17:3-6.1 }

(Agency Note: N.J.A.C. 17:3-6.2 is proposed to be recodified as N.J.A.C. 17:3-6.3.)

17:3-[6.3]6.2 Effective date; death prior thereto

(a) (No change.)

[(b) A member who has applied for a retirement allowance, who dies before his retirement allowance becomes due and payable shall not be covered by insurance as a retired member.]

[(c)](b) An in-service insurance benefit will be payable if the member's insurance coverage was in effect immediately prior to [ his] the member's retirement date.

17:3-[6.2]6.3 Effective date; changes

(a) A member shall have the right to withdraw, cancel or change an application for retirement at any time before [his] the member's retirement allowance becomes due and payable[; thereafter] by sending a written request signed by the member. Thereafter, the retirement shall stand as approved by the board.

(b) Except in the event of deferred retirement, if a member requests a change [in his retirement application] of retirement date or option selection before [his] the member's retirement allowance becomes due and payable, said change will require approval of the [board] board and the revised retirement allowance shall not become due and payable until 30 days have elapsed following the effective date or the date the board met and approved the change in the member's retirement application, whichever is later.

[(c) If the applicant should die within 30 days following the date the Board of Trustees approved the revised application, the member shall be considered to be retired on the basis of the originally approved application for retirement, provided that the initial 30-day requirement was satisfied.]

[(d)](c) A deferred retirement shall become effective on the first of the month following the member's 60th birthday. At the election of the member, if the member's 60th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 18A:66-36(b).

[(e)](d) In the case of deferred retirement, if an applicant desires to amend [his] the retirement application, the amended application must be filed with the [Fund] Division a minimum of one month prior to [his] the effective date of retirement.

[(f)](e) (No change in text.)

17:3-6.4 Outstanding loan

(a) A member who has an outstanding loan balance at the time of retirement may repay the loan balance, with interest, as follows:

1. In full before the retirement allowance becomes due and payable as provided in N.J.A.C. 17:3-[6.3]6.2; or

[2. By retention of retirement benefit payments, excluding authorized deductions, by the Fund until the loan balance, with interest, is repaid.]

[i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding.]

[3.]2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by P.L. 1999, c.132. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.

(b) If a retirant dies before the loan balance, with interest, is repaid, the remaining balance is paid first from the group life insurance proceeds, and then from the proceeds of any other benefits payable on account of the retirant in the form of monthly payments or the balance of the Option [I] 1 reserves or the balance of the retirant's accumulated deductions and regular interest that are due to the beneficiary or estate. If the retirant designated multiple beneficiaries to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which they are entitled to the benefits.

17:3-6.6 Retirement credit

(a) (No change.)

(b) A member who appeals the suspension or termination of [his or her] the member's employment and is awarded back pay for all or a portion of [his or her] that employment for the period of such suspension or termination shall receive retirement credit for the period covered by the award, regardless of the amount of the back pay awarded, provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the pension contribution will be determined by the provisions of the award. If the member receives full back pay, including normal salary increases, then the contribution will be computed on the base salaries that the employee would have earned for the reinstated suspended or terminated period. When the settlement is less than the full back pay, the pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment. In the event that the amount of back payment is insufficient to deduct the value of the normal pension contributions due, such contribution shall be paid by the member.

(c) (No change.)

17:3-6.7 Disability determination

(a) A member for whom an application for accidental disability retirement allowance has been filed by the member, by [his] the member's employer, or by one acting in behalf of the member, will be retired on an ordinary disability retirement allowance if the board finds that:

1. [The member was under the normal retirement age] The applicant was considered a member at the time of filing the application for a disability retirement allowance or is covered by the provisions of N.J.A.C. 17:3-6.15; [and]

2. (No change.)

3. The member is not eligible for accidental disability since the incapacity is not a direct result of a traumatic event occurring during and as a result of the performance of [his] the member's regular or assigned duties; and

4. The member meets the service requirement for [ordinance] ordinary disability.

17:3-6.8 Option selection

If an applicant for an accidental disability retirement benefit is rejected for an accidental disability benefit but is approved [for] by the Board for retirement, in accordance with N.J.A.C. 17:3-6.7, [ he] the applicant will be permitted, within 30 days following Board approval of [his] the retirement, to amend the option selection which [he] the applicant made on the original accidental disability retirement application.

17:3-6.9 Employer and employee notices

[(a)] If an applicant for accidental disability retirement is found to be physically or mentally incapacitated for the performance of duty but is rejected for accidental disability retirement because the Board finds that the disability was not a direct result of a traumatic event occurring during and as a result of the performance of [his] the applicant's regular or assigned duties, and if the applicant does not meet the minimum statutory requirements for any other type of retirement allowance, the Fund will notify both the member and [his] the member's employer that the member was found to be physically or mentally incapacitated for the continued performance of duty, as was previously certified to the Fund [by both the employee and his employer].

[(b) Both the employer and the employee will also be advised that a copy of such notice will be placed in the member's file and will be given full consideration in any future claim for disability retirement benefits.]

17:3-6.10 [Employer application; employee notice] Involuntary disability application

(a) If an application for an accidental disability retirement benefit or for an ordinary disability retirement benefit is filed by an employer for one of [his] its employees, the member will be promptly notified by letter that:

1. [His] The member's employer has properly initiated a disability application signed by the certifying officer or other designated officer of the employer, on the member's behalf; and

[2. His employer has certified that the member is permanently and totally disabled for the continued performance of duty; and, if appropriate;]

[3. His employer has certified that the member should be retired as a direct result of a traumatic event occurring during and as a result of the performance of his regular or assigned duties;]

2. The member's employer has submitted a written statement as to the grounds for the employer's request for the member's involuntary disability retirement and all pertinent medical documentation;

[4. He]3. The member has a period of 30 days to contest [his] the involuntary retirement before the board acts on [his] the employer's application;

[5. He]4. The member will be required to appear for an examination before a physician designated to conduct such an examination for the Fund; [and]

[6.]5. In the event the board finds that [he] the member is totally and permanently incapacitated for the performance of duty, [he] the member shall be granted the maximum retirement [allowance, (without option) payable under the statute] option, if [he (the member)] the member does not file a completed "Application for Disability Retirement [Allowance]" setting forth the [type of allowance he] retirement option the member desires, before [ his] the retirement goes into effect; and

[7.]6. In the event the board finds that [he] the member is not totally and permanently incapacitated for the performance of duty, the employer's application shall be disallowed and the employer shall be informed that the member should be returned to duty.

17:3-6.11 Early retirement [benefits]; reduction

(a) [The statutory reduction of 1/4 of one percent applies to each month prior to the month in which the member attains age 55 and for the month in which the member attains age 55 if his 55th birthday occurs on or after the 15th day of the month.] Retirement with 25 or more years of credited service before the first of the month in which a member attains age 60 shall be classified as "early" retirement unless the member retires on a veteran's retirement allowance.

(b) [Retirement on the first of the month in which a member attains age 55 shall be classed as "early" retirement, although a reduction is not applied if his 55th birthday occurs before the middle of such month.] The statutory reduction of one quarter of one percent applies to each month prior to the month in which the member attains age 55 and for the month in which the member attains age 55 if the member's 55th birthday occurs after the 15th day of the month.

17:3-6.12 Service retirement; eligibility

A member becomes eligible for "Service" retirement on the first of the month following [his] the member's 60th birthday. At the election of a member, if the member's 60th birthday falls on the first of a month, the retirement shall become effective on that date provided the member files a timely retirement application pursuant to N.J.S.A. 18A:66-43(a) and requests that date.

17:3-6.13 Disability retirant; annual medical examinations

(a) All disability retirants [under the normal retirement age of 60] may be required to undergo a medical examination each year for a maximum period of five years by a physician designated by the Fund as of the anniversary date of their retirement, unless such examination requirement has been waived by the Board.

(b) Failure on the part of a retirant to submit to the required medical examination shall result in the automatic suspension of [his or her] the retirant's retirement allowance until [he or she] the retirant submits to a medical examination.

17:3-6.14 Disability retirant; annual report (employment, earnings, test and adjustment)

(a) [All] Upon written request from the Division, all disability retirants shall be required to file a report with the Fund which shall include copies of the [retirants'] retirant's IRS 1040 forms and W-2 forms as well as any other proofs of employment requested of a specific retirant indicating the type of employment they are engaged in, if any, and the gross earned income realized therefrom as of December 31 of [ each] the prior year.

1.-2. (No change.)

(b) If a retirant reports employment and earnings, then the following tests shall be made by the Fund to ascertain:

1. [Eligibility for reenrollment:] If the retirant is engaged in a position subject to coverage by the Fund, the retirement allowance shall be canceled and the retirant shall be reenrolled in the Fund pursuant to N.J.S.A. 18A:66-40c, effective as of the date of the retirant's appointment to such [contract] position. Any disability retirement benefits received after this date of appointment shall be refunded to the [System] Fund.

[2. Adjustment of allowance]

[i.]2. (No change in text.)

[ii.]3. If it is found, on or after April 30, that gross earned income for the prior calendar year exceeded the difference between the pension and the salary of the retirant's former position and if the retirant does not refund the excess pension to the Fund within 30 days of notification of the difference, the pension [for the succeeding 12-month period will be reduced by the excess pension received in the preceding calendar year] portion of the retirement allowance shall be reduced, dollar for dollar, by the excess earnings. The Board of Trustees shall determine the length of time that the retirant's pension allowance will be reduced.

17:3-6.15 Disability retirements; filing after more than two years' discontinuance of service

(a)-(b) (No change.)

(c) [This rule shall be applicable to all vested members and former members whose retirements were effective prior to February 1, 1999, but disability] Disability retirements under this rule shall not be effective prior to February 1, 1999.

17:3-6.17 Approved allowance

When a retirement allowance becomes effective, the type of [allowance (maximum or option)] retirement benefit and option elected shall stand as approved.

17:3-6.18 Option ["I"] 1 benefit

The reserve established under the provisions of Option ["I"] 1 shall be a form of reducing term insurance, as the reserve shall reduce in value by the amount of the retirant's regular monthly [Option I] allowance, whether received or not, for each month that [ he] the retirant survives after the effective date of [ his] retirement.

17:3-6.19 [(Reserved)] Work-related travel; accidental disability retirement and accidental death benefit coverage

(a) A member whose duties include regular or occasional travel in the course of employment will be considered in the "performance of the member's

regular or assigned duties" for the purposes of accidental disability retirement or "in the actual performance of duty" for the purposes of accidental death benefits during employment-related travel as provided in this section. For the purposes of this section, "in performance of duty" means and includes both "performance of regular or assigned duties" and "in the actual performance of duty."

(b) If a member's duties require or authorize the member to travel between a regularly assigned office or workplace and other locations, or among other locations, the member is in performance of duty during travel between a regularly assigned office or workplace and other locations, or among other locations.

(c) If a member's duties require or authorize the member to travel between the member's place of residence and a location other than an office or workplace of the employer to which the member is regularly assigned or near to the regularly assigned office or workplace to perform the duties of the employment, the member is in performance of duty when the member completely leaves the property of the member's residence and begins to travel to the other location, or until the member begins entry to the property of residence after travel from the other location, and all expenses of the travel are paid for by the employer. A member's duties are considered to authorize or require travel from the place of residence to a location other than a regularly assigned office or workplace of the employer in the following situations:

1. The member's regular or assigned duties involve field work which requires or authorizes the member to travel to locations other than a regularly assigned office or workplace of the employer to perform the member's duties and do not require the member to report to a regularly assigned office or workplace before or after traveling to other locations. Travel by the member between a regularly assigned office or workplace of the employer and the place of residence of the member is not considered part of the member's duties.

2. The member's regular or assigned duties are usually performed at an office or workplace of the employer to which the member is regularly assigned but occasionally require or authorize travel to other locations.

3. The member is authorized or required by the member's employer to respond to an emergency situation outside of the member's regularly scheduled work hours, regardless of whether the member goes to a regularly assigned office or workplace or another location, or whether the expenses of the travel are paid for by the employer or the member.

4. The member is attending a meeting, seminar, convention or a similar type of work-related activity as authorized or required by the employer at a location other than a regularly assigned office or workplace, regardless of whether the expenses of the travel are paid for by the employer or the member. Where there are social or recreational activities associated with the work- related activity or attendance requires living accommodations, only travel to and from the general activity and participation in and travel to and from the work-related functions of the activity are considered part of the duties of the member. Activities related to social or recreational functions or living accommodations are not considered part of the duties of the member.

(d) In all cases, a certification from the employer is required and must include a copy of the member's job description, a statement of the member's work schedule on the day of the travel in question, and proof of or a statement by the employer that the travel was authorized or required by the employer and was paid for by the employer.

17:3-6.20 Final compensation; 10 and 12-month members reported monthly

(a) In order to determine the final compensation (three-year average) for benefits on a[:

1. Member] member reported on a monthly basis under a ten 10-month contract, use the creditable salaries upon which contributions were made to the Fund for [his] the member's final 30 months, or the highest three fiscal years of pensionable service, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

[2. Member](b) In order to determine the final compensation (three-year average) for benefits on a member reported on a monthly basis under a 12-month contract, use the creditable salaries upon which contributions were made to the Fund for [his] the member's last 36 months or the highest three fiscal years of pensionable service, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

[(b)](c) If a member was reported on any combination of [ten] 10 and 12-month contract years in such three-year period, the final average compensation shall be determined on a proportional basis.

[(c) The months for which no contributions were made shall be counted as zero.]

17:3-6.21 Determination of last year's salary; veterans paid on a monthly basis

(a) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age 55 or older, reported on a monthly basis under a 10-month contract, use the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(b) In order to determine the last year's salary for a veteran with 35 or

more years of creditable service, age 55 or older, reported on a monthly basis under a 12-month contract basis, use the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(c) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 10-month contract, use the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement or in the consecutive 10 month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(d) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 12-month contract, use the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, or in the consecutive 12-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(e) If a member was reported on any combination of 10 and 12-month contract years in such months, the last year's salary shall be determined on a proportional basis.

17:3-6.22 Waiver

(a) If for any reason a retirement allowance or portion thereof has been waived by a retired member or beneficiary, the benefit waived shall remain in the Retirement Reserve Fund.

(b) Such [person] retired members or beneficiaries may cancel the waiver effective as of the first day of any month subsequent to the receipt of the notice of cancellation; however, [he] they may not make a claim for [payment] retroactive payments of any benefits waived prior thereto.

17:3-6.23 (Reserved)

17:3-6.24 Part-time members

The determination of benefits, service credit and final compensation for any person (part-time teacher) who qualified for membership under [Section 2.3 (full-time) of] this [Chapter] chapter shall be done on the same basis as for regular full-time teachers, with the exception that the Board shall reserve the right to review any application where there has been an unusual change in the teacher's status which might result in the payment of an abnormal benefit.

17:3-6.25 Medical examination; physicians

[Where the statute prescribes that a physician be designated by the Fund] N.J.S.A. 18A:66-39 and 40 require the Fund or the Board to designate physicians to perform [a] medical examination s[, such]. A designated physician [shall be selected from the current membership directory of the Medical Society of New Jersey and the New Jersey Association of Osteopathic Physicians and Surgeons; however] shall not be a member's personal physician, except in the case[s] of [those] a member[s] whose personal physician has identified [them] the member as having a probable abbreviated life expectancy[, such] (referred to as an "imminent death" case[s]), [may be processed without the necessity of an examination by a physician designated by the Fund] if corroborating medical evidence of the diagnosis can be obtained.

17:3-6.26 Final compensation; biweekly salary computation for [State] employees reported [by centralized payroll] on a biweekly basis

(a) In computing "final compensation" upon which pension contributions were based, in the case of a 12-month [State] employee reported on a biweekly basis, a total of 78 biweekly [pays] pensionable pay periods will be used, including any retroactive salary payments [made within the prescribed] that are attributable to the covered period.

(b) In computing (a) above, the total salary will be adjusted by the factors supplied by the actuary to convert biweekly salaries to compensate for [ State] biweekly payroll schedules. Application of the factors to the salaries reported for pension purposes will develop "final compensation."

(c) In computing (a) above in the case of [State] employees reported on a 10-month basis, the total biweekly [pays] pay periods will include those pay periods in the third quarter of each year in which the member does not receive a salary. The adjustment as specified in (b) above shall not be made.

(d) If a member was reported on a biweekly basis on any combination of 10-and 12-month contract years, the final average compensation prior to retirement shall be determined on a proportional basis. [The biweekly pay periods for which no contributions were made shall be counted as zero.]

17:3-6.27 Determination of last year's salary; [State employee] veterans reported [by centralized payroll] on a biweekly basis

(a) In [computing the salary upon which pension contributions were based during a member's last year of service, in the case of a 12-month State employee] order to determine the last year's salary for a veteran with 35 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 12 month contract, use a total of 26 biweekly pays [will be used], including any across the board retroactive salary payments made within the [prescribed] covered period. The total salary will be adjusted by factors supplied by the actuary to compensate for [State] biweekly payroll schedules.

(b) In [computing (a) above, in the case of State employees reported on] order to determine the last year's salary for a veteran with 35 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 10-month [basis] contract, include in the total 26 biweekly pay periods [pays will include] those pay periods in the third quarter of each year in which the member does not receive salary, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. The adjustment as specified in (a) bove[,] shall not be made.

(c) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 12-month contract, use the member's creditable salaries upon which contributions were made in the member's final 26 biweekly pay periods of pensionable service preceding retirement, or in the 26 consecutive pay periods in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. The total salary will be adjusted by factors supplied by the actuary to compensate for biweekly payroll schedules.

(d) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 10-month contract, use the member's creditable salaries upon which contributions were made in the member's final 26 biweekly pay periods of pensionable service preceding retirement, or in the 26 consecutive pay periods in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. the total 26 biweekly pay periods will include those pay periods in the third quarter of each year in which the member does not receive salary. The adjustment as specified in (a) above shall not be made.

[(c)](e) If a member was reported on a biweekly basis on any combination of [ten] 10 and 12-month contract years, the last year's salary prior to [death or] retirement shall be determined on a proportional basis. [The biweekly pay periods for which no contributions were made shall be counted as zero.]

SUBCHAPTER 7. TRANSFERS

17:3-7.1 [interfund] Honorable service; interfund transfers; State-administered retirement systems

(a) (No change.)

(b) The system will transfer membership to any State-administered retirement system as follows:

1.-5. (No change.)

i. (No change.)

ii. The member has credit in the present system for service earned after the date of enrollment in the new system (concurrent service) unless the member meets the criteria established by P.L. 2001, [c.6] c.341 (N.J.S.A 43:15A-14). P.L. 2001, [c.6] c.341 provides that a member of the Public Employees' Retirement System (PERS) at the time of enrollment in the Teachers' Pension and Annuity Fund (TPAF) may transfer the non-concurrent PERS service if the member ceased to be an active contributing member of the PERS [two] three or less years from the date of enrollment in the TPAF. The member must apply to transfer this service no more than two years from the date of the last contribution in the PERS unless the member is vested in the PERS, or the member's PERS account has not expired due to the provisions of N.J.S.A. 43:15A-8. A member who transfers service under this provision shall receive credit for the salaries earned in both the TPAF and PERS during the period of concurrent service; or

iii. (No change.)

6. (No change.)

(c)-(d) (No change.)

17:3-7.2 [(Reserved)] Intrafund transfers; state-administered retirement systems

(a) Members who leave one public employer and take a position with another public employer covered by the same pension system are immediately eligible to transfer their membership to their new employers, as long as the following conditions are met:

1. The member has not withdrawn their contributions;

2. The account has not expired; that is, it has not been more than two years between the date of the last contribution received from the old employer and the starting date of contributions with the new employer or there was enough service credit to be eligible for a deferred retirement;

3. The account has not been canceled due to Board of Trustees action. It is the responsibility of the employer to establish the employee's status. For accounts that are withdrawn, expired or canceled, an enrollment application is needed, and the standard enrollment rules are again in effect; and

4. The member is not on a leave of absence from the first employer.

(b) To transfer the member's account to the new employer, the new employer should file a Report of Transfer with the Division of Pensions and Benefits within 10 working days of the date employment begins. If more than one year elapses between the date that the member was required to contribute to the retirement system and the date the report of transfer was received by the Division plus an additional two months for administrative processing time, the employer will be assessed a late enrollment employer liability penalty plus delayed appropriation costs.


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
APPLICATIONS; INVOLUNTARY DISABILITY APPLICATION; APPROVED ALLOWANCE

Amendments: N.J.A.C. 17:2-6.1, 6.10 and 6.17

Cite as 34 N.J. Reg. 2971(a)

Adopted August 12, 2002

The agency proposal follows:

Summary

P.L. 2001, c.120 (N.J.S.A. 43:15A-50) provides for the creation of a fifth option which members may select to receive their retirement benefits. This fifth option provides four additional payment options that provide a lifetime pension to a beneficiary upon the death of a member. Under this fifth option, a member may choose an actuarially reduced retirement allowance in order to provide a beneficiary an allowance equivalent to the full amount, three-quarters, one-half or one-quarter of the reduced allowance. Unlike current options, if the beneficiary dies before the retiree who has selected one of these new options, the retiree's allowance increases to the maximum option. These selections under the new, fifth, option will be referred to as Options A, B, C and D.

Therefore, the Board proposes to amend N.J.A.C. 17:2-6.1 by adding a new subsection (c) which will define these new options as well as the existing options. Subsections (c), (d) and (e) will become (d), (e), and (f). The Board also proposes to amend existing subsection (c) by adding the new options A, B, C, and D after Options 2, 3 and 4.

The Board proposes to amend N.J.A.C. 17:3-6.10(a)5 by changing "maximum retirement allowance (without option)" to "the maximum retirement option." The Division, until recently, did not classify the maximum retirement allowance as an option. The Division is no longer referring to the maximum allowance as "without option" and has renamed it the "Maximum Option" as defined at new subsection (c).

The amendment at N.J.A.C. 17:2-6.17 would also replace the reference to "allowance (maximum or option)" because as stated above, the maximum allowance is now called "the maximum retirement option"; therefore, it does not need to be distinguished by the use of a parenthetical phrase.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-6.1 Applications

(a)-(b) (No change.)

(c) A member shall, on the retirement application, select one of nine ways (options) to receive retirement benefits. Each option provides the member with a lifetime monthly retirement benefit. Once a retirement benefit becomes due and payable as defined by N.J.A.C. 17:2-6.2, the option cannot be changed. Except under the Maximum Option and Option 1, once a member designates a beneficiary, that beneficiary cannot be changed. P.L. 2001, c.120 provides for additional payment options that allow the member to choose an actuarially reduced retirement allowance in order to provide a beneficiary with an allowance equivalent to the full amount, three-quarters, one-half or one- quarter of the reduced allowance. If the beneficiary dies before the retiree, the retiree's allowance will increase to the maximum amount. These additional payment options shall be known as Options A, B, C, and D as defined below. The options, as established by N.J.S.A. 43:15A-50, include the following:

1. Maximum Option provides the largest allowance for the member but does not include a pension benefit paid to a beneficiary upon the member's death.

2. Option 1 provides a reducing retirement reserve to one or more beneficiaries. At retirement, a reserve amount is established to pay the member's lifetime retirement allowance. This reserve is reduced each month by the member's original monthly retirement allowance. Upon the member's death, the beneficiary or beneficiaries receive the balance of the reserve, if any.

3. Option 2 provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary.

4. Option 3 provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly allowance to a beneficiary.

5. Option 4 provides, upon the member's death, a lifetime monthly retirement allowance to one or more beneficiaries. The member determines the retirement allowance which in the aggregate cannot be more than the Option 2 allowance.

6. Option A provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

7. Option B provides, upon the member's death, a lifetime monthly retirement allowance equal to 75 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

8. Option C provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

9. Option D provides, upon the member's death, a lifetime monthly retirement allowance equal to 25 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

[(c)](d) Before an application for retirement may be processed, the Division must receive proof of the member's age, if none is already in the member's record, proof of the beneficiary's age, if the member elected Option 2, 3, [or] 4, A, B, C, or D, and a completed Certification of Service and Final Salary form from the employer setting forth the employment termination date, and the salaries reported for contributions in the member's final year of employment.

Recodify existing (d)-(e) as (e)-(f) (No change in text.)

17:2-6.10 Involuntary disability application

(a) If an application for an accidental disability retirement benefit or for an ordinary disability retirement benefit is filed by an employer for one of their employees, the member will be promptly notified by letter that:

1.-4. (No change.)

5. In the event the Board finds that the member is totally and permanently incapacitated for the performance of duty, the member shall be granted the maximum retirement [allowance, (without option) payable under the statute] option, if the member does not file a completed "Application for Disability Retirement Allowance" setting forth the type of allowance the member desires, before the retirement goes into effect; and

6. (No change.)

17:2-6.17 Approved allowance
When a retirement allowance becomes effective, the type of [allowance (maximum or option)] retirement benefit and option elected shall stand as approved.


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ELIGIBILITY FOR LOAN; OUTSTANDING LOAN

Amendments: N.J.A.C. 17:2-4.9 and 6.4

Cite as 34 N.J. Reg. 2970(b)

Adopted August 19, 2002

The agency proposal follows:

Summary

The proposed amendment to N.J.A.C. 17:2-4.9 would clarify what the member's maximum outstanding loan balance can be. New Internal Revenue Service regulations, effective January 1, 2002, have resulted in changes to the Division's loan policies. Specifically, 26 U.S.C. § 72(p) requires that loan balances not exceed $50,000.

The proposed amendment to N.J.A.C. 17:2-6.4 would delete the option to pay an outstanding loan balance by having the member's entire pension check withheld until the loan was satisfied. P.L. 1999, c.132, changed the repayment method of outstanding loans at retirement. The law provided that a member who retired with an outstanding loan could repay the loan through deductions from the retirement benefits, payable in the same monthly amount that was deducted from the member's compensation immediately before retirement, until the balance of the loan, together with the interest, is repaid. If the retiree died before the loan with interest was repaid, the remaining loan balance would be repaid from the proceeds of any other benefits payable on the account of the retiree, either in the form of monthly payments due to the beneficiaries, or in the form of a lump sum payment from the pension or group life insurance. P.L. 1999, c.132 removed the provision that the Division of Pensions and Benefits could withhold the entire retirement allowance until the loan was satisfied. The proposed amendment would, therefore, also remove the provision which allows the member to elect that the entire retirement check be withheld until the loan is satisfied.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-4.9 Eligibility for loan

Only active contributing members of the System may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $50,000.

17:2-6.4 Outstanding loan

(a) A member who has an outstanding loan balance at the time of retirement may repay the loan balance, with interest, as follows:

1. In full before the retirement allowance becomes due and payable as provided in N.J.A.C. 17:2-6.3; or

[2. By retention of retirement benefit payments, excluding authorized deductions, by the Retirement System until the loan balance, with interest, is repaid.]

[i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding.]

[3.]2. (No change in text.)

(b) (No change.)


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
INELIGIBLE PERSONS

Proposed Amendment: N.J.A.C. 17:2-2.3

Cite as 34 N.J. Reg. 1364(a)

Summary

The proposed amendments to N.J.A.C. 17:2-2.3(a)4 and 7 are necessary due to the enactment of P.L. 2001, c.278, which became law on December 31, 2001. This act changes the earnings limit for a retiree of the Public Employees' Retirement System (PERS) who is working in a PERS covered position for one or more public employers.

The new law requires cancellation of retirement and re-enrollment if the PERS retiree earns more than $15,000 in a calendar year from all PERS covered employment. Previously, the limit was $10,000 and it was not an aggregate limit; rather, it was a limit at any one employer.

Prior to the enactment of P.L. 2001, c.278, a PERS retiree who returned to work with more than one PERS employer could consider the salaries earned at each employer separately for the $10,000 annual limit. For example, if an employee's annual salary at one employer was $9,000 and the annual salary at another employer was $7,500, the employee would not be required to reenroll in the PERS. P.L. 2001, c.278 now provides that a PERS retiree may return to PERS covered employment and earn an aggregate amount of $15,000 or less in a calendar year. All PERS employment is considered in determining whether the $15,000 threshold has been reached. For example, a retiree who earns $7,000 per year from two PERS positions ($14,000 annually) would not be eligible to reenroll, but a retiree who earns $7,501 per year from two PERS positions ($15,002) would be required to reenroll.

The proposed amendment to N.J.A.C. 17:2-2.3(a)4 would add that the provisions in this subsection do not apply to retirees as well as to current members of the System. The proposed amendment to N.J.A.C. 17:2-2.3(a)7 would include the addition of the word "aggregate" before "calendar year" and the requirement that the retiree notify the employer when the compensation exceeds the calendar year compensation for exclusion from membership. This addition is necessary because the Division does not have access to salaries if the employee is not contributing to the retirement system; therefore, it cannot determine when the threshold has been reached. Many retirees have more than one post-retirement employer; therefore, one employer may not know that the threshold has been reached through other employment without information from the retiree. The language regarding employment at more than one employer would be deleted because the new law provides for an aggregate of salary and does not consider each employment separately.

The proposed addition of N.J.A.C. 17:2-2.3(a)10 and 11 is necessary due to the recent enactment of legislation which created two additional categories of ineligible people. P.L. 2001, c.253 permits PERS retirees to take employment in teaching positions at institutions of higher education without having to reenroll in the PERS regardless of income. P.L. 2001, c.355 provides a one-year exemption from employment after retirement for PERS retirees who obtain employment with a board of education or with the Department of Education in positions of critical need. A PERS retiree covered by this exception who works for a board of education may extend this exemption for an additional year.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-2.3 Ineligible persons

(a) The following classes of persons are ineligible for membership in the system:

1.-3. (No change.)

4. Any employee who is provisionally appointed to a Civil Service position is considered as an employee with temporary employment status and is ineligible to establish membership until the employee receives a regular Civil Service appointment, or has one year of continuous service. This does not apply to anyone who is already enrolled as a member or is a retiree from the System. Breaks in service of less than 30 days do not negate the continuity of service;

5.-6. (No change.)

7. Any retired member who returns to a PERS [eligible] covered position or positions for which the [calendar year] aggregate compensation is less than the aggregate calendar year compensation limit for exclusion from membership pursuant to N.J.S.A. 43:15A-57.2b. [To determine if the calendar year compensation for employment received by a retired member is below the calendar year compensation limit, all of the calendar year compensation received from employment with the same employer shall be combined, and all of the calendar year compensation from employment with more than one employer shall be considered separately.] Retired members shall notify their employer or employers when the aggregate calendar year compensation will be reached, so that the retired members may be reenrolled in the PERS. For the purposes of this paragraph, a "retired member" is a former member who has terminated all employment covered by the retirement system, who has not received compensation from employment covered by the retirement system for at least 30 consecutive calendar days, who is not receiving a disability retirement allowance and whose retirement benefit has become due and payable as provided in N.J.A.C. 17:2-6.2;

8. Any person who is employed in an intermittent title. The designation "intermittent" shall be used for those titles in the career service in which work responsibilities are characterized by unpredictable work schedules and which do not meet the normal criteria for regular, year-round, full-time or part-time assignments; [and]

9. Any temporary employee hired under the Workforce Investment Act of 1998. Temporary employees hired under the Workforce Investment Act shall be deemed to be Job Training Partnership Act (JTPA) employees and therefore ineligible for PERS membership pursuant to N.J.S.A. 43:15A-7h[.];

10. Any retired member, as defined in (a)7 above, who returns to employment with an institution of higher education in a teaching position covered by the PERS pursuant to N.J.S.A. 43:15A-57.2; and

11. Any retired member, as defined in (a)7 above, who becomes employed by the State Department of Education in a position of critical need as determined by the State Commissioner of Education, 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 pursuant to N.J.S.A. 43:15A-57.2. The retired member so reemployed by a board of education may renew a contract for one additional year, provided that the total period of employment with any individual board of education does not exceed a two-year period. The cancellation, reenrollment, and additional retirement allowance provisions and the compensation limitations shall apply if the retired member becomes employed within 120 days of retirement in a position with the employer from which the member retired.


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
DETERMINATION OF LAST YEAR'S SALARY;
VETERANS REPORTED ON A BIWEEKLY BASIS

Amendments: N.J.A.C. 17:2-6.21 and 6.25

Cite as 34 N.J. Reg. 2971(b)

Adopted August 19, 2002

The agency proposal follows:

Summary

P.L. 2001, c.353 provides that a Public Employee's Retirement System (PERS) member with veteran status now qualifies for the increased veteran's benefit if they retire with 20 years of service at age 60 or older, or with 25 years of service and age 55 or older. P.L. 2001, c.133 also changed the age requirement for veterans with 35 years of service to 55 or older. These changes make the veterans' benefits in the PERS equal to those in the Teachers' Pension and Annuity Fund. The proposed amendments to N.J.A.C. 17:2-6.21 and 6.25 would change the ages at which a member qualifies for benefits to correspond with those recently enacted.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-6.21 Determination of last year's salary; veterans paid on a monthly basis

(a) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age [60] 55 or older, reported on a monthly basis under a 10-month contract, use the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(b) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age [60] 55 or older, reported on a monthly basis under a 12-month contract basis, use the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(c) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age [62] 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 10-month contract, use the creditable salaries upon which contributions were made in the member's final 10 months of pensionable service preceding retirement or in the consecutive 10-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(d) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age 62 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a monthly basis under a 12-month contract, use the member's creditable salaries upon which contributions were made in the member's final 12 months of pensionable service preceding retirement, or in the consecutive 12-month period in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees.

(e) [If a member was] In order to determine the last year's salary for a veteran reported on any combination of 10 and 12-month contract years in such months, the last year's salary shall be determined on a proportional basis.

17:2-6.25 Determination of last year's salary; veterans reported on a biweekly basis (a) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age [60] 55 or older reported on a biweekly basis under a 12-month contract, use a total of 26 biweekly pay periods including any across the board retroactive salary payments made within the covered period. The total salary will be adjusted by factors supplied by the actuary to compensate for biweekly payroll schedules.

(b) In order to determine the last year's salary for a veteran with 35 or more years of creditable service, age [60] 55 or older, reported on a biweekly basis under a 10-month contract, include in the total 26 biweekly pay periods those pay periods in the third quarter of each year in which the member does not receive salary, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. The adjustment as specified in (a)1 above shall not be made.

(c) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age [62] 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 12-month contract, use the member's creditable salaries upon which contributions were made in the member's final 26 biweekly pay periods of pensionable service preceding retirement, or in the 26 consecutive pay periods in which the member achieved the greatest earnings, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. The total salary will be adjusted by factors supplied by the actuary to compensate for biweekly payroll schedules.

(d) In order to determine the last year's salary for a veteran with 20 or more years of creditable service, age [62] 60 or older, or a veteran with 25 or more years of creditable service, age 55 or older, reported on a biweekly basis under a 10-month contract, the total 26 biweekly pay periods will include those pay periods in the third quarter of each year in which the member does not receive salary, including any retroactive salary payments that are attributable to the covered period and paid as part of a salary agreement with a group of employees. The adjustment as specified in (a)1 above shall not be made.

(e) [If a member was] In order to determine the last year's salary for a veteran reported on a biweekly basis on any combination of 10 and 12-month contract years, the last year's salary prior to retirement shall be determined on a proportional basis.


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
HONORABLE SERVICE; INTERFUND TRANSFERS;
STATE-ADMINISTERED RETIREMENT SYSTEMS

Amendment: N.J.A.C. 17:2-7.1

Cite as 34 N.J. Reg. 1366(a)

Adopted August 19, 2002

The agency proposal follows:

Summary

P.L. 2001, c.341 now provides for the transfer of service credit from the Teachers' Pension and Annuity Fund (TPAF) to the Public Employees Retirement System (PERS) or PERS to TPAF for nonconcurrent service if the period of concurrent service is less than three years. Previously, nonconcurrent service could not be transferred into the new retirement system if a member of TPAF at the time of enrollment in PERS unless the member had fewer than two years of concurrent service.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-7.1 Honorable service; interfund transfers; State-administered retirement systems
(a) (No change.)

(b) The system will transfer membership to any State-administered retirement system as follows:
1.-4. (No change.)

5. The member is not eligible to transfer service credit if any of the following conditions apply:

i. (No change.)

ii. The member has credit in the present system for service earned after the date of enrollment in the new system (concurrent service) unless the member meets the criteria established by P.L. 2001, [c. 6] c.341 (N.J.S.A. 43:15A-14). P.L. 2001, [c. 6] c.341 provides that a member of the Teachers' Pension and Annuity Fund (TPAF) at the time of enrollment in the Public Employees' Retirement System (PERS) may transfer the non-concurrent TPAF service if the member ceased to be an active contributing member of the TPAF [two] three or less years from the date of enrollment in the PERS. The member must apply to transfer this service no more than two years from the date of the last contribution in the TPAF unless the member is vested in the TPAF, or the member's TPAF account has not expired due to the provisions of N.J.S.A. 18A:66-8. A member who transfers service under this provision shall receive credit for the salaries earned in both the TPAF and PERS during the period of concurrent service.

iii. (No change.)

6. (No change.)

(c)-(d) (No change.)


ALTERNATE BENEFIT PROGRAM
PART-TIME FACULTY MEMBERS

Amendment: N.J.A.C. 17:7-2.3

Cite as 34 N.J. Reg. 825(a)

Adopted November 18, 2002

Summary

The rules regarding the Alternate Benefit Program (ABP) were readopted, effective April 25, 2001, with extensive amendments. At their August meeting, the Benefits Council, which is made up of representatives from the public universities and colleges in New Jersey, raised an issue regarding the eligibility of a member who is contributing to the ABP, to enroll in the Public Employees' Retirement System from the same location.

Former N.J.A.C. 17:7-2.9, now recodified as 17:7-2.3, Part-time faculty members, based on the provisions of N.J.S.A. 18A:66-170, provided that "eligibility of part-time faculty members whose services have been renewed for the succeeding school year shall not include part-time faculty members who are participants in an Alternate Benefit Program or who are members of any other State-administered retirement program in a full-time position with the same employer.... "

As amended effective May 21, 2001, while attempting to clarify the previous rule N.J.A.C. 17:7-2.9, N.J.A.C. 17:7-2.3 inadvertently omitted the reference to "the same employer." The Division's interpretation of the provisions of N.J.S.A. 18A:66-170 regarding the enrollment of ABP members in PERS covered positions from the same location has not changed. Therefore, the Division of Pensions and Benefits proposes to amend N.J.A.C. 17:7-2.3 by adding the clarification that ABP participants who concurrently work in part- time positions "with the same employer" cannot be enrolled from that part-time position in the ABP or any other State-administered retirement program.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:7-2.3 Part-time faculty members

Alternate Benefit Program participants who concurrently work with the same employer in a part-time position, which is covered by another State administered pension plan, shall be ineligible to make ABP or other State administered pension plan contributions from their concurrent part-time salary.


 
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