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Pensions and Benefits
RULE CHANGES
2007
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. N.J.A.C. refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

View the New Jersey Register and New Jersey Administrative Code online.

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


Public Notices

Notice of Extension of Comment Periods for Proposed Amendments 17:9-3.5 and 5.6, Multiple Coverage as an Employee, Retired Employee, or Dependent Prohibited; Refunds Rejected; and 17:9-5.3, Local Employer Payment of Dependent Charges


Proposed Rules

Proposed Amendment: N.J.A.C. 17:9-5.3 (SHBP)

Proposed New Rules: N.J.A.C. 17:3 (Teachers' Pension and Annuity Fund)

Proposed New Rules: N.J.A.C. 17:9-13 (Chapter 375 Dependents)

Proposed Amendment: N.J.A.C. 17:3-6.1 (Teachers' Pension and Annuity Fund - Disability Retirements)

Proposed Amendment: N.J.A.C. 17:2-6.3 and 8.1 (Public Employees' Retirement System - Eligibility for Enrollment)

Proposed Amendment: N.J.A.C. 17:4-4.1 (Police and Firemen's Retirement System - Creditable Compensation )


Adoptions

Adopted Amendments: N.J.A.C. 17:2-6.3 and 8.1 and Adopted Repeal: N.J.A.C. 17:2-8.2; EFFECTIVE DATES; CHANGE DEFINITIONS; CRITERIA FOR DETERMINING ELIGIBILITY FOR ENROLLMENT FOR EMPLOYEES OF THE DEPARTMENT OF LAW AND PUBLIC SAFETY- Public Employees' Retirement System {(Cite as 39 N.J.R. 5367(a)} - Adopted September 19, 2007

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PROPOSED RULES


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS PROGRAM

39 N.J.R. 5069(a)

Proposed Amendment: N.J.A.C. 17:9-5.3

Local Employer Payment of Dependent Charges

Authorized by: State Health Benefits Commission, Frederick J. Beaver, Secretary.

Authority: N.J.S.A. 52:14-17.27.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-361.

Submit comments by February 1, 2008 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, New Jersey 08625

The agency proposal follows:

Summary

On January 4, 1973, the State Health Benefits Commission (Commission) adopted N.J.A.C. 17:9-5.3, Local employer payment of dependent charges. The current rule requires updating to make this rule consistent with P.L. 2007, c. 62 (c.62), which altered the rules regarding local employer payment of dependent charges. C.62 permits employers other than the State that participate in the State Health Benefits Programs (SHBP) to negotiate employee contributions to the cost of coverage by bargaining unit. In addition, c.62 also allows such employers to apply the terms of a negotiated agreement concerning employee contributions to SHBP coverage to employees with no majority representation for collective bargaining purposes. Prior to the enactment of this legislation, SHBP employers were required to pay 100 percent of the cost of medical coverage for employees and could only implement certain negotiated premium-share arrangements for the cost of dependent coverage if all such contributions were applicable to all employees. These limitations no longer apply.

On November 6, 2006, a proposed amendment to N.J.A.C. 17:9-5.3 was published in the New Jersey Register (see 38 N.J.R. 4657(a)). The proposed amendment was never adopted because c.62 was enacted prior to the State Health Benefits Commission's adoption of the proposed amendment to N.J.A.C. 17:9-5.3. The enactment of c.62 requires an amendment to N.J.A.C 17:9.5.3 in order to make the rule consistent with the legislative intent. Under proposed new subsection (a), an employer is not required, but is permitted, to pay the cost of coverage for both an employee and dependent, based on the terms set forth by means of a binding collective negotiations agreement. Formerly, subsection (a) required uniformity for all employees and could only be applied to the cost of dependent coverage. In order to make subsection (a) consistent with the statutory law it is proposed that subsection (a) be deleted and replaced with a new subsection (a). The proposed deletion of subsection (a) shall provide the employer the opportunity to have the cost of coverage shared by the employees by means of a binding collective negotiations agreement. An employer can negotiate sharing of the cost of coverage for active employees by bargaining unit. Uniformity for all employees is no longer required.

New subsection (b) is proposed to follow the legislative intent of c.62, which permits the employer to modify the payment obligations for employees for whom there is no majority representative for collective negotiations purposes in a manner consistent with the terms of any collective negotiations agreement binding on the employer. The current language of subsection (b) mandates that a local employer opting to pay any portion of the cost of dependent coverage pay the same proportion of the cost of such dependent coverage for all local employees. Prior to the enactment of c.62, local employers that negotiated dependent coverage premium sharing with unions representing local employees could only implement a negotiated arrangement if it applied to all local employees. With the enactment of c.62, the uniformity requirement has been removed thereby permitting local employers more latitude to implement separate premium sharing arrangements for coverage for both employees and dependents with each bargaining unit representing local employees. Further, under c.62 an employer can now negotiate different cost sharing by plan. The agreement could vary in a number of ways, such as placing limitations on payments by the employer or the employee on the basis of a percentage of the employee's compensation, the premium, or a flat dollar amount or any other agreed upon basis.

Existing subsection (c) details the statutory requirement that when a local employer submits a resolution to change the cost of dependent coverage, all employees must be given notice and the opportunity to resolicit coverage for themselves and their dependents. In order to make subsection (c) consistent with c.62, it is proposed that subsection (c) be deleted and replaced with a new subsection (c). The new subsection (c) will require the employer to notify the Division by resolution when the cost of the employees coverage changes. However, new subsection (c) does not refer to an opportunity for employees affected by this change to change their coverage elections, since this requirement is covered in subsection (d).

Subsection (d) details that an employee shall have the opportunity to complete and forward the required enrollment form within 60 days following a change in the employee's cost. Subsection (d) is proposed to be amended for clarification. "Affected" is proposed to be added in this subsection to clarify that all employees may not be subject to the same premium arrangement and that some employees' cost will not change unless it was negotiated by their respective bargaining units. "Change in the employee's cost" is also proposed to be added to clarify that it is the employees cost that must change before the employee can complete a new enrollment form and not the employer's assumption of premium charges.

Subsection (e) details that when an employee fails to complete and forward the required enrollment form within the time limit prescribed in subsection (d) for coverage, they may effect a change to enrollment only during annual enrollment period. Subsection (e) is proposed to be amended for clarification. "Affected" is proposed to be added to clarify that all employees may not be subject to the same premium arrangement and that some employees cost will not change unless it was negotiated by their respective bargaining units.

A new subsection (f) is proposed to be added, which states that the Division of Pensions and Benefits will not be held responsible for the employer's legal obligations to the employee with respect to coverage. Therefore, the employer should not expect the Division to perform unusual work in order to make a contractual deadline. The employee should be advised to contact their employer regarding details of payments, coverage and or terminations.

A new subsection (g) is proposed to be added to explain that retroactive enrollment, coverage changes or terminations will not be processed to meet the contract provisions. Therefore, enrollments that exceed the time limitations in a particular contract will no longer be processed. Each contract will be processed according to the terms of any collective negotiated agreement binding on the employer.

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

Social Impact

The proposed amendments provide local employers electing to pay a portion of the cost for employee and dependent coverage with the option of negotiating alternative cost sharing arrangements with each union representing local employees. No longer will a local employer that has negotiated different premium-share arrangements with its various unions be barred from implementing those negotiated agreements under the SHBP. The proposed amendments will permit the portion of the cost for such coverage to be paid by the employee to be a matter for each union to negotiate separately with the local employer. Attendant cost savings would accrue to the local taxpayers' benefit.

Economic Impact

As noted, the proposed amendments eliminate the prohibition against local employers electing to pay a portion of the cost for coverage negotiating alternative cost sharing arrangements with each union representing local employees. These provisions of c.62 were intended to provide local governments that participate in the SHBP with flexibility to negotiate changes required to control costs.

The proposed amendments could result in some local employees contributing more toward the cost of coverage, depending upon the cost sharing arrangement negotiated between their union and the local employer. The proposed amendments could also result in some local employers paying less since they would no longer be restricted from implementing negotiated premium-sharing arrangements that differed across employee groups.

C.62 also permits all local units of government (including boards of education, county colleges, and local authorities) to establish cafeteria plans pursuant to section 125 of the Federal Internal Revenue Code, 26 U.S.C. §125, to provide for a reduction in an employee's salary, through payroll deductions or otherwise, in exchange for payment by the employer of medical or dental expenses not covered by a health benefits plan, of dependent care expenses as provided in section 129 of the code, 26 U.S.C. §129, and of such other benefits as are consistent with section 125, which are included under the plan. The amount of any reduction in an employee's salary will continue to be treated as regular compensation for all other purposes, including the calculation of pension contributions and the amount of any retirement allowance, but, to the extent permitted by the Federal Internal Revenue Code, will not be included in the computation of Federal taxes withheld from the employee's salary. By establishing a section 125 plan, the employer can help to mitigate the impact of employee contributions to health care upon the employee's take-home pay without negatively impacting the employee's future retirement benefits from the State-administered retirement systems.

The proposed amendments will not impact the State Health Benefits Program since the total premium collected from local employers for employee and dependent coverage will remain unchanged. The employer will make the arrangements with the employees of the respective local bargaining units to collect their required portion of the cost for premium sharing. As a result of this arrangement, the State Health Benefit Program billing systems will not be impacted.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-17.27 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact Statement

The operation of the proposed amendments will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendments with their written comments.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the State Health Benefits Commission only affect public employers, public employees and public retirees and their respective dependents. Thus, the proposed amendments do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:9-5.3   Local employer payment of dependent charges

[(a) The statute requires the employer to pay the employee's cost of the coverage and may pay any portion of the cost for the dependent coverage.

(b) Any employer who elects to pay any portion of the cost for dependent coverage shall pay the same proportion of the cost of such dependent coverage for all employees covered in the program.

(c) However, when a local employer submits a resolution provided by the State Health Benefits Commission to change the amount paid toward the cost of dependent coverage, all employees must be resolicited with respect to coverage for themselves and their dependents.]

(a) The obligations of a participating employer other than the State to pay the premium or periodic charges for health benefits coverage may be determined by means of a binding collective negotiations agreement.

(b) With respect to employees for whom there is no majority representative for collective negotiations purposes, the employer may, in its sole discretion, modify the respective payment obligations set forth in law for the employer and such employees for the coverage of the employee and enrolled dependents in a manner consistent with the terms of any collective negotiations agreement binding on the employer.

(c) Should the payment obligations of employees change as a result of the implementation of a collection negotiations agreement binding on the employer, or upon the extension of such an agreement to employees for whom there is no majority representative for collective negotiations purposes, the employer must notify the Division of Pensions and Benefits by submission of the appropriate resolution.

(d) The employer shall give all affected employees an opportunity for completing[,] and forwarding a new enrollment form within 60 days following the [employer's assumption of the dependent premium charges] change in the employee's cost.

(e) Any affected employee who fails to complete and forward the required form within the time limits, which have been prescribed, may effect such change of enrollment only during the annual enrollment period.

(f) The Division assumes no responsibility for maintaining coverage in accordance with the employer's legal obligations.

(g) No retroactive enrollment, coverage changes or terminations will be processed to meet the contract provisions.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
TEACHERS' PENSION AND ANNUITY FUND

39 N.J.R. 5058(b)

Proposed New Rules: N.J.A.C. 17:3

Teachers' Pension and Annuity Fund

Authorized By: Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.

Authority: N.J.S.A. 18A:66-56.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-360.

Submit comments by February 1, 2008 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) is responsible for reviewing the administrative rules within N.J.A.C. 17:3. When the Board becomes aware of a change in the laws or a court decision that could affect the TPAF, 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 (Division) and the Board's staff to determine if the current rules require clarification, and whenever practicable, so that the rules are consistent with the rules governing the Public Employees' Retirement System (PERS).

The expired rules are proposed herein as new rules by the Board of Trustees of the TPAF, which expired on October 10, 2007, pursuant to N.J.S.A. 52:14B-5.1. The expired rules deal with the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects associated with the TPAF.

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.

The expired rules proposed herein as new rules, proposed amendments, repeal of existing rule, and the new rules reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the TPAF. 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. Pursuant to N.J.S.A. 52:14B-5.1, the chapter was readopted effective October 10, 2002. Following is a discussion of the expired rules proposed herein as new rules and the proposed amendments, repeals and new rules.

Throughout the rules, technical amendments are proposed to establish consistency and conformity in language and the use of defined words and terms.

Subchapter 1. Administration

N.J.A.C. 17:3-1.1, Board meetings, is amended as discussed below under the new section Subchapter 1A, Definitions.

N.J.A.C. 17:3-1.2, Fiscal year, would remain unchanged.

The Board proposes amending N.J.A.C. 17:3-1.3, Officers and committees, at subsection (a) to add the election of a vice chairperson and a representative to the State Investment Council from its membership. This committee meets only when the Fund is seeking bids for an actuary. The Board proposes to add that a representative to this committee would be elected whenever it is formed. Subsection (b) is amended to include, if the chairperson and vice chairperson are not available, then another member would be elected to act as chairperson for that single meeting. Subsection (c) would remain unchanged. Subsection (d) is amended to accurately reflect that there is only one standing committee, the Finance Committee. Subsections (e), (f) and (g) are being merged with existing subsection (d). Subsections (h) and (i) are deleted. These committees were not created by statute and have not been active in many years. Furthermore, PERS amended its corresponding rules in the same manner at N.J.A.C. 17:2-1.3.

At N.J.A.C. 17:3-1.4, Election of member-trustee, subsections (a) and (c) are amended as discussed under new Subchapter 1A, Definitions. Subsections (d) through (o) remain unchanged. The Board proposes to amend subsection (p) to eliminate historical information, which is no longer relevant. Also, this subsection is amended to clarify the procedure for filling a vacancy for an unexpired term in the event a vacancy occurs among the trustees elected by the membership. Subsections (q) through (w) remain unchanged.

N.J.A.C. 17:3-1.5, Certifying officer (employer), is amended as discussed below under new Subchapter 1A, Definitions.

The Board proposes to amend N.J.A.C. 17:3-1.6, Records, at subsection (a) to include that the provisions in the general administration section ( N.J.A.C. 17:1-1.2) apply. Subsections (b) and (c) remain unchanged. Subsection (d) is amended to clarify the Division's long-standing practice that the Board-appointed physician's report will not be released until after the Board's initial determination. Subsection (e) is added to state the Division's long-standing administrative practice, that the annual report of the Fund's actuary will not be released until it has been approved by the Board. Subsection (f) is proposed to be added to state the Division's procedure for reviewing original documents. As the Division scans most documents and needs sufficient time to obtain the original documents from the warehouse, it is necessary to make an appointment to view the documents. These changes are similar to the language found in PERS at N.J.A.C. 17:2-1.6.

N.J.A.C. 17:3-1.7, Appeal from Board decisions, 17:3-1.8, Suspension of pension checks, and 17:3-1.9, Verified discrepancy in member's age, respectively, would remain unchanged.

N.J.A.C. 17:3-1.10, Travel, is being repealed as N.J.A.C. 17:3-6.19 governs this issue.

N.J.A.C. 17:3-1.11, Proof of age and 17:3-1.12, Employees; biweekly salaries, would remain unchanged.

At N.J.A.C. 17:3-1.13, Nearest attained age; enrollment; retirement, subsection (a) would remain unchanged. The Board proposes to amend subsection (b) to include the subsequent change in the contribution rate when excess assets no longer existed, pursuant the provisions of P.L. 2001, c. 133.

Subchapter 1A. Definitions

New Subchapter 1A, Definitions, is being added, which contains definitions for the terms "base salary," "Board," "Division," "extra compensation," "'Fund' or 'TPAF,'" "PERS" and "work year." These terms were all defined in various sections throughout the current rules. This section serves to provide a central location for frequently used terms. Further, the terms "base salary" and "extra compensation" have been moved from N.J.A.C. 17:3-4.1(a)1 and 2. The term "extra compensation" is amended to include the phrase "or additional remuneration for performing duties that are not integral to the effective functioning of the regular school curriculum." The term "base salary" is used in the statute in an effort to provide retirement benefits to teachers based upon service rendered as a teacher. Various forms of extra compensation have been included in salary reported to the Division, which is payment for service beyond those duties compensated by base salary. Since the issue of extra compensation has been litigated, the Division has looked to the courts reasoning in further defining "extra compensation." The final sentence of "extra compensation" and subparagraphs (a)2i through xix will remain a part of N.J.A.C. 17:3-4.1, as new paragraph (a)1.

Subchapter 2. Enrollment

The Board proposes to amend N.J.A.C. 17:3-2.1, Enrollment eligibility, at paragraph (a)1 and at subsection (b) to correct the name of the teacher licensing agency in New Jersey that issues all certificates that are required for public school employment. The word "Education" is deleted and is replaced with the word "Examiners" and to include N.J.S.A. 18A:6-34 et seq., and N.J.A.C. 6A:9, the State Board of Examiners authorizing legal authority. Subsections (c) through (d) would remain unchanged. Subsection (e) is amended as discussed above under new Subchapter 1A, Definitions. The Board proposes to add a new subsection (f) to clarify enrollment ineligibility for certain members of the Fund effective as of January 20, 2004, as a result of the adoption of N.J.A.C. 6A:19-2.3, by the State Board of Education. This rule provides that members employed by a postsecondary vocational-technical school and who established membership in the TPAF prior to January 20, 2004, were "grandfathered" in the positions.

N.J.A.C. 17:3-2.2, Documentation, is amended by including the correct reference of the teachers licensing agency in New Jersey.

N.J.A.C. 17:3-2.3, Multiple enrollees, would remain unchanged.

N.J.A.C. 17:3-2.4, Emergency or provisional certificate, is amended as discussed above under new Subchapter 1A, Definitions.

N.J.A.C. 17:3-2.5, Janitors, remains unchanged, 17:3-2.6, (reserved), and 17:3-2.7, Enrollment following deferred retirement, respectively, would remain unchanged.

At N.J.A.C. 17:3-2.8, Enrollment date, subsections (a) through (c) would remain unchanged. A new subsection (d) is added to clarify the Division's long-standing administrative practice that an employee cannot receive credit in the TPAF for the initial pay period or month, if employment commenced after the seventh day of the pay period, or 16th day of the month. This rule is similar to the language found in PERS at N.J.A.C. 17:2-2.4(e).

Subchapter 3. Insurance and Death Benefits

The Board proposes to amend N.J.A.C. 17:3-3.1, Compulsory and optional enrollment, at subsections (a) and (b), to restate that the Division will determine a member's age at the time the enrollment application is filed. Subsection (c) would remain unchanged. This clarification mirrors the language found in PERS at N.J.A.C. 17:2-3.1.

N.J.A.C. 17:3-3.2, Computation of insurance benefits, 17:3-3.3, Contributory insurance rate, 17:3-3.4, New enrollments and transfers; contributory insurance premiums, 17:3-3.5, Leave for illness; life insurance coverage, and 17:3-3.6, Survivor benefits, respectively, would remain unchanged.

The Board proposes to amend N.J.A.C. 17:3-3.7, Withdrawal application; contributory insurance by adding the phrase "and the contributory insurance will not be reinstated under the membership account number in which the cancellation was exercised." This language clarifies the Division's practice that once a member submits a Contributory Insurance Withdrawal Card, the withdrawal is final under the membership account in which the withdrawal was submitted.

The Board proposes to amend N.J.A.C. 17:3-3.8, Withdrawal and return; contributory insurance by expanding the section heading to include "conversion." The Board proposes to add a new subsection (b), to clarify the Division's practice regarding a member's privilege to convert their group life insurance policy upon termination from employment. This is similar to the language found in PERS at N.J.A.C. 17:2-3.8.

N.J.A.C. 17:3-3.9, Retired life insurance coverage, would remain unchanged.

The Board proposes to amend the section heading at N.J.A.C. 17:3-3.10, Contributory insurance premiums; leave of absence, to include "workers' compensation." Subsection (a) is amended to clarify that only a leave of absence without pay is affected by this rule. The requirement that the employer provide verification of the leave of absence is added to state the Division's procedure. This will enable the Division to process a claim more quickly should the member die and prevent the account from expiring if it is inactive for two years. The Board proposes to amend subsection (b) by including language that defines the specific time period that a member is eligible to submit payments to the Division to continue group life insurance. The Division has found that members are not submitting payments to the Division within the requisite time period to continue their coverage. The Board proposes to add a new subsection (c) to state that, pursuant to N.J.S.A. 18A:66-32.1, a member's contributory insurance coverage will remain in effect for members who are receiving periodic benefits directly from workers' compensation. In addition, no premiums are required to continue coverage.

N.J.A.C. 17:3-3.11, Ten-month members, would remain unchanged.

At N.J.A.C. 17:3-3.12, Beneficiary designation; pension contributions, subsection (b) is amended as discussed above under new Subchapter 1A, Definitions. Subsection (c) is amended to remove the definition of children. Beneficiaries must be specifically named. This further clarifies the Division's practice not to accept the designation "children," which contradicts the requirement that beneficiaries be specifically named. This change is consistent with the same language found in PERS at N.J.A.C. 17:2-3.12(b).

The Board proposes to amend N.J.A.C. 17:3-3.13, Benefits payable under P.L. 1984, c. 96, as amended by P.L. 1995, c. 221, as discussed above under new Subchapter 1A, Definitions.

N.J.A.C. 17:3-3.14, Acceptable designation of beneficiaries, subsection (a) would remain unchanged. The Board proposes to amend subsection (b) by deleting the word "active" before "group life insurance." The beneficiaries are entitled to benefits under either active or retired group life insurance.

The Board proposes a new section, N.J.A.C. 17:3-3.15, Suspension, to state that while noncontributory insurance remains in effect for 93 days after the date of a suspension; contributory insurance does not remain in effect. Unlike leaves of absences, there is no statutory authority to allow for payment of the contributory insurance during a suspension. Therefore, if a member wants to retain coverage, the member is required to convert to an individual policy. This is similar to the language found in PERS rules at N.J.A.C. 17:2-3.15.

Subchapter 4. Creditable Compensation

The Board proposes to amend N.J.A.C. 17:3-4.1, Creditable compensation, to delete the defined terms at paragraphs (a)1 and 2, as they now appear in new Subchapter 1A, Definitions. As noted above in the discussion of new N.J.A.C. 17:3-1A.1, the final sentence of existing N.J.A.C. 17:3-4.1(a)2 is being retained and recodified as paragraph (a)1. Further amendments to the recodified text include the deletion of subparagraph (a)1ix, as the Division has found this is redundant of information at existing subparagraph (a)1x. New subparagraph (a)1xix, is being added to further state the Division's practice not to permit a member to receive compensation for additional services performed during a normal duty assignment.

Subsections (b) and (c) would remain unchanged. Subsection (d) is amended to further clarify the Division's practice that cases that are in violation of the law must be administratively denied prior to providing a right of appeal to the Board. Paragraph (e)1 is amended as discussed above in new Subchapter 1A, Definitions. Subsections (f) through (h) would remain unchanged. Subsection (i) is amended to clarify the Division's definition of sixth period compensation and ensure that all employers offer sixth period compensation in a manner, which is consistent with the Division's practice and does not discriminate against the retirement system. The Board proposes to add subsection (j) to define compensation that may qualify for credible compensation. Historically, stipends were routinely paid in a lump sum for performing additional duties that were not part of the regular contract. It was generally understood that as a lump sum payment, it was excluded as creditable compensation. This form of payment has evolved into a type of compensation that is often paid in the regular payroll checks for performing duties that are not included in the regular contract.

N.J.A.C. 17:3-4.2, Leave with pay, would remain unchanged.

At N.J.A.C. 17:3-4.3, School year members; 10-months and 12-months, subsections (a) and (b) would remain unchanged. Subsection (c) is amended to clarify the Division's long-standing practice that a 12-month member must work and receive salary in a month to receive service credit for that month. Subsection (d) is amended for the reasons as discussed above under new Subchapter 1A, Definitions.

The Board proposes to increase the loan tolerance at N.J.A.C. 17:3-4.4, Loan tolerance, from $ 10.00 to $ 50.00. The Board believes that this amount is de minimus in light of the fact that the cost of auditing balances of less than $ 50.00 far outweighs the write-off amounts. This will mirror the language found in PERS at N.J.A.C. 17:2-4.4.

N.J.A.C. 17:3-4.5, Approved leave, and 17:3-4.6, Minimum adjustment, respectively, would remain unchanged.

At N.J.A.C. 17:3-4.7, Service and salary credit: awards of back pay, subsections (a) through (c) would remain unchanged. Subsection (d) is amended to include the word "settlement" to clarify that the section is discussing awards of back pay or a settlement of back pay. The last sentence in subsection (d) is reversed to provide that first the Division must determine the compensation to be used before refunding contributions on the compensation. Subsection (e) remains unchanged. This mirrors the language found in PERS at N.J.A.C. 17:2-4.7.

N.J.A.C. 17:3-4.8, Military leave prior to August 1, 1974, would remain unchanged.

N.J.A.C. 17:3-4.9, Eligibility for loan, is amended to clarify the requirement that loans from TPAF are subject to I.R.C. §72(p) (2007) of the Internal Revenue Code.

N.J.A.C. 17:3-4.10, Waiver of retirement benefits upon withdrawal, would remain unchanged.

At N.J.A.C. 17:3-4.11, Termination; withdrawal, subsection (a) would remain unchanged. Paragraph (b)2 is amended to indicate that either the employer or the member may certify that employment has not terminated. Paragraph (b)3 is amended by replacing the word "or" with "and" in the second sentence. Also language is added to inform both a member and employer of the consequences if either party should fail to inform the Division of an appeal pending. Paragraph (b)4 would remain unchanged. Paragraph (b)5 is amended to state that a member who has a pending claim for workers' compensation can withdraw from the Fund, provided the member signs a waiver stating their intent to withdraw. This also mirrors the language found in PERS at N.J.A.C. 17:2-4.11.

N.J.A.C. 17:3-4.12, Deductions, and 17:3-4.13, Active employment; membership requirement, would remain unchanged.

Subchapter 5. Purchases and Eligible Service

Subsection (a) at N.J.A.C. 17:3-5.1, Eligibility for purchase, would remain unchanged. At subsection (b), the word "written" is being removed as the Division provides a member with various media to submit a purchase request. It is further amended to state the Division's administrative practice, that is, if the Purchase Cost Quotation expires, a new purchase cost is calculated using the member's current purchase cost factors, including any age and income change that may affect the cost. Subsection (c) is amended as discussed above in new Subchapter 1A, Definitions.

N.J.A.C. 17:3-5.2, New enrollment contribution rate adjustment, 17:3-5.3, Reestablishing military leave credit, and 17:3-5.4, Compulsory contributions (back deductions), would remain unchanged.

N.J.A.C. 17:3-5.5, Optional purchases of eligible service, is amended at paragraph (a)3 to clarify the purchase of temporary service. N.J.S.A. 18A:66-14 provides for the purchase of continuous temporary employment, which resulted without interruption and the purchase of substitute employment immediately prior to permanent employment. It is necessary to add new subparagraph (a)3i to define temporary service without interruption and subparagraph (a)3ii to define substitute service. The current rules do not adequately set forth the eligibility requirements, which reflect the Division's long-standing administrative practice on this issue. These proposed changes should eliminate the confusion on this subject. Paragraphs (a)4 through 6 remain unchanged. Paragraph (a)7 is amended as discussed above under new Subchapter 1A, Definitions.

The Board proposes to amend paragraph (b)1 to clarify that only active duty military service designated as "honorable" is eligible for purchase and to include a definition of active duty military service. The Board has always interpreted active military duty to mean the same as the Federal definition found at 10 U.S.C. §101 but has not included the definition in the Administrative Code. The Board would expand the definition to include types of military service that is ineligible for purchase. An unpublished Appellate Decision, Ewanus v. State of New Jersey, Division of Pensions and Benefits, Board of Trustees, Public Employees' Retirement System, Dkt. No. A-6348-00T2, decided December 24, 2002, determined that attendance at West Point or other military academies could not be purchased. This is similar to the language found in PERS at N.J.A.C. 17:2-5.5(b)1.

Subsection (c) is amended by deleting the phrase "has withdrawn from such other system" and adding the phrase "is not eligible to receive a current or future retirement benefit from that service." This clarifies that when a purchase request is submitted, the purchase will not be permitted, if at that time, the applicant is eligible to receive a current or future retirement benefit from that service. Subsection (d) remains unchanged.

N.J.A.C. 17:3-5.6, Methods of payment, is being amended at subsection (a) and (b) to delete the word "extra" and replace it with the word "additional" as it is additional payroll deductions not extra deductions. The phrase "under (a)2 or 3 above" is added to clarify that subsection (b) applies to paragraphs (a)2 and 3. The Board proposes to add new subsection (c) to include direct rollovers and transfers of funds. Federal law was changed to permit this method of payment and the Division has established the administrative practice of accepting rollovers and transfers in accordance with I.R.C. §401(a)(31) (2007) of the Internal Revenue Code. The proposed amendment sets forth the procedures for using rollovers and transfers for the payment of the purchase of additional service credit. This is consistent with language found in PERS at N.J.A.C. 17:2-5-6.

N.J.A.C. 17:3-5.7, continues to be reserved.

N.J.A.C. 17:3-5.8, Service ineligible for purchase, is amended to identify the types of employment that are ineligible for purchase. New paragraphs (a)2 through 6 reflect the types of employment or service, which is not eligible for purchase. There is no provision for the purchase of this type of employment or service and it has been the Division's long-standing administrative practice to deny a member the right to purchase this type of service.

N.J.A.C. 17:3-5.9, Lump sum purchase, is amended as discussed above under new Subchapter 1A, Definitions.

Subchapter 6. Retirement

At N.J.A.C. 17:3.6.1, Applications, subsection (a) is amended as discussed above under new Subchapter 1A, Definitions. Subsection (b) remains unchanged. The Board proposes to amend subsection (c) to clarify that the beneficiary or estate of a member or beneficiary who dies before receiving in retirement benefits, the value of the total member contributions plus interest, would receive the remaining balance of contributions and interest. This is required by N.J.S.A. 18A:66-47. Subsection (d) remains unchanged. On May 7, 2007, the Division proposed to amend subsection (e) (see 39 N.J.R. 1644(a)). As N.J.A.C. 17:3 has expired the Division is not going to act on that proposed amendment, but will incorporate the proposed amendment to N.J.A.C. 17:3-6.1(e) within this notice of proposal. Subsection (e) is amended due to concerns expressed regarding the requirements relating to medical reports required in support of applications for disability retirements. The subsection requires that an application for disability retirement be supported by two medical reports, one by the member's personal or attending physician and the other either hospital records supporting the disability or a report from a second physician. The subsection does not distinguish between a physical disability retirement application and a mental health disability retirement application. The amendment will create a distinction between medical reports required in support of a physical disability retirement application and medical reports required in support of a mental health disability retirement application. Paragraph (e)1 is amended to clarify that it only applies to physical disability retirement application. Proposed new paragraph (e)2 relates to medical reports required in support of a mental health disability application. Subsection (f) remains unchanged. New subsections (g) and (h) are added. The Division has found that prior to a member receiving the Board's determination for the disability application the applicant at times files a second Application for Retirement, requesting a different type of benefit. Filing multiple applications may cause processing errors in a members' pension account and creates unnecessary work for the Division staff. This still allows the applicant to retain the retirement date designated on the original disability application provided the applicant files timely.

At N.J.A.C. 17:3-6.2, Effective date; death prior thereto, the Board proposes amending this section to remove "death prior thereto" from the heading. This rule only deals with the effective date of retirement. Subsection (b) is deleted as this is no longer an active practice by the Division.

At N.J.A.C. 17:3-6.3, Effective date; changes, subsections (a) and (b) would remain unchanged. The Board proposes amending subsection (c) to clarify it is necessary for a member to specify the effective date of retirement when filing an application for deferred retirement. Subsection (d) would remain unchanged. Subsection (e) is amended to clarify that compensation received for sick or vacation time after retirement that is paid on regular payroll, would negate the receipt of retirement benefits until the payments ceased.

The Board proposes, at N.J.A.C. 17:3-6.4, Outstanding loan, to clarify in subsections (a) and (b) that "accrued" interest is what is actually being assessed. The Board also proposes to add the statutory citation for c. 132, that is, N.J.S.A. 18A:66-35.1 in paragraph (a)2.

N.J.A.C. 17:3-6.5, Willful negligence, 17:3-6.6, (reserved), and 17:3-6.7, Disability determination, would remain unchanged.

N.J.A.C. 17:3-6.8, Option selection, would specify in the heading that this rule only applies if an accidental disability is denied, as the rule already requires.

N.J.A.C. 17:3-6.9, Employer and employee notices, would remain unchanged.

N.J.A.C. 17:3-6.10, Involuntary disability application, is amended at paragraph (a)1 to correct a spelling error.

N.J.A.C. 17:3-6.11, Early retirement; reduction, and 17:3-6.12, Service retirement; eligibility, would remain unchanged.

The Board proposes to clarify N.J.A.C. 17:3-6.13, Disability retirant; annual medical examinations at subsection (a) by adding the phrase "under the normal age of 60" to clarify the Division's practice that a medical reexamination can be required by the Division if a member is under the normal age of 60. Subsection (b) remains unchanged.

N.J.A.C. 17:3-6.14, Disability retirant; annual report (employment, earnings, test and adjustment), is amended as discussed above under new Subchapter 1A, Definitions.

The Board proposes to amend N.J.A.C. 17:3-6.15, Disability retirements; filing after more than two years' discontinuance of service at subsection (a) by removing the gender specific pronouns. Also, amendments as discussed above under new Subchapter 1A, Definitions.

At N.J.A.C. 17:3-6.17, Approved allowance, the Board proposes to amend the definition of when a retirement allowance becomes effective by adding the citation " N.J.A.C. 17:3-6.2."

N.J.A.C. 17:3-6.18, Option 1 benefit and 17:3-6.19, Work-related travel; accidental disability retirement and accidental death benefit coverage, would remain unchanged.

Proposed amendments to N.J.A.C. 17:3-6.20, Final compensation:10 and 12-month members reported monthly, at subsections (a) and (b) include changing "on" to "of" before "a member" to correct technical issues. The word "use" is deleted and replaced with the phrase "shall be used" at the end of the sentences to make the sentences declarative instead of imperative. Subsection (c) remains unchanged.

Proposed amendments to N.J.A.C. 17:3-6.21, Determination of last year's salary; veterans paid on a monthly basis, at subsection (a) and (b) the word "use" would be removed and replaced with the phrase "shall be used" at the end of the sentences to make the sentences declarative instead of imperative. Also, language is included to define the salary, which is the 10 to 12 month period of greatest earnings, that will be used in the calculation of the veteran retirement benefit. Subsection (c) and (d) is amended to remove the word "use" and replace with the phrase "shall be used" to make the sentences declarative instead of imperative. Subsection (e) would remain unchanged. This language mirrors the language found in PERS at N.J.A.C. 17:2-6.21.

N.J.A.C. 17:3-6.22, Waiver, 6.23, (Reserved), 6.24, Part-time members, 6.25, Medical examination; physicians, 6.26, Final compensation; biweekly salary computation for employees reported on a biweekly basis, 6.27, Determination of last year's salary; veterans reported on a biweekly basis, respectively, would remain unchanged.

Subchapter 7. Transfers

The Board proposes to amend N.J.A.C. 17:3-7.1, Honorable service; interfund transfers; State-administered retirement systems, to clarify that the "present" system is actually the "new State-administered retirement system" in subsection (a). The "present" or "previous" system would be changed to "former" system in the rule. This is being proposed to eliminate the confusion with this rule. The Board proposes to add new section (b) to state what happens should a member accept covered employment in a new system and also accept employment in the former system, which would have the same effective date in each system. The transfer would not occur if the effective dates were the same because there would not be any break in service from the former membership.

N.J.A.C. 17:3-7.2 Intrafund transfers; State-administered retirement systems, is amended for the reasons as discussed above in new Subchapter 1A, Definitions.

As the Board has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules involving the Teachers' Pension and Annuity Fund benefits the members, retirees, beneficiaries and participating employers of the Fund. The members, participating employers, retirees and survivors of retirees rely on the efficient operation of the retirement system to provide them with both monthly retirement benefits and information needed regarding their individual accounts. The members rely upon the predictability of the rules, which guide the administration of their benefits and the stability of the Fund. The protections and guarantees that these rules afford its members mandate their continued existence.

Many of the proposed amendments are of a purely technical nature, such as providing a proper procedure for reviewing and scanning documents, name changes or changing dates. Other proposed amendments will have a social impact specifically on members, retirants, beneficiaries and former members of the Fund but not the society as a whole. For example, N.J.A.C. 17:3-6.1(e) would have a beneficial effect on members filing applications for mental health disability retirements. The proposed amendment states which medical professionals may submit medical reports in support of a member's mental health disability retirement application. This is expected to result in fewer rejected mental health disability applications and the expedited approval of qualifying mental health disability applications.

It is important to note that the Division has made various changes in the language of the TPAF rules to mirror the language found in PERS, which is specifically indicated within the proposed amendment. Also, some of the clarifications made in the proposed amendments to the rules explain long-standing administrative practice, which is more comprehensively set forth in a rule. Additionally, as the case law has developed over time, it has become necessary to amend and/or repeal rules, which have become either moot or partially unenforceable. The Division recognizes that there is a general societal interest in making sure a public retirement system is well run and available to its members.

Economic Impact

The expired rules reproposed herein as new rules and proposed amendments, new rules and repeals, themselves, will not present any economic effects on the public; they will continue existing, long-standing, regulatory requirements. The expired rules proposed herein as new rules and the proposed amendments and new rules do not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration and operation of the Teachers' Pension and Annuity Fund. Further, the expired rules proposed herein as new rules with amendments will enable the Division to continue to provide for benefits in a manner that meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:3 has proven to be effective over time in the proper administration of the Teachers' Pension and Annuity Fund. Without the administrative rules to provide for the efficient operation of the Fund, financial disparities may result.

Most of the proposed amendments are technical in nature and do not have an economic impact. Some will have a positive economic impact. The proposed amendment to Subchapter 1A, specifically expanding the definition of extra compensation, will provide for more efficient guidelines in determining if compensation received by a member for a particular position will entitle that member to participation in the Fund. In turn, this process may save employers and the Division money. Also, the Division will not allow members who are performing duties, which are not integral to the effective functioning of the regular school curriculum, to receive credit for their service.

To the extent the proposed amendments reiterate statutory requirements; they will have no new economic impact. The Division will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules that would impose any hardship or costs on the members of the Teachers' Pension and Annuity Fund or on the public in general.

Federal Standards Statement

The proposed amendment to N.J.A.C. 17:3-4.9, will provide further clarification regarding the requirement that loans from TPAF are subject to Federal regulation. In addition, N.J.A.C. 17:3-4.9 continues to ensure compliance with Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. §72(p) (2007), which requires that loan balances not exceed $ 50,000.

The proposed amendment to N.J.A.C. 17:3-5.5(b)1 sets forth a definition of the types of military services that is eligible for purchase as honorable service, which is in compliance with the Federal definition found at 10 U.S.C. §101 of the Internal Revenue Code.

The proposed amendment to N.J.A.C. 17:3-5.6(c) will provide further clarification regarding lump sum payments and partial lump sum payments, which can include the direct rollover of tax-deferred contributions from financial plans that qualify under the terms specified under I.R.C. §401(a)(31) (2007) of the Internal Revenue Service.

A Federal standards analysis is not required for the expired rules proposed herein as new rules and the remaining proposed new rules and amendments because N.J.S.A. 18A:66-56 governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking.

Jobs Impact

The operation of the expired rules proposed herein as new rules with amendments, new rules and repeals will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of these proposed readopted rules with their written comments.

Agriculture Industry Impact

The expired rules proposed herein as new rules with amendments, new rules and repeals will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Teachers' Pension and Annuity Fund only affect public employers and employees. Thus, the expired rules proposed herein as new rules with amendments, new rules and repeals do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The expired rules proposed herein as new rules with amendments, new rules and repeals would not have any impact on the achievement of smart growth, and implementation of the State Development and Redevelopment Plan.

Full text of the expired rules proposed herein as new rules may be found in the New Jersey Administrative Code at N.J.A.C. 17:3.

Full text of the proposed amendments and repeal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 1.  ADMINISTRATION

17:3-1.1  Board meetings

(a) The Board [of Trustees] shall meet on the first Thursday of each month or at such time as may be deemed necessary by the Board.

(b) (No change.)

(c) The current rules within Roberts' Rules of Order, Second Edition, 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] TPAF in the conduct of its monthly meetings.

17:3-1.3  Officers and committees

(a) The members of the Board shall elect a chairperson and vice chairperson and a representative to the State Investment Council from its membership for the forthcoming year at its regular meeting held in July. A representative to the Pension System Actuary Selection Committee, as provided for by N.J.S.A. 43:4b-1, shall be elected by the Board whenever the selection of a new actuary is needed.

(b) The chairperson of the Board shall preside at all meetings or in the absence of the chairperson, [such presiding officer as the Board] the vice chairperson shall [determine] assume the chairperson's responsibilities. In the absence of the chairperson and vice chairperson, another member selected by the majority of the members in attendance will preside for that single meeting.

(c) (No change.)

(d) [There] Pursuant to N.J.S.A. 18A:66-61, there shall be [three] one standing committee[s of three members each: 1.] which is the Finance Committee[;].

[2. Retirement Committee; and

3. Procedures and Policies Committee. (e)] The Committee shall be appointed at the July Board meeting by the chairperson elect for the forthcoming fiscal year. [(f)] The committee shall consist of three members of who shall be elected members of the Board. The State Treasurer and the person designated to represent the Fund on the State Investment Council shall serve as members of the Finance Committee. [(g)] The Finance Committee shall review all investment transactions and financial reports referred to it by the Secretary for presentation to the Board at its regular monthly meeting.

[(h) The Retirement Committee shall consider all cases referred to it by the Secretary and submit its recommendations to the Board at its next meeting.

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

17:3-1.4    Election of member-trustee

(a) The Board shall hold an annual convention of delegates of the membership of the Fund each year for the purpose of:

1. Electing a member-trustee to the Board [of Trustees];

2.-3. (No change.)

(b) (No change.)

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

(d)-(o) (No change.)

(p) The trustee [for the three-year term commencing January 1, 1997,] must be employed in or retired from a county in Group A[;], [for the three-year term commencing January 1, 1998, in a county in] Group B[; for the two-year term commencing January 1, 1997, in a county in] or Group C [and so forth]. Members elected [thereafter] shall serve three-year terms. In the event an active or retired trustee elected by the membership is unable to finish the term, the vacancy shall be filled in the same manner and in the same group as the departing trustee, as set forth in N.J.S.A. 18:66-56. The term of this position shall be the remainder of the unexpired term.

(q)-(w) (No change.)

17:3-1.5    Certifying officer (employer)

(a)-(c) (No change.)

(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] Fund.

17:3-1.6    Records

(a) [The] In the addition to the provisions of N.J.A.C. 17:1-1.2, the minutes of the Board are a matter of public record and may be inspected during regular business hours in the [office] Office of the Board Secretary.

(b)-(c) (No change.)

(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. A copy of the Board appointed physician's medical report cannot be released until after the Board's initial determination. In no event will the report be released to any individual not authorized in writing to receive the report.

(e) The annual report of the Fund's actuary shall not be released until it has been approved by the Board.

(f) Original documents, if available, shall only be reviewed by appointment at the Division.

17:3-1.10    [Travel] (Reserved)

[Travel to and from work when it is to and from the regular place of employment is not considered duty rendered in the course of employment for the purpose of determining eligibility for accidental disability or accidental death benefits.]

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

(a) (No change.)

(b) A flat five percent pension rate of contribution was enacted by P.L. 1994, [c.62] 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] c. 133 the contribution rate as of January 1, 2002 is three percent. Effective January 1, 2004 the rate of contribution was returned to five percent. This rate is subject to change based on the Treasurer's determination in accordance with N.J.S.A. 18A:66-18b.

SUBCHAPTER 1A.  DEFINITIONS

17:3-1A.1  Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Base salary" means the annual compensation of a member, in accordance with contracts, ordinances, resolutions, or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is reported in regular, periodic installments in accordance with the payroll cycle of the employer.

"Board" means the Board of Trustees of the Teachers' Pension and Annuity Fund, vested with the general responsibility for the proper operation of the Fund pursuant to N.J.S.A. 18A:66-56.

"Division" means the Division of Pensions and Benefits, Department of Treasury, in the State of New Jersey.

"Extra compensation" means individual salary adjustments, which are granted primarily in anticipation of a member's retirement; additional remuneration for performing temporary duties beyond the regular work day or work year or additional remuneration for performing duties that are not integral to the effective functioning of the regular school curriculum.

"Fund" or "TPAF" means the Teachers' Pension and Annuity Fund, created pursuant to N.J.S.A. 18A:66-56.

"PERS" means the Public Employees' Retirement System, created pursuant to N.J.S.A. 43:15A-17.

"Work year" means either a 10-month contracted employee who works from September through June of each year and is compensated for each month or a 12-month contracted employee who works from July through June and is compensated for each month.

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] Examiners, pursuant to N.J.S.A. 18A:6-34 et seq. and N.J.A.C. 6A:9, and the person employed holds this valid certificate;

2.-3. (No change.)

(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] Examiners, pursuant to N.J.S.A. 18A:6-34 et seq. and N.J.A.C. 6A:9, is eligible for participation in the Fund.

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

(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.-3. (No change.)

(f) As of January 20, 2004, new part-time instructors employed at postsecondary vocational-technical schools are ineligible for enrollment in the Fund. Part time instructors at postsecondary vocational-technical schools who were members of the Fund, as of January 19, 2004, are "grandfathered" in their positions with postsecondary vocational-technical schools, as long as they remain with their current employers.

17:3-2.2 Documentation required

If a person is appointed to a position, which does not 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 order to determine such person's eligibility for enrollment, the employer shall be required to support the enrollment application with a statement setting forth the duties, qualifications, tenure rights and State Board of Examiners' Certification requirements of the position.

17:3-2.4  Emergency or provisional certificate

(a) (No change.)

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

1. Will not be permitted to make contributions to the [fund] Fund while employed in a substitute or temporary status;

2.-4. (No change.)

17:3-2.8  Enrollment date

(a)-(c) (No change.)

(d) An employee cannot receive credit in the retirement system for the initial pay period or month of employment if that employment began after the seventh day of the pay period or after the 16th day of the month.

SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS

17:3-3.1 Compulsory and optional enrollment

(a) For the purpose of contributory insurance, all 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 for all compulsory and optional enrollees, age 60 [or] and older, at the time their enrollment application is filed with the Division, in order to qualify for noncontributory and contributory insurance coverage.

(b) Optional enrollees under age 60 at the time their enrollment application is filed with the Division, 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. If an application for an optional enrollee is not received within one year after the optional enrollee became eligible for enrollment, evidence of insurability will be required for the noncontributory and contributory coverage.

(c) (No change.)

17:3-3.7 Withdrawal application; contributory insurance

A properly executed contributory insurance withdrawal application must be in the possession of the Fund before termination of the contributory coverage can be effected. Such withdrawal application cannot be retroactive and the contributory insurance will not be reinstated under the membership account number in which the cancellation was exercised.

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

(a) Withdrawal from contributory insurance coverage shall apply only to the membership account under which the cancellation was exercised. Any person, who has canceled contributory insurance coverage and withdraws from membership in the Fund, shall, upon subsequent re-enrollment in the Fund, be subject to the provisions of N.J.A.C. 17:3-3.1.

(b) If a member is covered by group life insurance during employment, the coverage ceases 31 days subsequent to the member's termination date from employment regardless of the cause of termination. A member can convert the life insurance at the members' expense as set forth in N.J.A.C. 17:3-3.13(b).

17:3-3.10 Contributory insurance premiums[;], leave of absence and workers' compensation

(a) Contributory insurance coverage will [be] remain 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 and without premiums paid by the member. The employer shall provide to the Division proof of the official leave of absence.

(b) Contributory insurance coverage will [be] remain 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 within 31 days of the official start date of the leave. It is the member's responsibility to make arrangements directly with the Division to continue these premium payments:

1.-2. (No change.)

(c) Contributory insurance coverage will remain in effect for members who are receiving periodic benefits directly from workers' compensation. No premiums are required pursuant to N.J.S.A. 18A:66-32.1.

17:3-3.12  Beneficiary designation; pension contributions

(a) (No change.)

(b) 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 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.]

17:3-3.13 Benefits payable under P.L. 1984, [c.96] c. 96, as amended by P.L. 1995, [c.221] c. 221

(a) For the purposes of P.L. 1984, [c.96] c. 96, section 1, as amended by P.L. 1995, [c.221] c. 221, section 2, ( N.J.S.A. 18A:66-47), the person designated as the beneficiary of an optional settlement on the retirement application may request that a retirement become effective and that a selection of an optional settlement be made as authorized by the law. If there is no designated beneficiary for an optional settlement, the person designated as the beneficiary to receive the return of contributions or unpaid benefits due to a retiree at the date of death may make this request. If a beneficiary requests that an optional settlement be made, the death benefits payable on behalf of the member shall be the death benefits payable on behalf of a member who dies after retirement as otherwise provided in the [Teachers' Pension and Annuity Fund] TPAF Act, N.J.S.A. 18A:66-1 through 93, as amended and supplemented.

(b) Where a beneficiary of a member requests that a retirement take effect and that a selection of an optional settlement be made as authorized under P.L. 1984, [c.96] c. 96, section 1, as amended by P.L. 1995, [c.221] c. 221, section 2, ( N.J.S.A. 18A:66-47), an additional amount of insurance, not to exceed the amount of insurance that could be converted under the group policies for noncontributory and contributory death benefits, shall be paid as claims under the group policies only if the member files an application for conversion of the insurance upon retirement as provided under N.J.S.A. 18A:66-79 and pays the initial premium for the converted insurance. The premiums paid for the converted insurance shall be retained by the carrier and be applied to the premiums payable by the State and the [retirement system] Fund for benefits provided under the group policies.

17:3-3.14  Acceptable designations of beneficiaries

(a) (No change.)

(b) The beneficiary or beneficiaries of the group life insurance designated on the retirement application shall be the beneficiary or beneficiaries of the [active] group life insurance.

1. (No change.)

17:3-3.15  Suspension

A member suspended without pay will have noncontributory life insurance coverage continued for a period of 93 days following the effective date of such suspension. A member will not be covered by contributory life insurance during a suspension without pay, but may convert the contributory insurance prior to 31 days after the effective date of the suspension.

SUBCHAPTER 4. MEMBERSHIP

17:3-4.1 Creditable compensation

(a) The compensation of a member subject to pension and group life insurance contributions and creditable for retirement and death benefits in the Fund shall be limited to base salary, and shall not include extra compensation. [For purposes of this section:

1. "Base salary" means the annual compensation of a member, in accordance with contracts, ordinances, resolutions, or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is reported in regular, periodic installments in accordance with the payroll cycle of the employer; and

2. "Extra compensation" means individual salary adjustments which are granted primarily in anticipation of a member's retirement or as additional remuneration for performing temporary duties beyond the regular work day or work year.]

1. Forms of compensation that have been identified as extra compensation include, but are not limited to:

i.-viii. (No change.)

[ix. Increments or adjustments granted for retirement credit;]

Recodify existing x.-xvii. as ix.-xvi. (No change in text.)

[xviii.] xvii. Compensation paid for working during vacation periods; [and]

[xix.] xviii. Compensation paid for serving as a bedside instructor or for leading extracurricular activities[.]; and

xix. Compensation paid for additional services performed during a normal duty assignment, which are not included in base salary.

(b)-(c) (No change.)

(d) With respect to all claims for benefits, the Division [of Pensions and Benefits] shall investigate increases in compensation reported for credit, which exceed the reasonably anticipated annual compensation increases for members of the Fund based upon either the increase in the Consumer Price Index for the time period of the increases and the table of assumed salary increases recommended by the actuary and adopted by the Board or based on the averages of the regular increases in the employees' compensation preceding the periods in which the extra compensation was received. Those cases where a violation of the statute or rules is suspected shall be [referred] administratively denied with right of appeal to the Board.

(e) In connection with an investigation of an increase in compensation, the Board may:

1. Require that a notarized statement under oath be obtained from the member's employer that the reported compensation was not granted primarily in anticipation of retirement, and conforms with the statutes and rules governing the [Teachers' Pension and Annuity Fund] TPAF;

2.-3. (No change.)

(f)-(h) (No change.)

(i) To be creditable[,] compensation for teaching sixth period, the compensation shall be offered to all eligible and certified employees in the same position or covered by the same collective bargaining agreement, reported in regular, periodic installments in accordance with the payroll cycle of the employer and not offered to employees in anticipation of retirement.

(j) A stipend may be considered credible compensation and subject to pension deductions for retirement credit if it:

1. Is included as part of the petitioner's regular payroll check; and

2. Represents duties not addressed in base compensation that are integral to the effective functioning of the school curriculum.

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

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

(c) A 12-month member is presumed to work each month of the fiscal year. Members shall not receive service credit for a month that a member does not work and is not on an approved paid leave of absence.

(d) 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] TPAF and begins employment on or before the date that was established by the previous year's contract position, such member will receive service credit within the [Teachers' Pension and Annuity Fund] TPAF for the period between the end of the previous contract and the employment date of the new 12-month position.

17:3-4.4 Loan tolerance

Interest will be calculated on a periodic basis on the unpaid loan balance. If scheduled payments are not paid timely, interest will be accrued and added to the remaining outstanding loan balance. If, at the end of the loan schedule, there is a balance of less than [$ 10.00] $ 50.00, it will be written off. If the balance is equal to or greater than [$ 10.00] $ 50.00, the member will be assessed.

17:3-4.7 Service and salary credit: awards of back pay

(a)-(c) (No change.)

(d) If the award or settlement is structured in such a way as to provide the member with a substantial increase of creditable salary at or near the end of the member's service, or a substantial increase in retirement benefits, the award or settlement shall be reviewed by the Board [of Trustees]. If the Board determines that the pension benefit was part of the negotiations for the award or settlement, or if the award or settlement includes extra compensation as defined by N.J.A.C. 17:3-4.1, [the member shall have the contributions for the salaries based on the award refunded without interest, and] the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have the contributions for the salaries based on the award refunded without interest.

(e) (No change.)

17:3-4.9 Eligibility for loan

Only active contributing members of the Fund 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. The loan is subject to I.R.C. §72(p) (2007) of the Internal Revenue Code.

17:3-4.11 Termination; withdrawal

(a) (No change.)

(b) No application shall be approved, if:

1. (No change.)

2. The member, or employer, certifies that the member's employment contract has not expired, or that 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 the member has formally resigned from the position [or] and there is no legal action contemplated or pending and the dismissal has been adjudged final. If the member or employer does not advise the Division that an appeal is pending and the withdrawal application is processed, the member will be required to repay the Fund the full amount of contributions with interest, before the account may be reinstated;

4. (No change.)

5. The member has a claim pending for [Workers' Compensation] workers' compensation benefits unless the member signs a waiver indicating that the member still wishes to withdraw.

SUBCHAPTER 5.  PURCHASES AND ELIGIBLE SERVICE

17:3-5.1  Eligibility for purchase

(a) (No change.)

(b) In order to be eligible to purchase service, a member must submit a [written] request to purchase service and such purchase must be authorized by the member before the expiration date indicated on the letter, which quotes the terms of the purchase. If the Purchase Cost Quotation expires prior to authorization and subsequently the member requests the purchase of such service, the purchase cost will be subject to recalculation based upon all cost factors in effect at the time of the new request.

(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 service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.

17:3-5.5  Optional purchases of eligible service

(a) A shared-cost purchase is one in which the member pays only the employee's share and not the employer's share of the purchase. A member may purchase all or a portion of such eligible service. A shared-cost purchase shall be calculated on the basis of the actuarial purchase factor established for the member's age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The following types of purchases are shared-cost purchases:

1.-2. (No change.)

3. [After August 6, 2001, continuous] Continuous temporary service without interruption or substitute service as a teacher immediately preceding enrollment[;] is eligible for purchase provided the following conditions are met:

i. Continuous temporary service without interruption must be employment without a break in service. For an employer that reports on a monthly basis, a break in service is defined as no salary earned by an employee during a month. For an employer that reports on a biweekly basis, a break in service is defined as no salary earned by an employee during a biweekly pay period.

ii. Substitute service is eligible for purchase provided the employment immediately precedes enrollment in TPAF. Immediately preceding enrollment is defined as employment rendered the month or biweekly pay period, prior to the date of enrollment. The period(s) of substitute service that a member can request to purchase must meet the following criteria:

(1) A year of substitute service wherein a 10-month employee worked an average of 10 days per month and an aggregate of 100 days during a regular work year. A 12-month employee is required to have worked an average of 10 days per month and an aggregate of 120 days per year.

(2) Substitute service for a period of less than one year immediately preceding enrollment is eligible for purchase provided the member worked a minimum average of 10 days per month for each month of substitute service.

(3) When more than one year of substitute service is requested for purchase, each year of substitute service rendered prior to enrollment is reviewed and each year is required to meet the criteria set forth under the provisions of (a)3ii(1) above.

4.-6. (No change.)

7. Non-concurrent [Public Employees' Retirement System] PERS service if a dual member of TPAF and PERS pursuant to P.L. 2001, [c.6] c. 6 ( N.J.S.A. 18A:66-15.1). All or a portion of non-concurrent service in the PERS from an expired or withdrawn account may be purchased.

(b) The types of purchases indicated in (b)1 and 2 below are considered to be full-cost purchases. A member may purchase all, or a portion of, such eligible service. The lump sum purchase cost shall be calculated on the basis of the actuarial purchase factor established for the member's nearest age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The computed lump sum purchase cost will then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 18A:66-13 provides that the employer shall not be liable for any costs of purchasing this service; therefore, the member must pay both the employee and employer share.

1. Active duty military service prior to enrollment. Active military service, that is eligible for purchase, means honorable full-time duty in the active military service of the United States, which is the same as the Federal definition found at 10 U.S.C. §101. Such term includes full-time training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. It does not include periods of service of less than 30 days, weekend drills or annual summer training of a national guard or reserve unit, nor does it include periods when the member was on-call. It also does not include time spent in the Reserved Officers Training Corps or as a cadet or midshipman at one of the service academies. Military service before enrollment cannot be used to qualify for an ordinary disability retirement; and

2. (No change.)

(c) A member shall be eligible to purchase an aggregate of up to 10 years of out-of-State public employment, military service and Federal employment provided that the member is neither receiving nor will be entitled to receive a future retirement allowance for such service from any other public retirement system and provides proof to the Division [of Pensions and Benefits] that the member [has withdrawn from such other system] is not eligible to receive a current or future retirement benefit from that service. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service.

(d) (No change.)

17:3-5.6 Methods of payment

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

1. (No change.)

2. Partial lump sum; balance by [extra] additional payroll deductions; or

3. Extra deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years[;].

(b) [Extra] Additional payroll deductions under (a)2 or 3 above will include regular interest for the term of the installment.

(c) Lump sum payments and partial lump sum payments can include the direct rollover of transfer of tax-deferred contributions from financial plans that qualify under terms specified under I.R.C. §401(a)(31) (2007) of the Internal Revenue Service. All payments remitted to the Division must be accompanied by a properly completed Direct Rollover/Trustee-to-Trustee Transfer of Funds for the Purchase of Additional Service Credit form. Checks remitted to the Division without the required forms shall be returned to the member. A lump sum rollover payment for a purchase cannot exceed the lump sum cost of that purchase. Checks in an amount greater than the lump sum cost of the purchase shall be returned to the member.

17:3-5.8  Service ineligible for purchase

(a) A member will not be granted, nor may a member purchase, prior service or membership credit, including, but not limited to, the following situations:

1. Service rendered outside of the United States, with the exception of service rendered to a local school board in territories or possessions of the United States, Washington, DC and the Canal Zone[, is not purchasable.];

2. Additional service credit for out-of-State employment periods during leaves of absence;

3. Service rendered that is concurrent with service time or employment that the member has received membership service credit in the Fund;

4. Any service rendered, which was covered by the Alternate Benefits Program (ABP) or another defined contribution plan including any service associated with pension contributions transferred to the ABP;

5. A period of time when a member was on a suspension without pay during their employment; or

6. Any public service that was not eligible for either compulsory or optional enrollment in a State-administered retirement system at the time the service was rendered.

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] TPAF Law ( N.J.S.A. 18A:66-1 et seq.) and the rules of the Fund.

SUBCHAPTER 6. RETIREMENT

17:3-6.1  Applications

(a) Applications for retirement must be made on forms required by the Fund. Such forms must be completed in all respects and filed with the Division [of Pensions and Benefits (Division)] on or before the requested date of retirement. A member's retirement application becomes effective on the first of the month following receipt of the application unless a future date is requested. Members enrolled at multiple TPAF locations must retire from employment in all covered positions before a retirement shall become effective.

(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] 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. If the total amount of retirement allowances received by a member or beneficiary under the option selected is less than the value of the member's contributions and regular interest on those contributions, the balance of contributions and regular interest shall be paid in a lump sum to the member's designated beneficiary or estate.

2.-9. (No change.)

(d) (No change.)

(e) In addition to the [foregoing] requirements in (a) through (d) above:

1. [an] An application for a physical 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[.]; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

(f) (No change.)

(g) A member filing for a disability retirement shall not file a separate application for any other type of retirement while a disability application is pending.

(h) If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant will be required to submit a separate application for retirement. If the applicant submits the separate application for retirement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.

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

(a) A member's retirement allowance shall not become due and payable until 30 days after the date the Board approved the application for retirement or 30 days after the date of retirement, whichever is later.

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

17:3-6.3 Effective date; changes

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

(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).] Should the member's 60th birthday fall on the first of the month, the member may elect the retirement to commence on that date, provided that an application is received by the Division in accordance with N.J.A.C. 17:3-6.1.

(d) (No change.)

(e) Should the member continue to receive a salary beyond the effective date of retirement, no retirement benefits shall be paid for the period where the member received salary and no salary or service credit shall be provided for the service rendered after the effective date of retirement. This restriction also applies to payments of accrued sick or vacation time that is paid in periodic payments on the employer's regular payroll schedule.

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 accrued interest, as follows:

1. (No change.)

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 accrued interest, is repaid as authorized by P.L. 1999, [c.132] c. 132 ( N.J.S.A. 18A:66-35.1). 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 accrued 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 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.

17:3-6.8  Option selection; accidental disability denied

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

17:3-6.10 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 its employees, the member will be promptly notified by letter that:

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

2.-6. (No change.)

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) (No change.)

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

(a) Pursuant to N.J.S.A. 18A:66-40, if a disability retirant is engaged in gainful employment that does not require reenrollment in the [Teachers' Pension and Annuity Fund] TPAF, then the amount of the retirant's pension benefit and cost-of-living increases based on the pension benefit, but not the annuity benefit, shall be reduced to an amount, when added to the amount then earned, shall not exceed the amount of salary now attributable to the position from which the member retired.

1. For the purposes of determining the amount of salary attributable to the position from which the member retired, the Division [of Pensions and Benefits (Division)] shall apply the salary assumption used by the Fund's actuaries in each calendar year of retirement to the retirant's final year's salary.

2. (No change.)

(b)-(d) (No change.)

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

(a) Following the filing of a disability retirement application, a vested member, who has not withdrawn [his or her] contributions from the retirement system, and has discontinued service for more than two consecutive years, and who was otherwise eligible for disability retirement at the time service was discontinued, shall be approved to receive disability retirement benefits by the Board [of Trustees], if:

1. The applicant demonstrates to the satisfaction of the Board [of Trustees] that [he or she] the applicant was physically or mentally incapacitated for the performance of duty at the time service was discontinued, and continues to be so incapacitated, with the same disability or disabilities, at the time of filing; and

2. The applicant factually demonstrates to the satisfaction of the Board [of Trustees] that service was discontinued because of the disability or disabilities.

(b)-(c) (No change.)

17:3-6.17 Approved allowance

When a retirement allowance becomes effective pursuant to N.J.A.C. 17:3-6.2, the type of retirement benefit and option elected shall stand as approved.

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] of a member reported on a monthly basis under a 10-month contract, [use] the creditable salaries upon which contributions were made to the Fund for 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, shall be used.

(b) In order to determine the final compensation (three-year average) for benefits [on] of 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 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, shall be used.

(c) (No change.)

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 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, shall be used.

(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, 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, shall be used.

(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 10months 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, shall be used.

(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 12months 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, shall be used.

(e) (No change.)

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

(a) 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] of the [present System] new State-administered retirement system shall disallow the transfer of all or a portion of prior service of any member of the [System] former State-administered retirement system for misconduct occurring during the member's prior public service, which renders that prior service, or part thereof, dishonorable.

(b) A member is eligible to transfer membership from another State-administered retirement system, provided the membership has not expired or has not been withdrawn and provided that all service eligible for participation has ceased.

[(b)] (c) 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.341] c. 341 ( N.J.S.A 43:15A-14). P.L. 2001, [c.341] 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 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.)

Recodify existing (c) and (d) as (d) and (e) (No change in text.)

17:3-7.2  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.-2. (No change.)

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. (No change.)

(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.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION
STATE HEALTH BENEFITS PROGRAM

39 N.J.R. 1645(a)

Proposed New Rules: N.J.A.C. 17:9-13

Chapter 375 Dependents

Authorized By: State Health Benefits Commission, Frederick J. Beaver, Secretary.

Authority: N.J.S.A. 52:14-17.27.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-145.

Submit comments by July 6, 2007 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, New Jersey 08625-0295

The agency proposal follows:

Summary

Prior to the enactment of P.L. 2005, c. 375, codified at N.J.S.A. 52:14-17.29k (Chapter 375), child dependent coverage under the State Health Benefits Program (SHBP) generally ended at the end of the calendar year in which the child reached age 23 (see N.J.A.C. 17:9-3.1, Dependents and children defined). The exception to this general rule was a child with disabilities age 23 and older (see N.J.A.C. 17:9-3.4, Children with disabilities age 23 or older; determination of eligibility for continuation of coverage). Chapter 375 provides the opportunity for child dependent coverage to continue for children without disabilities until age 30. For a child dependent to qualify for continued SHBP coverage under Chapter 375, the child dependent must be a covered person's child by blood or law who: is less than 30 years of age; is unmarried; has no dependent of his or her own; is a New Jersey resident or is enrolled as a full-time student at an accredited institution of higher education; and is not actually provided coverage as a named subscriber, insured, enrollee, or covered person under any other group or individual health benefits plan, group health plan, church plan, or health benefits plan, or entitled to benefits under Title XVIII of the Social Security Act, Pub.L. 89-97 (42 U.S.C. §§1395 et seq.). Chapter 375 provides that the cost of Chapter 375 child dependent coverage shall be reimbursed by the employee or retiree (subscriber) to the SHBP, in accordance with a rate to be determined by the State Health Benefits Commission (Commission).

The Commission proposes to create new Subchapter 13, Chapter 375 Dependents, to clarify eligibility for Chapter 375 dependent coverage, payment for Chapter 375 dependent coverage and termination of Chapter 375 dependent coverage.

N.J.A.C. 17:9-13.1, Eligibility criteria, sets forth the criteria that a dependent child age 23 or over must satisfy in order to qualify for Chapter 375 dependent coverage and must continue to satisfy to remain eligible for Chapter 375 dependent coverage.

At N.J.A.C. 17:9-13.2, Enrollment, subsection (a) sets forth that enrollment of a Chapter 375 eligible dependent is voluntary. This subsection details the manner in which enrollments of Chapter 375 eligible dependents will be administered. An employee or retiree may enroll a Chapter 375 eligible dependent at anytime up to December 31, 2007. After December 31, 2007, an employee or retiree may enroll a dependent in one of two ways: (1) by submitting an enrollment application to the Division no later than 30 days after the dependent meets the eligibility criteria in N.J.A.C. 17:9-13.1, coverage will be effective the first coverage period of the month, 60 days after the dependent meets all eligibility criteria; and (2) in the event the employee or retiree does not submit the enrollment application to the Division within 30 days after the dependent meets the eligibility criteria in N.J.A.C. 17:9-13.1, enrollment applications will only be accepted during the annual October open enrollment period, with coverage for eligible dependents effective the first coverage period in January, following the open enrollment period. Subsection (b) provides that a subscriber is responsible for certifying, on the Chapter 375 enrollment form, that the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1 at the time of enrollment or will meet all eligibility criteria under N.J.A.C. 17:9-13.1 by the anticipated effective date of coverage. Subsection (b) also mandates that the subscriber immediately report to the Division of Pensions and Benefits any change in the dependent child's status that results in the dependent child no longer qualifying as a Chapter 375 dependent.

At N.J.A.C. 17:9-13.3, Coverage available, subsection (a) establishes what coverage a Chapter 375 dependent is entitled to. A Chapter 375 dependent will be provided coverage in the same medical plan and, if applicable, prescription drug plan that the subscriber is enrolled in. Subsection (b) establishes that a Chapter 375 dependent is not eligible to receive dental or vision benefits.

N.J.A.C. 17:9-13.4, Premium rates and payment for coverage, sets forth the manner in which the Commission will establish premium rates for Chapter 375 dependents. This section also provides that the subscriber is responsible for the cost of SHBP coverage for each enrolled Chapter 375 dependent.

At N.J.A.C. 17:9-13.5, Termination of coverage, subsection (a) sets forth the events that mandate termination of SHBP coverage for a Chapter 375 dependent, specifically: the Chapter 375 dependent no longer meets criteria for Chapter 375 eligibility; the subscriber's death or other termination of the subscriber's coverage; the Chapter 375 dependent enters the armed forces; the subscriber fails to make required premium payments; or the Chapter 375 dependent dies. Subsection (b) sets forth the date when SHBP coverage will terminate for each event of termination noted in subsection (a). Subsection (c) provides that termination of Chapter 375 dependent coverage is not a qualifying event under the Consolidated Omnibus Budget Reconciliation Act, P.L. 99-272 (COBRA). COBRA provides for continuation of employer group health insurance, when that insurance would otherwise end. Loss of dependent status under a group health insurance plan is a COBRA qualifying event. Under the SHBP, the loss of dependent child status occurs at the end of the calendar year in which the child reaches the age of 23. (See N.J.A.C. 17:9-3.1, Dependents and children defined.) Notwithstanding Chapter 375, the loss of dependent child status at the end of the calendar year in which the dependent child reaches the age of 23 shall continue to be a COBRA qualifying event. Subsection (c) sets forth that termination of Chapter 375 dependent coverage shall not be a COBRA qualifying event.

At N.J.A.C. 17:9-13.6, Notice of termination of coverage due to nonpayment of premiums, subsection (a) provides that the Division shall notify a subscriber of an overdue premium payment on the next billing statement and that Chapter 375 dependent coverage shall terminate if full payment of both monthly premiums is not remitted within 30 days. If payment is not received, coverage shall terminate on the last day of the month for which premiums were paid. Subsection (b) provides that a Chapter 375 dependent terminated for nonpayment of premiums cannot re-enroll as a Chapter 375 dependent until the next open enrollment, provided the dependent still meets all eligibility criteria.

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. 

Social Impact

Chapter 375 affords a subscriber, whose dependent child meets all eligibility criteria, the option of continuing the dependent child in SHBP coverage until the dependent child reaches age 30. As noted above, prior to Chapter 375, SHBP dependent child coverage generally terminated at the end of the calendar year in which the dependent reached age 23. Chapter 375 is critical in that it affords a subscriber the opportunity to continue an age 23 dependent's SHBP coverage to age 30. This opportunity is of critical import to those subscribers seeking to ensure that their child dependents remain eligible to receive the quality of medical care provided by medical plans participating in the SHBP after age 23.

Economic Impact

The proposed new subchapter is cost neutral to the State and local employers since the subscriber is responsible for the cost of the coverage for a Chapter 375 dependent. The Commission shall calculate premium rates initially on the basis of anticipated experience and thereafter on the basis of actual experience.

Federal Standards Statement

A Federal standards analysis is not required because the rulemaking requirements for the SHBP are governed by State law, specifically N.J.S.A. 52:14-17.27. The only Federal law referenced by the proposed new rules is the Consolidated Omnibus Budget Reconciliation Act, P.L. 99-272 (COBRA), which provides for continuation of employer group health insurance when that insurance would otherwise end. However, the new rules permit continuation of coverage for certain individuals, as permitted under COBRA. Therefore, no Federal requirements or standards are exceeded.

Jobs Impact

The operation of the proposed subchapter will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed subchapter with their written comments.

Agriculture Industry Impact

The proposed subchapter will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Division of Pensions and Benefits only affect public employers, public employees and their dependents and beneficiaries. Thus the proposed subchapter does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed subchapter will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposed new rules follows:

SUBCHAPTER 13.  CHAPTER 375 DEPENDENTS

17:9-13.1   Eligibility criteria

(a) In order for a dependent to qualify for and remain eligible for State Health Benefits Program coverage after age 23 as a Chapter 375 dependent, the dependent must be a covered person's child by blood or law who:

1. Is less than 30 years of age;

2. Is unmarried;

3. Has no dependent of his or her own;

4. Is a New Jersey resident or enrolled as a full-time student at an accredited public or private institution of higher education; and

5. Is not actually provided coverage as a named subscriber, insured, enrollee, or covered person under any other group or individual health benefits plan, group health plan, church plan, or health benefits plan, or entitled to benefits under either Title XVIII of the Social Security Act, Pub.L. 89-97 (42 U.S.C. §§1395 et seq.).

17:9-13.2   Enrollment

(a) Enrollment of a Chapter 375 eligible dependent is voluntary. A separate election will be required for enrollment, change in or a voluntary termination of coverage for a Chapter 375 eligible dependent. If an employee or retiree (subscriber) does not elect coverage for a Chapter 375 eligible dependent by December 31, 2007, the subscriber may thereafter enroll the dependent as follows:

1. Submission of an enrollment application to the Division no later than 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1. Coverage will be effective the first coverage period of the month, 60 days after the dependent meets all eligibility criteria.

2. In the event a subscriber does not submit an enrollment application to the Division within 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1, the subscriber can only enroll the dependent during the annual October open enrollment period. If the dependent meets all eligibility criteria, coverage will be effective the first coverage period in January, following the open enrollment period.

(b) A subscriber who elects to enroll a dependent as a Chapter 375 dependent must report the dependent's qualifying status on the enrollment form and such signed enrollment form shall constitute the subscriber's certification that such dependent is the subscriber's child by blood or law and that such dependent satisfies, or will satisfy at the time of coverage, all eligibility criteria under N.J.A.C. 17:9-13.1. The subscriber is under a continuing obligation to immediately report any change in the dependent's qualifying status to the Division.

17:9-13.3   Coverage available

(a) An enrolled Chapter 375 dependent shall be provided coverage in the same medical plan in which the subscriber is enrolled. In the event the subscriber participates in a State Health Benefits Program (SHBP) prescription drug plan, the Chapter 375 dependent shall also qualify for participation in the same SHBP prescription drug plan.

(b) A Chapter 375 dependent is not eligible to receive dental or vision benefits.

17:9-13.4   Premium rates and payment for coverage

The Commission shall determine premium rates for enrolled Chapter 375 dependents, initially on the basis of the anticipated experience of the group and annually thereafter on the basis of the actual experience of the group. The subscriber is responsible for the cost of the State Health Benefits Program coverage for each enrolled Chapter 375 dependent.

17:9-13.5   Termination of coverage

(a) State Health Benefits Program (SHBP) coverage for a Chapter 375 dependent shall terminate in the event:

1. The Chapter 375 dependent no longer meets all of the criteria for eligibility at N.J.A.C. 17:9-13.1;

2. The employee's or retiree's death or other termination of the employee's or retiree's coverage;

3. The Chapter 375 dependent enters the Armed Forces;

4. The employee or retiree fails to make required premium payments for the Chapter 375 dependent; or

5. The Chapter 375 dependent dies.

(b) For any event described in (a)1 through 3 above, SHBP coverage for the Chapter 375 dependent shall terminate on the first day of the month following the event. With respect to (a)4 above, SHBP coverage for the Chapter 375 dependent shall terminate on the last day of the month for which a premium payment was made. With respect to (a)5 above, SHBP coverage shall terminate immediately following the Chapter 375 dependent's death.

(c) Termination of SHBP coverage for a Chapter 375 dependent is not a qualifying event for the continuation of SHBP coverage under the Consolidated Omnibus Budget Reconciliation Act, P.L. 99-272 (COBRA).

17:9-13.6   Notice of Termination of coverage for nonpayment of premiums

(a) If a subscriber fails to make a required premium payment for a Chapter 375 dependent by the end of the month in which premium payment is due, the Division shall notify the subscriber of the overdue amount on the next billing statement. Such notice shall advise the subscriber that the Chapter 375 dependent's right to continue coverage will be terminated if payment of the overdue premium payment and the current premium payment due is not remitted to the Division within 30 days. If payment is not remitted within 30 days, the Division shall terminate the Chapter 375 dependent's coverage effective the last day of the month for which premiums were paid.

(b) A Chapter 375 dependent terminated for nonpayment of premiums is not eligible to re-enroll as a Chapter 375 dependent until the next regular open enrollment, provided the dependent still meets all Chapter 375 dependent eligibility criteria.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
TEACHERS' PENSION AND ANNUITY FUND

39 N.J.R. 1644(a)

Proposed Amendment: N.J.A.C. 17:3-6.1

Applications

Authorized By: Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.

Authority: N.J.S.A. 18A:66-56.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-150.

Submit comments by July 6, 2007 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Teachers' Pension and Annuity Fund (TPAF) proposes amending N.J.A.C. 17:3-6.1(e) due to concerns expressed regarding the requirements relating to medical reports required in support of applications for disability retirements. The subsection requires that an application for disability retirement be supported by two medical reports, one by the member's personal or attending physician and the other either hospital records supporting the disability or a report from a second physician. The subsection does not distinguish between a physical disability retirement application and a mental health disability retirement application. The subsection is proposed to be amended to distinguish between medical reports required in support of a physical disability retirement application and medical reports required in support of a mental health disability retirement application.

The Police and Firemen's Retirement System, the Public Employees' Retirement System and the State Police Retirement System have all recently amended their corresponding rules in this same manner. The Division of Pensions and Benefits is required to administer the State-administered retirement systems in a manner that is uniform, to the extent possible, across the retirement systems.

 N.J.A.C. 17:3-6.1(e), relating to medical reports required in support of a physical disability retirement application, reflects the rule's present requirements, that is, the submission of two medical reports, one from the member's personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. This subsection is amended to clarify that it only applies to physical disability retirement applications. Proposed new paragraph (e)2, relating to medical reports required in support of a mental health disability application, states that the two medical reports required in support of a mental health disability retirement application are one from the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from another psychiatrist or psychologist or from a physician or licensed clinical social worker.

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.

Social Impact

The proposed amendment would have a beneficial effect on members filing applications for mental health disability retirements. The proposed amendment states what medical professionals may submit medical reports in support of a member's mental health disability retirement application. This is expected to result in fewer rejected mental health disability applications and the expedited approval of qualifying mental health disability applications.

Economic Impact

The proposed amendment will have a positive economic impact on members filing applications for mental health disability retirements. Accepting a second report from a member's personal or attending physician or licensed clinical social worker allows those members receiving treatment from a physician or a licensed clinical social worker to avoid the costs associated with securing the second medical report from a second psychiatrist or psychologist. In addition, the proposed amendment is expected to expedite the processing of applications for mental health disability applications, which in turn will result in the earlier receipt of disability retirement benefits by members whose applications are approved.

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment. The Division is not aware of any provisions in the proposed amendment that would impose any hardship or costs on TPAF, TPAF members or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 18A:66-56 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Teachers' Pension and Annuity Fund only affect Teachers' Pension and Annuity Fund members and their dependents and beneficiaries. Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:3-6.1     Applications

(a)-(d) (No change.)

(e) In addition to the [foregoing] requirements in (a) through (d) above:

1. [an] An application for a physical 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[.]; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

(f) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

39 N.J.R. 1642(a)

Proposed Amendments: N.J.A.C. 17:2-6.3 and 8.1

Proposed Repeal: N.J.A.C. 17:2-8.2

Effective Dates; Change

Definitions; Criteria for Determining Eligibility for Enrollment for Employees of the Department of Law and Public Safety

Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Authority: N.J.S.A. 43:15A-17.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-151.

Submit comments by July 6, 2007 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Board of Trustees of the Public Employees' Retirement System (PERS Board) proposes amending N.J.A.C. 17:2-6.3, Effective dates; change, to correct an inaccurate New Jersey Administrative Code cross-reference. At present, the initial phrase of subsection (a) states: "Except as provided by N.J.A.C. 17:3-6.7 . . ." The correct Administrative Code citation is N.J.A.C. 17:2-6.7, Disability determination. The proposed amendment changes the Administrative Code citation from N.J.A.C. 17:3-6.7 to N.J.A.C. 17:2-6.7.

The PERS Board also proposes amending Subchapter 8, Prosecutors Part, by deleting paragraph 4 from the definition of "service" in N.J.A.C. 17:2-8.1 and by repealing N.J.A.C. 17:2-8.2, Criteria for determining eligibility for enrollment for employees of the Department of Law and Public Safety, in its entirety.

In 2002, the Legislature enacted P.L. 2001, c. 366, codified at N.J.S.A. 43:15A-155 to 161. P.L. 2001, c. 366 established a new part of the Public Employees' Retirement System (PERS) called the Prosecutors Part. The Prosecutors Part provides enhanced pension benefits to county prosecutors and certain State employees in specified titles in the Division of Criminal Justice in the Department of Law and Public Safety. P.L. 2001. c. 366, defines "prosecutor," as used in the Prosecutors Part, to mean:

(1) a county prosecutor, first assistant prosecutor or assistant prosecutor as defined in N.J.S. 2A:158-1 et seq.; (2) the Director of the Division of Criminal Justice in the Department of Law and Public Safety; (3) an assistant director, deputy director, assistant attorney general or deputy attorney general in that department and assigned to that division pursuant to P.L. 1970, c. 74 (C. 52:17B-97 et seq.); or (4) a criminal investigator in the Division of Criminal Justice in the Department of Law and Public Safety who is not eligible for enrollment in the Police and Firemen's Retirement System. N.J.S.A. 43:15A-155.

On June 21, 2004, the PERS Board adopted Subchapter 8, Prosecutors Part. N.J.A.C. 17:2-8.2, Criteria for determining eligibility for enrollment for employees of the Department of Law and Public Safety, sets forth eligibility criteria for the enrollment in the Prosecutors Part of certain Department of Law and Public Safety employees not assigned to the Division of Criminal Justice.

On August 30, 2006, the PERS Board was advised by the Attorney General's Office that the provisions of N.J.A.C. 17:2-8.2 were inconsistent with the requirements of P.L. 2001, c. 366. The Attorney General's Office advised that P.L. 2001, c. 366, precluded enrollment in the Prosecutors Part for State employees not holding one of the titles listed in the statute and not assigned to the Division of Criminal Justice. The Attorney General's Office concluded that the PERS Board could not utilize the criteria promulgated in N.J.A.C. 17:2-8.2 in determining eligibility for enrollment in the Prosecutors Part. Accordingly, the PERS Board proposes repealing N.J.A.C. 17:2-8.2. The proposed repeal results in the need to delete paragraph 4 from the definition of "service" in N.J.A.C. 17:2-8.1. Paragraph 4 specifically references N.J.A.C. 17:2-8.2. The proposed repeal of N.J.A.C. 17:2-8.2 also necessitates N.J.A.C. 17:2-8.3 through 8.16 being recodified as N.J.A.C. 17:2-8.2 through 8.15.

Social Impact

The proposed amendment to N.J.A.C. 17:2-6.3, Effective dates; change, corrects an inaccurate citation and benefits PERS members applying for disability retirements.

The proposed repeal of N.J.A.C. 17:2-8.2, Criteria for determining eligibility for enrollment for employees of the Department of Law and Public Safety, will impact employees within the Department of Law and Public Safety who were enrolled in the Prosecutors Part on the basis of the criteria set forth in that section. As noted, the Attorney General's Office has concluded that this section is invalid, as contrary to statute. Accordingly, such individuals are not entitled to receive the enhanced pension benefits afforded prosecutors under P.L. 2001, c. 366.

Economic Impact

The proposed repeal of N.J.A.C. 17:2-8.2, Criteria for determining eligibility for enrollment for employees of the Department of Law and Public Safety, will result in those enrolled in the Prosecutors Part under this section being enrolled in the regular PERS. There will be no loss of service credit. The service credit related to their time in the Prosecutors Part under this section will be credited to their regular PERS account. In addition, the pension contribution rate for these individuals will be reduced from the Prosecutors Part contribution rate of 7.5 percent to the regular PERS contribution rate of five percent. Finally, the amount reflecting the difference between the higher Prosecutors Part contribution rate and the lower regular PERS contribution rate paid by these individuals while enrolled in the Prosecutors Part pursuant to this section will be refunded.

PERS will benefit in that the higher retirement allowance provided under the Prosecutors Part will be paid only to those eligible to enroll in the Prosecutors Part under P.L. 2001, c. 366.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-17 and 43:15A-155 to 161 govern the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendments and repeal will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendments and repeal with their written comments.

Agriculture Industry Impact

The proposed amendments and repeal will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Public Employees' Retirement System only affect public employers, public employees and their dependents and beneficiaries. Thus, the proposed amendments and repeal do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendments and repeal will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposed amendments and repeal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:2-6.3 Effective dates; change

(a) Except as provided by N.J.A.C. [17:3]17:2-6.7, a member shall have the right to withdraw, cancel or change an application for retirement at any time before the member's retirement allowance becomes due and payable by sending a written request signed by the member. Thereafter, the retirement shall stand as approved by the Board.

(b)-(e) (No change.)

17:2-8.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

...

"Service" as a prosecutor as defined by N.J.S.A. 43:15A-155 shall include service as the following. For members employed as prosecutors on January 7, 2002, service shall also include any Public Employees' Retirement System service credited to a member's account on January 7, 2002. Pursuant to P.L. 2003, [c.140] c. 140, for an individual nominated and appointed pursuant to Article VII, Section II, paragraph 1 of the New Jersey Constitution to the position of a county prosecutor after January 7, 2002, service shall also include regular Public Employees' Retirement System service credited as of the date of appointment.

1. (No change.)

2. The Director of the Division of Criminal Justice in the Department of Law and Public Safety; any assistant director, deputy director, assistant attorney general or deputy attorney general employed by that [department] Department and assigned to that [division] Division on or after January 7, 2002; and

3. A criminal investigator (as defined by N.J.S.A. 52:17B-100.1) in the Division of Criminal Justice who was ineligible for enrollment in the Police and Firemen's Retirement System on or after January 7, 2002[; and].

[4. A Department of Law and Public Safety employee meeting the criteria set forth in N.J.A.C. 17:2-8.2.]

...

[17:2-8.2 Criteria for determining eligibility for enrollment for employees of the Department of Law and Public Safety

(a) Employees of the Department of Law and Public Safety who are not assigned to the Division of Criminal Justice shall be eligible for enrollment in the Prosecutors Part provided they satisfy one of the following criteria:

1. The employee is assigned to a unit that has a specific delegation of authority under the Criminal Justice Act of 1970, N.J.S.A. 52:17B-97 et seq., and the employee performs law enforcement functions on behalf of the Attorney General as an assistant attorney general, deputy attorney general or investigator. For the purposes of this section an investigator is defined as someone who assists an assistant attorney general or deputy attorney general in the investigation of potential violations of the law. Specifically, an investigator performs functions related to the detection, apprehension, arrest or conviction of persons and entities who violate the law; or

2. The employee is detached from his or her assignment in the Division of Criminal Justice to another division or office within the Department of Law and Public Safety and performs law enforcement functions on behalf of the Attorney General under the Criminal Justice Act of 1970, N.J.S.A. 52:17B-97 et seq. Additionally, the employee, prior to being detached from the Division of Criminal Justice, must have been eligible for enrollment in the Prosecutors Part according to P.L. 2001, c.366.]

17:2-8.2 (Reserved)


TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM
CREDITABLE COMPENSATION

Proposed Amendment:  N.J.A.C. 17:4-4.1

Authorized by: Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary

Authority: N.J.S.A. 43:16A-13(7)

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2007-31.

Submit comments by April 6, 2007, to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ  08625-0295

The agency proposal follows:

Summary

The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-4.1, Creditable compensation, due to concerns expressed by Division staff, affected employers and employees, as well as collective negotiations representatives regarding its application.

It is proposed that N.J.A.C. 17:4-4.1(a)2vi, be amended to delete the word waivers.; Including the general term waivers; in a listing of specific examples of payments or benefits that are extra compensation serves no purpose.

It is proposed that N.J.A.C. 17:4-4.1(a)2ix and x be combined. Both relate to increments or adjustments; relating to retirement. It is logical that, given their common subject matter, the two be combined to avoid redundancy.   The proposed combination of N.J.A.C. 17:4-4.1(a)2ix and x results in subparagraphs (a)2xi, xii and xiii being recodified as x, xi and xii.

It is proposed that recodified N.J.A.C 17:4-4.1(a)2xii be amended to delete the phrase during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service; and substitute in lieu thereof the phrase prior to the 20th year of the member's service credit.; The purpose of this amendment is to permit an employer to monetarily recognize an employee for the employee's years of service through senior officer pay and have that compensation recognized as part of base salary for pension calculation purposes while at the same time protecting the financial soundness of the PFRS. By precluding senior officer pay as part of a member's base salary after the member's 20th year in the PFRS, the Board has acted to ensure that that the PFRS has sufficient funds to pay the increased retirement benefits relating to senior officer pay.

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.

Social Impact

The proposed amendments will have a beneficial effect on members and on the PFRS. The proposed amendments to N.J.A.C. 17:4-4.1(a)2vi, ix and x clarify the intent of these provisions by deleting a term that does not add to the intent of the provision, that is,  waiver; and by merging two provisions to avoid redundancy. The proposed amendment to recodified N.J.A.C. 17:4-4.1(a)2xii clarifies in what years of service an employer can monetarily recognize an employee for their years of service and have that compensation recognized as part of base salary for pension calculation purposes.     

Economic Impact

The proposed amendments will have a positive economic impact on the PFRS, employers and members in that it clearly establishes when senior officer's pay will be recognized as part of base salary for pension calculation purposes and does so in a manner that ensures the financial soundness of the PFRS.

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendments.  The Division is not aware of any provisions in the proposed amendments that would impose any hardship or costs on PFRS members or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendments will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendments with their written comments.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Police and Firemen's Retirement System only affect public employers, public employees and their dependents and beneficiaries.  Thus, the proposed amendments do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:4-4.1 Creditable compensation

(a) The compensation of a member subject to pension contributions and creditable for retirement and death benefits in the system shall be limited to base salary, and shall not include extra compensation.

1. (No change.)

2. Extra compensation; means individual salary adjustments which are granted primarily in anticipation of a member's retirement or as additional remuneration for performing temporary duties beyond the regular workday. Forms of compensation that have been identified as extra compensation include, but are not limited to:

i. v. (No change.)

vi. Sell-backs, trade-ins [, waivers,] or voluntary returns of accumulated sick leave, holiday pay, vacation, overtime, compensatory time, or any other payment or benefit in return for an increase in base salary;

vii.-viii. (No change.)

ix. Increments or adjustments granted for retirement credit or in recognition of the member's forthcoming retirement;

[x. Increments or adjustments in recognition of the member's forthcoming retirement;]
Recodify existing xi. and xii. as x. and xi. (No change in text.)

[xiii.] xii. Any form of compensation which is not included in a member's base salary [during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service]  prior to the 20th year of the member's service credit.

(b)-(i).  (No change.)


ADOPTIONS


TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES' RETIREMENT SYSTEM

39 N.J.R. 5367(a)

Adopted Amendments: N.J.A.C. 17:2-6.3 and 8.1

Adopted Repeal: N.J.A.C. 17:2-8.2

PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Effective Dates; Change Definitions; Criteria for Determining Eligibility for Enrollment for Employees of the Department of Law and Public Safety

Proposed: May 7, 2007 at 39 N.J.R 1642(a).

Adopted: September 19, 2007 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Filed: November 15, 2007 as R.2007 d.382, without change.

Authority: N.J.S.A. 43:15A-17.

Effective Date: December 17, 2007.

Expiration Date: January 24, 2010.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-17 and 43:15A-155 to 161 govern the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adopted amendments follows:

17:2-6.3  Effective dates; change

(a) Except as provided by N.J.A.C. 17:2-6.7, a member shall have the right to withdraw, cancel or change an application for retirement at any time before the member's retirement allowance becomes due and payable by sending a written request signed by the member. Thereafter, the retirement shall stand as approved by the Board.

(b)-(e) (No change.)

17:2-8.1  Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

. . .

"Service" as a prosecutor as defined by N.J.S.A. 43:15A-155 shall include service as the following. For members employed as prosecutors on January 7, 2002, service shall also include any Public Employees' Retirement System service credited to a member's account on January 7, 2002. Pursuant to P.L. 2003, c. 140, for an individual nominated and appointed pursuant to Article VII, Section II, paragraph I of the New Jersey Constitution to the position of a county prosecutor after January 7, 2002, service shall also include regular Public Employees' Retirement System service credited as of the date of appointment.

1. (No change.)

2. The Director of the Division of Criminal Justice in the Department of Law and Public Safety; any assistant director, deputy director, assistant attorney general or deputy attorney general employed by that Department and assigned to that Division on or after January 7, 2002; and

3. A criminal investigator (as defined by N.J.S.A. 52:17B-100.1) in the Division of Criminal Justice who was ineligible for enrollment in the Police and Firemen's Retirement System on or after January 7, 2002.

17:2-8.2  (Reserved)


 
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