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Pensions and Benefits
RULE CHANGES
2011
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 August 28, 2011 Increase in the Minimum Annual Base Salary for Participation in the Public Employees' Retirement System

Notice of August 28, 2011 Increase in the Minimum Annual Base Salary for Participation in the Teachers' Pension and Annuity Fund


Proposed Rules

TEACHERS' PENSION AND ANNUITY FUND

Proposed Amendment: N.J.A.C. 17:3-1.4, Teachers' Pension Annuity Fund (TPAF)

Proposed Repeal and New Rule: N.J.A.C. 17:3-2.7, Teachers' Pension Annuity Fund (TPAF), Enrollment Following Deferred Retirement

POLICE AND FIREMEN'S RETIREMENT SYSTEM

Proposed Readoption with Amendments: N.J.A.C. 17:4, Police and Firemen's Retirement System (PFRS)

STATE POLICE RETIREMENT SYSTEM

Proposed Readoption with Amendments: N.J.A.C. 17:5, Proposed New Rules: N.J.A.C. 17:5-1A and 3.2, and Proposed Repeal: N.J.A.C. 17:5-1.7, State Police Retirement System (SPRS)


Adoptions

Final Special Rule Adoption: N.J.A.C.17:6, Cite at 43 N.J.R. 662(a), Defined Contribution Retirement Program (DCRP) - January 25, 2011

Final Adoption of Amendment: N.J.A.C. 17:2-1.4, Cite at 43 N.J.R. 447(a), Public Employees Retirement System (PERS) - February 22, 2011

Adopted Repeal N.J.A.C. 17:3-4.7, Cite at 43 N.J.R. 449(a), Teachers' Pension and Annuity Fund (TPAF) - February 22, 2011

Adopted Repeal N.J.A.C. 17:4-4.8, Cite at 43 N.J.R. 449(b), Police and Firemen's Retirement System (PFRS) - February 22, 2011

Adopted Repeal N.J.A.C. 17:5-3.6, Cite at 43 N.J.R. 449(c), State Police Retirement System (SPRS) - February 22, 2011

Adopted New Rule N.J.A.C. 17:2-2.8, Cite at 43 N.J.R. 1036(c), Public Employees Retirement System (PERS) - April 18, 2011

Final Adoption of Amendment: N.J.A.C. 17:3-1.4, Cite at 43 N.J.R. 1370(b), Teachers' Pension and Annuity Fund (TPAF) - June 6, 2011

Adopted Repeal and New Rule: N.J.A.C. 17:3-2.7, Cite at 43 N.J.R. 1899(a), Teachers' Pension and Annuity Fund (TPAF) - August 1, 2011

Readoption N.J.A.C. 17:4 et seq., Cite at 43 N.J.R. 2364(b) , Police and Firemen's Retirement System (PFRS) - September 6, 2011

Final Adoption of Amendment: N.J.A.C. 17:1-1.9, Cite at 43 N.J.R. 2672(a), General Administration, Bankruptcy; Subsequent Loans - October 17, 2011

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PUBLIC NOTICES


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS

43 N.J.R. 3052(a)

Notice of August 28, 2011 Increase in the Minimum Annual Base Salary for Participation in the Public Employees' Retirement System
 
Take notice that, pursuant to N.J.A.C. 17:2-2.1(c), the Division of Pensions and Benefits is raising the annual base salary for participation in the Public Employees' Retirement System from $ 7,700 to $ 7,800. The regulation includes language which states the "minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, 'Consumer Price Index' means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics." This increase in the minimum annual base salary is actuarially sound and this increase is effective January 1, 2012.


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS

43 N.J.R. 3052(b)

Notice of August 28, 2011 Increase in the Minimum Annual Base Salary for Participation in the Teachers' Pension and Annuity Fund
 
Take notice that, pursuant to N.J.A.C. 17:3-2.1(g), the Division of Pensions and Benefits is raising the annual base salary for participation in the Teachers' Pension and Annuity Fund from $ 7,700 to $ 7,800. The regulation includes language which states the "minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, 'Consumer Price Index' means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics." This increase in the minimum annual base salary is actuarially sound and this increase is effective January 1, 2012.

PROPOSED RULES


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

43 N.J.R. 274(a)

Proposed Amendment: N.J.A.C. 17:3-1.4

Click here to view Interested Persons Statement

Election of Member-Trustee
 
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 2011-029.
 
Submit comments by April 8, 2011 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) proposes to amend N.J.A.C. 17:3-1.4, Election of member-trustee. Each year a convention is held to elect a member-trustee to the Board. The current process involves mailing packets to and from the County Superintendents, as well as the membership. This process is paper intensive. The proposed amendment to the rule will establish procedures that permit the Board Secretary to electronically provide information to both the County Superintendents and the membership.

In an effort to decrease administrative costs, the Board proposes to amend the current rule and establish procedures that will permit the Division to streamline the process and utilize technology wherever possible. For example, the annual report that was included in the convention packet is now available on the Division's website for review. The proposed amendment will provide the Board Secretary with the flexibility to distribute information much faster and the Division will save on the printing and postage costs. The Division has been providing information electronically to employers, including certifying officer letters, since July 2006. Employers have been receptive to this form of communication and have been compliant with Division requests.

Throughout this subsection the TPAF Board of Trustees is addressed as the Board and technical amendments are proposed to establish consistency and conformity in the language.

N.J.A.C. 17:3-1.4(a) and paragraph (a)1 remain unchanged. Paragraph (a)2 is deleted since the annual report will no longer be presented at the convention, instead it is available on the Division's website and can be obtained prior to the actual meeting date. Paragraph (a)3 is recodified as paragraph (a)2 and is amended to delete the discussion period "on any questions concerning the report or matters pertaining to the Fund." This language is no longer necessary as the membership is provided a general discussion period. Subsection (b) is amended to include that the time and location designated by the Board shall be at the recommendation of the Secretary of the Board. Subsection (e) is amended to clarify that the alternates attending the convention must be active or retired members of the Fund. Subsection (f) is amended to also include that alternates attending the convention shall be selected from the membership. Also, the word "Board" is being deleted and replaced with "County Superintendent," to eliminate confusion as to who determines the county meeting date. Paragraph (f)2 is amended to clarify that the County Superintendent will electronically forward to the Secretary of the Board, membership information including the street and email address of the delegates and alternates.

Subsection (g) has a minor technical change. Subsection (i) is deleted and replaced with a new subsection, which clarifies that members wishing to be nominated as a candidate for a trustee position are required to send a letter of interest to the Secretary of the Board at least 45 days prior to the convention meeting date. This is necessary to provide sufficient time for the Division to verify candidates' eligibility pursuant to N.J.S.A. 18A:66-56. Subsection (k) is deleted and replaced with a new subsection which includes a complete list of the convention materials that will be provided to the eligible delegates and alternates by the Secretary of the Board.

Subsection (o) is amended with new paragraphs (o)1 and 2. New paragraph (o)1 clarifies the procedure for the election of a trustee whereby only one candidate registers with the Board Secretary and an election will not be required. New paragraph (o)2 clarifies the procedure when multiple candidates register for the position as trustee with the Board Secretary and an election will be required. Subsection (p) is amended to remove an incorrect cross-reference to a statute. Subsection (q) is amended to delete reference to "the main floor" since the convention may be held at a facility with a different floor plan. Subsection (r) is amended to add "delegates" since they are also seated at a specified area at the convention. Paragraph (s)1 is deleted since the subject is addressed in subsection (o) as proposed for amendment.

As the Division 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 affect and work to the benefit of the past, present and future employees of public education. The retirees, survivors of retirees and members, rely on the efficient operation of the retirement system to provide them with monthly retirement benefits, with proper crediting of service, with death benefits and with the information they need regarding their individual accounts. The members rely upon the presence and predictability of the rules that guide the administration of their benefits. The protections and guarantees that these rules afford its members mandate their continued existence.

The proposed amendment to N.J.A.C. 17:3-1.4 will clarify the Board's position regarding the election of member-trustee to the TPAF Board. In the current economic climate, it is important to determine how the election process can be streamlined in consideration of staffing limitations and decreasing administrative budgets. The proposed amendment to the election procedures will reduce the costly paper reproduction of the TPAF annual report and certain mailings that are associated with the convention.

The social benefits of the proposed amendment outweigh any negative effect that this amendment may impose on members or employers. Providing proper interpretation of the Board election process will provide members and employers with a better understanding of this administrative practice. The taxpaying public may be affected by these rules, since public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the retirement system, which the rules require.
 
Economic Impact

The proposed amendment will have a positive economic impact on the Teachers' Pension and Annuity Fund, since it will reduce the administrative costs of the Board elections for member-trustee. The TPAF convention for a member-trustee involves notifying the 21 County Superintendents and the delegates and alternates for each county. The proposed change to the rule will permit the Board Secretary to electronically send convention information to the interested parties. This will result in the Division saving the costs associated with the printing and postage of the election materials. The Division will continue to monitor the impact of the proposed amendment.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. 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 Board invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment along with their written comments.
 
Agriculture Industry Impact

The proposed amendment will have no impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed amendment has no effect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Teachers' Pension and Annuity Fund in New Jersey.
 
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.
 
Housing Affordability Impact

The proposed amendment will not have an impact on affordable housing in New Jersey since the amendment applies to the election of a member-trustee to the Teachers' Pension and Annuity Fund and it will have no impact on the average cost of housing in New Jersey.
 
Smart Growth Development Impact

The proposed amendment will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the rule only applies to the election of a member-trustee to the Teachers' Pension and Annuity Fund.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in bracketed [thus]):
 
SUBCHAPTER 1.    ADMINISTRATION
 
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; and
 
[2. Presenting its annual report; and]
 
[3.] 2. Conducting a general discussion period [on any questions concerning the report or matters pertaining to the Fund].
 
(b) [Such] The convention shall be held annually at a time and location designated by the Board and at the recommendation of the Secretary of the Board.
 
(c)-(d) (No change.)
 
(e) The delegates [to] and alternates attending the convention must be active [members of or former members receiving a retirement allowance from] or retired members of the Fund.
 
(f) The delegates and alternates attending shall be selected from the membership of each county. The selection date shall be determined by the [Board] County Superintendent.
 
1. (No change.)
 
2. The County Superintendent, within five days after the meeting, shall electronically forward to the Secretary of the Board [a certificate] information containing the membership numbers, retirement numbers, names, street and email addresses and school districts of the delegates and alternates.
 
(g) Each county shall be entitled to one delegate for each 550 members employed in or retired from the county [or major fraction thereof].
 
(h) (No change.)
 
[(i) The Secretary of the Board shall forward to each delegate and alternate his or her identification for admission to the convention, a copy of the election rule, convention agenda, annual report of the Board of Trustees for the preceding fiscal year and the name of the trustee whose term is expiring.]
 
(i) Members wishing to be nominated are required to send a written letter of interest to the Secretary of the Board at least 45 days prior to the convention meeting date.
 
(j) (No change.)
 
[(k) The Secretary of the Board shall also notify each delegate and alternate of the names of the candidates to be nominated for trustee that have been registered.]
 
(k) The Secretary of the Board shall provide by mail or electronically to each eligible delegate and alternate the following:
 
1. Identification for admission to the convention;
 
2. A copy of the election rules;
 
3. Convention agenda;
 
4. Division's web address for the annual report of the Board of Trustees for the preceding fiscal year;
 
5. Proposed minutes of the prior year's convention; and
 
6. Name(s) of the candidate(s) to be nominated for trustee who have registered with the Secretary of the Board.
 
(l)-(n) (No change.)
 
(o) The following procedure will be followed for the election of a member-trustee.
 
1. If only one candidate has registered with the Board Secretary in accordance with (j) above, for the position of trustee, the candidate shall be deemed elected without ballot.
 
[(o)] 2. [A] In the event that more than one candidate has registered with the Board Secretary in accordance with (j) above, the candidate to be elected must receive a majority of the total votes cast by the seated delegates or their alternates to be elected. In the event no candidate receives a majority, the candidate who has received the least number of votes shall be eliminated. This procedure shall be repeated on each succeeding ballot until one candidate has received a majority of the total vote.
 
(p) The trustee must be employed in or retired from a county in Group A, Group B or Group C. Members elected 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) Only delegates with proper identification will be admitted to [the main floor of] the convention.
 
(r) [Alternates] Delegates, alternates and visitors shall be seated in a specified area.
 
(s) The secretary of the convention will conduct a roll call of the delegates. Alternates will be seated in the place of respective county absentee delegates in the order in which they are listed by the secretary of the county meeting[:].
 
[1. The election of the member-trustee shall require a majority vote among the delegates actually seated in the convention.]
 
(t)-(w) (No change.)


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

43 N.J.R. 953(a)

Proposed Repeal and New Rule: N.J.A.C. 17:3-2.7

Click here to view Interested Persons Statement

Enrollment Following Deferred Retirement

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 2011-097.

Submit comments by June 17, 2011 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) proposes to repeal and replace N.J.A.C. 17:3-2.7, Enrollment following deferred retirement, since the enactment of P.L. 2007, c. 103, which imposes a maximum compensation upon which contributions will be made for TPAF employees who become members of the retirement system on or after July 1, 2007. The maximum amount will be the amount of base or contractual salary equivalent to the annual maximum wage contribution base for Social Security. P.L. 2008, c. 89 amended the statutory age-related reductions for early retirement benefits for members who enrolled in the TPAF after the effective dates of these laws. P.L. 2008, c. 89 amended the age for receipt of a service retirement or deferred retirement benefits to age 62. It also increased the minimum annual salary for TPAF participation for those members who enroll on or after November 2, 2008.

As a result of these changes in the TPAF retirement benefit structure and enrollment eligibility, it is necessary to clarify when a vested member returning to public employment prior to attaining the age to commence receipt of deferred retirement benefits may continue to accrue retirement system service and salary in the former account or must enroll under a new membership account. The length of time that has elapsed since the last pension contribution to the previous account is critical in determining whether the original membership account remains open. N.J.S.A. 18A:66-7(a) provides for cessation of membership after two years of inactivity, subject to certain exceptions pursuant to N.J.S.A. 18A:66-8(a). Members returning to TPAF-eligible employment after the expiration of the prior account are assigned a new enrollment date, and are subject to all enrollment, contribution and retirement eligibility requirements associated with that new enrollment date.

Further, it is necessary to clarify that members who are required to establish a new account due to the expiration of the prior account may elect to aggregate all service and salary credit within the new account, subject to all requirements associated with the new enrollment date. In some instances, this could mean that an individual who re-enrolled on or after November 2, 2008, would not be eligible for retirement benefits until the attainment of age 62. The transfer of all prior vested service to the new account is optional, however, and the re-enrolling member may elect to leave the prior vested account intact, and qualify for the receipt of a deferred retirement based upon that service under the provisions of N.J.S.A. 18A:66-36. No retirement benefits shall be payable until the member has terminated all TPAF eligible employment.

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 benefit 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.

The proposed repeal and new rule at N.J.A.C. 17:3-2.7 will clarify the statutory age-related reductions for early retirement benefits, the age for receipt of a service or deferred retirement and increased the minimum annual salary for those members who enrolled in the TPAF after the effective date of the enactment of P.L. 2007, c. 103 and P.L. 2008 c. 89. This legislation was enacted as a result of recommendations made by the Joint Legislative Committee on Public Employee Benefits Reform, which recognized the need to control pension costs and eliminate pension abuses.

The social benefits of this rulemaking outweigh any negative effect that the repeal and new rule may impose on members or employers. Providing proper interpretation of an enrollment following a deferred retirement will provide members and employers with a better understanding of this administrative practice. The taxpaying public may be affected by these rules, since public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the retirement system, which the rules require.

Economic Impact

The proposed repeal and new rule will have a positive economic impact on the TPAF, employers and members, in that it will clarify enrollment eligibility following a deferred retirement. Members that deferred their retirement and returned to public employment prior to the expiration of the former account can resume their original membership with the original benefit structure intact, thus remaining cost neutral. Those members that return to TPAF eligible employment after the expiration of the prior account are assigned a new enrollment date and are subject to all enrollment, contribution and retirement eligibility requirements associated with the new enrollment date for the prospective service. Further, they may elect to transfer their vested account to this new account, which will provide cost savings to the retirement system. The enactment of P.L. 2007, c. 103 and P.L. 2008, c. 89 are a result of recommendations made by the Joint Legislative Committee on Public Employee Benefits Reform, which recognized the need to control pension costs and eliminate abuse to the pension systems. The Division will continue to monitor the impact of the proposed repeal and new rule.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. 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 repeal and new rule will not result in the generation or loss of jobs. The Board invites any interested parties to submit any data or studies concerning the jobs impact of this proposed rulemaking along with their written comments.

Agriculture Industry Impact

The proposed repeal and new rule will have no impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed repeal and new rule has no effect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the Teachers' Pension Annuity Fund in New Jersey and the TPAF.

Smart Growth Impact

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

Housing Affordability Impact

The proposed repeal and new rule will not have an impact on affordable housing in New Jersey since the repeal and new rule apply to the enrollment following a deferred retirement of a member of the Teachers' Pension and Annuity Fund, further, as such, it will have no impact on the average cost of housing in New Jersey.

Smart Growth Development Impact

The proposed repeal and new rule will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the repeal and new rule only apply to the enrollment following a deferred retirement of a member of the Teachers' Pension and Annuity Fund.

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

17:3-2.7 Enrollment following deferred retirement

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

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

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

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

(a) For a member who has enrolled in the retirement system prior to November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 60 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 18A:66-7(a) or the longer period provided by N.J.S.A. 18A:66-8(a).

(b) Should a member who has enrolled in the retirement system prior to November 2, 2008, who elected a deferred retirement, resume regular service prior to age 60 after the period for continued membership stipulated by N.J.S.A. 18A:66-7(a) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.

(c) For a member who has enrolled in the retirement system on or after November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 62 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 18A:66-7(a), or the longer period provided by N.J.S.A. 18A:66-8(a).

(d) Should a member who has enrolled in the retirement system on or after November 2, 2008, and who elected a deferred retirement, resume regular service prior to age 62 after the period for continued membership stipulated by N.J.S.A. 18A:66-7(a) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.

(e) In the event that either (b) or (d) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all TPAF eligible employment.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

43 N.J.R. 1177(a)

Proposed Readoption with Amendments: N.J.A.C. 17:4

Proposed New Rules: N.J.A.C. 17:4-1A, 2.7 and 4.8

Proposed Repeal: N.J.A.C. 17:4-1.8

Proposed Repeals and New Rules: N.J.A.C. 17:4-4.9 and 7.3

Police and Firemen's Retirement System Rules

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 2011-094.

Submit comments by July 1, 2011 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 (Board) of the Police and Firemen's Retirement System (PFRS) is responsible for reviewing the administrative rules within N.J.A.C. 17:4. When the Board becomes aware of a change in the laws or a court decision that could affect the PFRS, 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, whenever practicable, so that they are consistent with the rules governing the other retirement systems.

The Board of Trustees of the PFRS proposes to readopt the current rules within N.J.A.C. 17:4, which expire on March 10, 2011, with the following amendments, repeals and new rules. The rules proposed for readoption with amendments, repeals and new rules affect the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects. Pursuant to N.J.S.A. 52:14B-5.1c, by filing this notice of proposal with the Office of Administrative Law on or before March 10, 2011, the expiration date of N.J.A.C. 17:4 is extended 180 days to September 6, 2011.

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 the individual accounts. The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirement for eligibility and amounts of benefits available that are mandated within the statues governing the PFRS. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66 (1978), the chapter was readopted effective June 8, 1990. The chapter expired on June 8, 1995 and was adopted as new rules effective April 1, 1996. Chapter 4 was readopted effective January 25, 2001 and again was readopted effective March 10, 2006. The following is a discussion of the rules proposed for readoption with amendments, repeals and new rules. Throughout the rules, the Division of Pensions and Benefits is addressed as the Division and technical amendments are proposed to establish consistency and conformity in the language and the use of defined words and terms.

SUBCHAPTER 1. ADMINISTRATION

N.J.A.C. 17:4-1.1, Board meetings, and 1.2, Fiscal year, would remain unchanged.

N.J.A.C. 17:4-1.3, Officers and committees, subsection (a) would remain unchanged. New paragraphs (a)1 and 2 are proposed to include the statutory references for both the election of a representative to the Pension System Actuary Selection Committee and a representative to the State Investment Council. Subsection (b) remains unchanged and subsection (c) is amended to use the standardized terms added in new Subchapter 1A, Definitions. Subsection (d) remains unchanged.

N.J.A.C. 17:4-1.4, Election of active member-trustee, is amended at subsection (a) to state when the election cycle begins and ends. Subsection (b) is amended to use the standardized terms added in new Subchapter 1A, Definitions. Subsection (c) is amended to refer to the notice of election, rather than election notices. Paragraph (c)1 is amended to state the notice of election will be distributed electronically by the Secretary of the Board or a contracted vendor. In addition, the employers will post the notice in a prominent place and the Division will have it posted to their website. Paragraph (c)2 is amended to delete the words "election notice" and add "notice of election." Subparagraphs (c)2i and ii remain unchanged. Subparagraph (c)2iii is amended to state that the instructions for the nominating process are available from the Board Secretary. Subparagraph (c)2iv and v remain unchanged. Subparagraph (c)2vi is amended for clarity. Paragraph (c)3 is amended to clarify that a notice of election is provided to the certifying officer. Paragraph (c)4 is deleted and replaced with a new paragraph that states that the employing agency shall be required to respond electronically that the notice of election has been properly distributed to the membership. Paragraph (c)5 is amended to include that the notice of election will be distributed electronically to eligible members and posted to the Division's website.

N.J.A.C. 17:4-1.4(d) is amended to clarify that the subsection applies to the nominating process rather than just the petitions. Paragraph (d)1 is amended to state that the instructions for the nominating instructions are available from the Office of the Board Secretary and will be posted to the Division's website. Paragraph (d)2 is deleted and replaced with a new paragraph that states that a member shall complete a written letter of interest and submit it to the Board Secretary in seeking the nomination to become a candidate for an elected trustee position. The Board Secretary will verify the eligibility of a member to be a candidate and if the member qualifies the Board Secretary will forward the instructions of the nominating process. Paragraph (d)3 is amended to delete the words "petition forms" and add "nominating instructions." Subparagraph (d)3i and ii are amended to further clarify that members will be required to register their nomination for the candidate through a designated website or a signed paper petition. New subparagraph (d)3iii is proposed to clarify that the preferred method for a petitioner to nominate a candidate is electronically through a designated website, although a paper petition form will be available. Paragraph (d)4 is amended to clarify that this paragraph is about a "paper" petition. Paragraph (d)5 is amended to state that an active member shall nominate only one candidate. The word "petition" is deleted since members may have the option of nominating a candidate either electronically or by a paper petition. Paragraph (d)6 is amended to state that the last date for nominating a candidate shall be identified, as well as the approximate date that the election packets shall be sent to employers for distribution to voters. Paragraph (d)7 is deleted since it is no longer relevant to the nominating process. Paragraph (d)8 is recodified as (d)7 and the words "by petition" are deleted since members may have the option of nominating a candidate either electronically or by a paper petition. New paragraph (d)8 is proposed to state that if there are no candidates that qualify for the trustee position, the entire nomination process will begin again for the remainder of the unexpired term. New paragraph (d)9 further states the procedure for the election process when there are two positions for the same election and only two candidates qualify. New paragraph (d)10 states the procedure for the election process when there are two positions for the same election and more than two candidates qualify.

N.J.A.C. 17:4-1.4(e)1 and 2 remain unchanged. Paragraph (e)3 is amended to add the word "and" at the end of the paragraph in conformity with Code standards. Paragraph (e)4 is amended to clarify that the certifying officer must acknowledge receipt and distribution of the election packets to employees. In addition, the statutory authority for the duties of the certifying officers has been added. Subsection (f) is amended for grammatical purposes, to indicate that the steps that follow "shall" apply to the distribution of paper ballots when requested by a member. Paragraphs (f)1, 2 and 3 remain unchanged. Subsection (g) and paragraphs (g)1 and (g)2 are proposed for technical amendments. Paragraph (g)3 is deleted and replaced with a new paragraph that states that the biographical information of each candidate is included on the ballot in the election packet. Paragraph (g)4 remains unchanged. Paragraphs (h)1, 2 and 3 are proposed with only minor technical amendments. Paragraph (h)4 remains unchanged. Subsection (i) is amended for grammatical purposes.

N.J.A.C. 17:4-1.4(i)1, 2 and 3 are amended with minor technical changes and to use the standardized terms added in new Subchapter 1A, Definitions. Subsection (j) is amended to state that in the event the victorious candidate dies or is found to be unable or unwilling to serve prior to commencing the term as trustee, the Board shall conduct a new election to fill the Board vacancy. The Board wants to ensure that the member/trustee position is filled by an individual that is elected by the membership, therefore, a new election is necessary to fill the Board vacancy.

N.J.A.C. 17:4-1.5, Certifying officer (employer), remains unchanged.

At N.J.A.C. 17:4-1.6, Records, subsection (a) is amended to include the phrase "approved" minutes and subsections (b) through (d) are deleted since the text is available in N.J.A.C. 17:1-1.2. Subsection (e) is recodified as subsection (b) and "approved by the Board" is changed to "accepted by the Board," since the Board does not approve but accepts the annual report by the system's actuary. Existing subsection (f) is recodified as subsection (c) and is amended to remove the telephone number.

At N.J.A.C. 17:4-1.7, Appeal from Board decisions, subsection (a) is amended to correctly codify the first paragraph and to replace the word "you" with the word "member." Subsections (b) through (e) would remain unchanged, except for the deletion of misplaced quotation marks at the end of subsection (e), which are relocated to the end of subsection (a).

N.J.A.C. 17:4-1.8, Suspension of pension checks, is proposed for repeal, as N.J.A.C. 17:1-1.13 governs this issue.

N.J.A.C. 17:4-1.9 and 1.10 remain reserved, while N.J.A.C. 17:4-1.11, Proof of age, and 1.12, Employees; biweekly salaries, remain unchanged.

N.J.A.C. 17:4-1.13, Election of retired member-trustee, is amended at subsection (a) to clarify when the election cycle begins and ends, and along with subsection (b) is also amended to use the standardized terms added in new Subchapter 1A, Definitions. Subsection (c) is amended to change the words from "election notices" to "notice of election." Paragraph (c)1 is amended to state that the notice of election shall be posted to the Division's website and printed in the retiree newsletter, rather than distributed by the Board Secretary to each retired member eligible to vote. In addition, the instructions for the nominating process, rather than the petition forms, are available from the Board Secretary. Paragraph (c)2 has a minor technical change. Subparagraphs (c)2i and ii remain unchanged. Subparagraph (c)2iii is deleted and replaced with a new subparagraph that states that the instructions for the nominating process are available through the Board Secretary. Subparagraph (c)2iv is amended with a minor technical change and subparagraph (c)2v remains unchanged. Subparagraph (c)2vi is amended to include that other information that would be pertinent to a particular election and the nominating process would also be available in the notice of election. Paragraph (c)3 is amended to clarify that the notice of election shall be provided to each retired member.

N.J.A.C. 17:4-1.13(d) and (d)1 are amended to change the reference "nominating petitions" and "nominating petition forms" to "nominating process." Paragraph (d)2 is deleted and replaced to state the nomination process. Paragraph (d)3 is amended to clarify that at least 100 retired members are required to register their nomination for the candidate through a designated website or, if necessary, paper petition. Paragraph (d)4 is deleted since it is no longer relevant to the nominating process. Recodified paragraph (d)4 is amended to clarify that the "retired" member shall nominate only one candidate for the trustee position, rather than sign one petition. Recodified paragraph (d)5 is amended for grammatical purposes to further clarify the nominating process. Paragraph (d)7 is deleted since the paragraph is no longer relevant to the nominating process. Recodified paragraph (d)6 is amended to state that if only one candidate is nominated for the member-trustee position, that candidate shall be deemed elected without balloting and a notice will be posted on the Division's website. New paragraph (d)7 is proposed to state the process when no candidates qualify for the trustee position.

N.J.A.C. 17:4-1.13(e) and (e)1 remains unchanged. Paragraph (e)2 is amended to replace the word "ballot" with an "election packet." Subparagraph (e)2i is amended to include the specific information that is required in the election packet. Subparagraph (e)2ii remains unchanged. Subparagraph (e)2iii is amended to clarify that the biographical information of each candidate is included on the ballot in the election packet. Subparagraph (e)2iv is deleted and replaced to state that mutilated and other types of illegible ballots shall be declared invalid and not considered in the final election count. Subparagraph (e)2v is deleted and replaced, and along with new subparagraphs (e)2vi through ix, address the information necessary to properly cast an electronic vote. Paragraph (e)3 is amended to clarify that all candidates may attend the drawing for the position on the ballot by contacting the Board Secretary. Paragraphs (e)4 and (e)5 are deleted since the context of these paragraphs is addressed in subparagraph (e)2iv. Paragraphs (e)6, 7 and 8 are proposed to be recodified as paragraphs (e)4, 5 and 6 without change.

N.J.A.C. 17:4-1.13(f)1 and 2 remain unchanged. Paragraph (f)3 is replaced to clarify that the biographical information of each candidate is included on the ballot in the election packet. Paragraph (f)4 remains unchanged. Subsection (g) is amended for grammatical purposes by indicating that the following paragraphs "shall" apply to vote tabulation. Paragraph (h)1 is amended to clarify that any candidate or member who believes there may have been an error in the counting or declaring the vote may request in writing that the Board hold a hearing to consider the request and determine whether a recount shall be held. Paragraph (h)2 is proposed with minor technical changes. Paragraph (h)3 is amended to add the word "retired" since N.J.A.C. 17:4-1.13 addresses only retired police and fire member-trustee. Subsection (i) is amended to state that in the event the victorious candidate dies or is unable or unwilling to serve prior to commencing the term as trustee, the Board shall conduct a new election to fill the Board vacancy, as required by N.J.S.A. 43:16A-13 for the election of a retired member-trustee to the PFRS Board. This will ensure that the member-trustee position is filled by an individual that is elected by the voting membership.

SUBCHAPTER 1A. DEFINITIONS

New Subchapter 1A, Definitions, contains the definitions for various terms that are used throughout this chapter and is relocated from N.J.A.C. 17:4-2.1(b). This section serves to provide a central location for frequently used terms. The following new terms are added: "Division," "final compensation," "PERS," "Police Training Commission" and "years of service." The defined term "general supervision" is proposed for deletion, as the language has been added to the term "direct supervision" because both terms have the same meaning and are used interchangeably within this chapter.

SUBCHAPTER 2. ENROLLMENT

At N.J.A.C. 17:4-2.1, Eligible positions, subsection (a) is amended to use the standardized terms added in new Subchapter 1A, Definitions. Subsection (b) is deleted since these terms are addressed in new Subchapter 1A. Subsection (c) is recodified as subsection (b) and is amended to use the standardized terms added in new Subchapter 1A, Definitions. Recodified subsection (e) is amended to use the standardized terms added in new Subchapter 1A, Definitions.

N.J.A.C. 17:4-2.2, Compulsory enrollment, is amended to use the standardized terms added in new Subchapter 1A, Definitions.

N.J.A.C. 17:4-2.3, Medical requirements, is amended to clarify that the employer "certifies," rather than "furnishes" evidence of good health to satisfy the Board.

At N.J.A.C. 17:4-2.4, Training requirements, paragraph (a)2 is amended to clarify that the employer must "certify," rather than "submit proof" to the Division that all police applicants are required to complete PTC or comparable training. Subparagraph (a)3ii is amended to use the standardized terms added in new Subchapter 1A, Definitions. Paragraph (a)6 is amended to clarify that the employer must "certify," rather than "submit evidence" that the applicant has completed PTC or comparable training to the Division and to use the standardized terms added in new Subchapter 1A, Definitions. Paragraph (a)7 is deleted, as the timeframe for police officers to have completed the PTC was from January 1, 2009 until July 1, 2010 and therefore, the paragraph is no longer relevant to this chapter. Subsection (b) is amended to use the standardized terms added in new Subchapter 1A, Definitions. Paragraph (b)1 remains unchanged and (b)2 is deleted, as the timeframe to have completed the firefighter 1 certification training was from January 1, 2009 until July 1, 2010 and, therefore, the paragraph is no longer relevant to the chapter.

At N.J.A.C. 17:4-2.5, Age requirements, subsection (a) remains unchanged. Subsection (b) is amended to use the standardized terms added in new Subchapter 1A, Definitions. The reference to the "Department of Personnel" is replaced with its successor agency, the "Civil Service Commission." Further, the cited statute, N.J.S.A. 43:16A-3(1) is deleted since it does not address the maximum age requirement. Subsections (c) through (g) remain unchanged. Subsection (h) is amended to use the standardized terms added in new Subchapter 1A, Definitions.

N.J.A.C. 17:4-2.6, Enrollment date, remains unchanged.

N.J.A.C. 17:4-2.7, Enrollment following deferred retirement, is proposed as a new rule. The new rule is a result of the enactment of P.L. 2010, c. 1. These pension reforms amended the maximum compensation upon which contributions will be made for PFRS who become members of the system on or after the law's effective date of May 21, 2010. The law also changed the provisions of the PFRS for those enrolled in the retirement system after the effective date that the member's retirement allowance will be calculated on any three fiscal years of membership providing the largest possible benefit. A member of the system before the effective date would continue to have the member's allowance calculated in the manner provided by existing law using the compensation in the final year of service. The law removed the provision that members have the non-forfeitable right to receive benefits as formally provided by the laws governing the retirement system upon the attainment of five years of service credit in the retirement system. In addition, it also eliminated the provision in PFRS that would permit a member of the PFRS to retire, at any age after 25 years of service credit, on a special retirement allowance of 70 percent of final compensation after the retirement system reaches a funded level of 104 percent.

As a result of these changes in the PFRS retirement benefit structure, it is necessary to clarify when a vested member returning to public employment prior to attaining the age to commence receipt of deferred retirement benefits may continue to accrue retirement system service and salary in the former account, or must enroll under a new membership account. The length of time that has elapsed since the last pension contribution to the previous account is critical in determining whether the original membership account remains open, as N.J.S.A. 43:16A-3(3) provides for expiration of membership after two years of inactivity, subject to certain exceptions pursuant to N.J.S.A. 43:16A-3(5). Members returning to PFRS-eligible employment after the expiration of the prior account are assigned a new enrollment date, and are subject to all enrollment, contribution and retirement eligibility requirements associated with that new enrollment date.

Further, it is necessary to clarify that members who are required to establish a new account due to the expiration of the prior account may elect to aggregate all service and salary credit within the new account, subject to all requirements associated with the new enrollment date. In some instances, this could mean that an individual who re-enrolled after May 21, 2010 would have their retirement allowance calculated on any three fiscal years of membership providing the largest possible benefit instead of the final year of service. The transfer of all prior vested service to the new account is optional however, and the reenrolling member may elect to leave the prior vested account intact, and qualify for the receipt of the deferred retirement based upon that service. No retirement benefits shall be payable until the member has terminated all PFRS-eligible employment.

SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS

N.J.A.C. 17:4-3.1, Computation of insurance benefits, 3.2, Leave for illness, 3.4, Survivor benefits, 3.5, Beneficiary designation; pension contributions, 3.6, Acceptable designations of beneficiaries, 3.7, Survivor benefits; establish dependency, remain unchanged and N.J.A.C. 17:4-3.3 remains reserved.

SUBCHAPTER 4. MEMBERSHIP

N.J.A.C. 17:4-4.1, Creditable compensation, 4.2, Prior service, 4.3, Continuance of membership; transfer, and 4.4, Loan tolerance, remain unchanged.

N.J.A.C. 17:4-4.5, Deduction, subsections (a) and (b) are amended to use the standardized terms added in new Subchapter 1A, Definitions.

N.J.A.C. 17:4-4.6, Minimum adjustment, is amended since the loan and arrearages adjustment has been increased to $ 50.00 from $ 2.00. Unresolved differences of $ 50.00 or less will be written off. Therefore, there will be no refunds or additional contributions upon the reconciliation of a member's account upon death if such adjustments involve the amounts of $ 50.00 or less. 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.

N.J.A.C. 17:4-4.7, Suspension, remains unchanged.

New N.J.A.C. 17:4-4.8, Maximum compensation limit, is proposed. New subsection (a) states the changes created with the enactment of P.L. 2010, c. 1, which imposed a maximum compensation limit upon which contributions will be made to employees who are enrolled in the PFRS on or after May 21, 2010. The maximum amount will be the amount of base or the contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. A new member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program (DCRP) for the excess portion of compensation beyond the Social Security cap. New subsection (b) further clarifies that the calculation of the retirement benefits are limited to the maximum compensation amounts.

N.J.A.C. 17:4-4.9, Eligibility for loan, is proposed for repeal and new N.J.A.C. 17:4-4.9, Loans, is proposed, since this section refers to more than just the eligibility for a loan. New subsection (a) clarifies that loans from the PFRS are subject to I.R.C. §72(p) of the Internal Revenue Code. New subsection (b) is added to address the change in the rate of interest per annum for loans, as well as the administrative fee pursuant to N.J.S.A. 43:16A-16.1.

N.J.A.C. 17:4-4.10, Termination; withdrawal, and 4.11, Active employment; membership requirement, remains unchanged.

SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE

At N.J.A.C. 17:4-5.1, Eligibility for purchase, subsection (a) would remain unchanged. Subsection (b) is amended to delete the word "written" from the phrase "must submit a written request," as the Division provides members with various ways to submit a purchase request. The subsection is further amended to state the Division's administrative practice, that is, if the Purchase Cost Quotation expires prior to authorization, 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. New subsection (c) is included to address the Division's administrative practice regarding the denial of a purchase request. Subsection (d) is amended to use the standardized terms added in new Subchapter 1A, Definitions and to update the statutory reference.

N.J.A.C. 17:4-5.2, Service credited from multiple positions, remains unchanged.

At N.J.A.C. 17:4-5.3, Optional purchase of eligible service, subsection (a) remains unchanged. Paragraph (b)1 is amended with a minor technical change. Paragraphs (b)2 through 5 and subsection (c) remain unchanged.

N.J.A.C. 17:4-5.4, Methods of payment, is amended to Methods of payment "for purchase of service credit," to clarify the subject of the section. Paragraph (a)1 remains unchanged. Paragraphs (a)2 and 3 are amended to delete "extra deductions" and replace it with "additional payroll deductions" since it is additional payroll deductions, not extra deductions that are the subject of these paragraphs. Technical amendments are also proposed based on the recodification discussed below. New subsection (b) is added to clarify that the additional payroll deductions include regular interest for the term of the installment, which has been included in the purchase of service credit. Existing paragraph (a)4 is recodified as subsection (c) and the Board proposes to add new language to set forth the procedures for using direct rollovers and transfers of funds to pay for the purchase of service credit. Federal law was amended 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). Existing subsection (b) is deleted since this issue is addressed in new subsection (b).

At N.J.A.C. 17:4-5.5, Reinstatement of membership credit, paragraph (a)1 is amended to use the standardized terms added in new Subchapter 1A, Definitions.

At N.J.A.C. 1-5.6, Elected officials; continuation of membership, the heading is amended to delete the phase "continuation of membership" since there may be instances when there is a break in service or an official is no longer enrolled in the PFRS. In addition, the word "PFRS" is added to clarify the type of membership the section pertains to.

N.J.A.C. 17:4-5.7 remains reserved.

SUBCHAPTER 6. RETIREMENT

At N.J.A.C. 17:4-6.1, Applications, subsection (a) is amended to include the requirement that applications cannot be filed beyond a one-year time frame, except in the case of disability retirement. Frequently, the member's retirement plans are not finalized resulting in changes to the retirement date, type, option, beneficiary and sometimes cancellation. These changes may also result in loss of health benefit coverage to the member and his or her dependents. This requirement is necessary to ensure that Division resources are allocated to support the efficient and timely processing of retirements. Subsection (b) is amended due to concerns expressed from the Division staff that a reasonable time frame must be established in order to receive the documentation necessary to process the various types of retirements, except in the case of disability retirement. A 90-day time frame to provide the Division with the requested additional information is reasonable and is consistent with other Division processing time frames. Subsection (c) remains unchanged. Subsection (d) is amended, as it addresses only disability retirements. Paragraphs (d)1 and 2 are amended to state that the required documentation must be received within six months of the date of filing a disability retirement application. If it is not received, the retirement will be canceled and the member will be required to complete a new disability application for a future retirement date. Disability applicants require more time to obtain medical records, incident and accident reports, Workers' Compensation reports and other information that will support the member's claim regarding the disability. New paragraphs (d)3 and 4 provide clarity in the disability retirement process since members should only file one retirement application at a time. Filing multiple applications may cause processing errors in a member's pension account and creates unnecessary work for the Division staff. If the Board denies the disability application then the member must submit a written statement accepting the alternate retirement type within 30 days of the Board's decision to retain the original retirement date. Subsection (e) is amended to clarify the processing of a retirement allowance when a member has reenrolled in the retirement system.

N.J.A.C. 17:4-6.2, Effective date, remains unchanged.

At N.J.A.C. 17:4-6.3, Effective dates; changes, subsection (a) remains unchanged. Subsection (b) is amended to delete the phrase "Except in the event of deferred retirement" as deferred retirement applicants are not treated any differently than those applying for other retirement types. Subsection (c) remains unchanged. Existing subsection (d) is deleted since a deferred retirement application is not treated any differently than other retirement filings. Subsection (e) is recodified as subsection (d) with a proposed amendment to use the standardized terms added in new Subchapter 1A, Definitions.

N.J.A.C. 17:4-6.4, Outstanding loan, 6.5, Willful negligence, 6.7, Disability determination, and 6.8, Employment after retirement, would remain unchanged and N.J.A.C. 17:4-6.6 would remain reserved.

At N.J.A.C. 17:4-6.9, Final compensation, subsections (a) and (b) remain unchanged. New subsection (c) is added, since the enactment of P.L. 2010, c. 1, changed the definition of "final compensation" for an employee who enrolled on or after the enactment of the legislation. An employee who is enrolled on or after May 21, 2010, will have his or her final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.

N.J.A.C. 17:4-6.10, Employer initiated disability retirement application, 6.11, Service or special retirement; eligibility, 6.12, Disability retirant; annual medical examinations, and 6.13 Medical examinations; physicians, would remain unchanged.

At N.J.A.C. 17:4-6.14, Compulsory retirement, subsections (a) through (i) remain unchanged. New subsection (j) is included to address the statutory requirement of N.J.S.A. 43:16A-5, which addresses members of the PFRS who were hired prior to January 1, 1987 and at the time of their enrollment the age limit for membership in the retirement system was not in effect.

N.J.A.C. 17:4-6.15, Employer and employee notices, 6.16, Final compensation; salary computation for employees reported on a biweekly basis, 6.17, Work-related travel; accidental disability retirement and accidental death benefit coverage, and 6.18, Waiver, remain unchanged.

SUBCHAPTER 7. TRANSFERS

N.J.A.C. 17:4-7.1, Interfund transfer/State-administered retirement system, and 7.2, Intrafund transfers; State-administered retirement systems, would remain unchanged.

New N.J.A.C. 17:4-7.3, Transfer of PFRS membership and return to employment from retirement, addresses the changes created by the enactment of P.L. 2010, c. 1. An employee enrolled in the PFRS before the enactment of this legislation, who transfer employment within PFRS will retain his or her original membership provided there is no break in membership. If there is a break in membership, the member has withdrawn the account or the member is a PFRS retiree who returns to PFRS covered employment the provisions of N.J.S.A. 43:16A-1 will apply.

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 Police and Firemen's Retirement System 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, date and grammatical changes. Some are proposed as a result of the passage of major pension reform legislation impacting the PFRS retirement benefit structure and enrollment eligibility. In the case of P.L. 2010, c. 1, these reforms include a maximum compensation upon which contributions will be made for the PFRS who become members on or after the effective date of the law. The maximum amount will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. In addition, legislation also changed the provisions of the PFRS to provide that a member who is enrolled in the retirement system after the effective date of the law would have the member's retirement allowance calculated using the average annual compensation received by the member during any three fiscal years of membership.

It is important to note that the Division has made various changes in the language of the PFRS rules to mirror the language found in PERS. 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 rules proposed for readoption with amendments, new rules and repeals, will not present any economic effects on the public; they will continue existing, and are long-standing, regulatory requirements. The rules do not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration and operation of the PFRS. The rules 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. 17:4 have proven to be effective over time in the proper administration of the PFRS. 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 positive economic and administrative impacts. The amendment to minimum adjustment, which increased the amount of adjustment to a member's account from $ 2.00 to $ 50.00 will have a positive economic impact since there will be a decrease in the number of accounts audited by the Division. In addition, the amendment to loans that provides that the rate of interest per annum for loans from the State-administered retirement system shall be a commercially reasonable rate as required by the Internal Revenue Code and the inclusion of an administrative fee for processing loans will impact the number of loans processed by the Division. The administrative fee will have a positive economic impact to the retirement system.

The enactment of P.L. 2010, c. 1, will have a positive economic impact to State and local government employers since it will provide savings from the benefits paid to public employees. In the case of an employee who becomes a member of the retirement system on or after the effective date of P.L. 2010, c. 1, "final compensation" means the average annual compensation for service for which contributions are made during any three fiscal years of membership providing the largest possible benefit to the member or the member's beneficiary. The reduction in the retirement benefits, which will vary depending on the member's compensation history, will provide savings to both State and local government employers.

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 PFRS or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption with amendments, new rules and repeals because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there are no Federal requirements or standards that affect the subject of this rulemaking, other than those mentioned below.

The proposed amendment to N.J.A.C. 17:4-4.9 will provide further clarification regarding the requirement that loans from the PFRS are subject to Federal regulation. In addition, N.J.A.C. 17:4-4.9 continues to ensure compliance with Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. §72(p), which requires that loan balances not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000.

The proposed amendment to N.J.A.C. 17:4-5.4(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) of the Internal Revenue Service.

Jobs Impact

The operation of the rules proposed for readoption 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 rules proposed for readoption with amendments, new rules and repeals will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the PFRS only affect public employers and employees. Thus, the rules proposed for readoption 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 rules proposed for readoption with amendments, new rules and repeals will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption with amendments, new rules and repeals will not have an impact on affordable housing in New Jersey and the rules will not evoke a change in the average costs associated with housing because the rules only apply to the administration of the PFRS.

Smart Growth Development Impact

The rules proposed for readoption with amendments, new rules and repeals will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the rules only apply to the administration of the PFRS.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:4.

Full text of the rules proposed for repeal may be found in the New Jersey Administrative Code at N.J.A.C. 17:4-1.8, 4.9 and 7.3.

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

SUBCHAPTER 1. ADMINISTRATION

17:4-1.3 Officers and committees

(a) The chairperson, first vice chairperson[,] and second vice chairperson of the Board will be elected by a majority vote of the members in attendance at the first meeting of July, not less than six members to be present at such meeting.

1. A representative to the Pension System Actuary Selection Committee, as provided by N.J.S.A. 43:4B-1, shall be elected by the Board whenever the selection of a new actuary is needed.

2. A representative to the State Investment Council shall be elected pursuant to N.J.S.A. 52:18A-83 from the retirement system's membership for the next term.


(b) (No change.)

(c) The Director of the Division [of Pensions and Benefits] shall appoint a qualified employee of the Division to be Secretary of the Board.

(d) (No change.)

17:4-1.4 Election of active member-trustee

(a) The election procedures as required by N.J.S.A. 43:16A-13 for the election of a police or fire trustee representative to the [Police and Firemen's Retirement System (]PFRS[)] Board [of Trustees] are set forth in this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PFRS Board.

(b) Eligible candidates shall include any active member of the [Police and Firemen's Retirement System] PFRS. Only police members may seek police seats, and only fire members may seek firefighter seats on the Board [of Trustees]. All candidates shall comply with any and all requirements as provided by law and [these rules] this chapter. Any candidate who fails to comply with the law and [these rules] this chapter is automatically disqualified as a candidate.

(c) The following shall apply to the notice of election [notices]:

1. At least nine months prior to the expiration of the term of each elected trustee or immediately upon a vacancy on the Board, a notice shall be prepared and distributed electronically by the Secretary of the Board or a contracted vendor, through the certifying officers to be provided to each member who is eligible to vote. Employers will post the notice in a prominent place and the Division will post it to its website;

2. The [election] notice of election shall [also]:

i.-ii. (No change.)

iii. State that [nominating petitions are required and that petition forms] the instructions for the nominating process are available from the Board Secretary at the Division [of Pensions and Benefits];

iv.-v. (No change.)

vi. Include any other information regarding [that] a particular election as specified by the Board [of Trustees.];

3. [Election] A notice[s] of election shall be [forwarded in bulk and in appropriate number] provided to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices[.];

[4. A confirmation form shall also be forwarded to each certifying officer or appropriate fiscal officer. Such form shall be returned to the Board Secretary or contracted vendor and shall include documentation of:

i. Receipt of the notice by the certifying officer or other appropriate fiscal officer; and

ii. The extent to which the certifying officer or other appropriate fiscal officer has distributed the notice to eligible members.]

4. The employing agency shall be required to respond electronically that the notice of election has been properly distributed to those identified in (c)3 above; and

5. Election notices shall be distributed electronically to each eligible member through the certifying officer of each employing location. Employers will prominently post such notice. In addition, this notice will be posted to the Division's website. Only active members of the PFRS may vote in an election of member-trustee of the PFRS Board [of Trustees of the PFRS].

(d) The following shall apply to the nominating [petitions] process:

1. [Nominating petition forms] The instructions for the nominating process shall be available at the Office of the Board Secretary of the [Police and Firemen's Retirement System.] PFRS and on the Division's website;

[2. Nominating petitions shall be forwarded to each active member who requests them after the Division verifies the member's eligibility to run for such election.]

2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;

3. The [petition forms] nominating instructions shall explain [that:] the information in (d)3i, ii and iii below.

i. For police trustee, at least 500 active police members, who are eligible to vote for the position, are required to [sign the petition for the candidate] register their nomination for the candidate through a designated website or, if necessary, a signed paper petition.

ii. For fire trustee, at least 300 active fire members, who are eligible to vote for the position, are required to [sign the petition for the candidate] register their nomination for the candidate through a designated website or, if necessary, a signed paper petition.

iii. To register a nomination for a candidate, the petitioner shall be required to designate their candidate selection either electronically through a designated website or, if necessary, through a signed petition form;


4. The paper petition form shall require the candidate's name and employer, and the pension membership number or Social Security number of each petitioner.

5. [The form shall explain that an] An active member shall [sign] nominate only one [petition] candidate, with police members petitioning for a police candidate and fire members petitioning for a fire candidate[.];

6. The last date[s for filing and returning the petitions] for nominating a candidate shall be identified, as well as the approximate date that election packets shall be sent to employers for distribution to voters[.];

[7. Candidates named on a petition shall sign the petition in a designated space indicating their willingness to be candidates.]

[8.] 7. If only one candidate is nominated for a position, the candidate shall be deemed elected to the position without balloting. A notice to the certifying officers shall be distributed for posting at the employing locations, indicating no contest since only one candidate was nominated [by petition.];

8. If no candidates qualify for the position, the position will remain vacant until the next election cycle and the position will be for the remainder of the unexpired term;

9. In the event there are two positions for the same election because of a vacancy causing an unexpired term, (police or fire) and only two candidates qualify, each candidate must declare whether they are running for the unexpired term or the full-term position; and

10. In the event there are two positions for the same election, (police or fire) and more than two candidates qualify, an election by ballot shall be held. Since the candidates have already declared their interest in the unexpired term or full-term position, the candidate receiving the highest number of votes will be declared the winner of the chosen position.


(e) The following apply to distribution of election packets:

1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to case a ballot through one of the following:

i.-ii. (No change.)

iii. Paper ballot (postage-paid, self seal return mailer)[.];

2. For each eligible voter, there shall be forwarded to the certifying officer individual member packets with instructions for balloting, which shall include the following information:

i.-viii. (No change.)

ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting[.];

3. The ballot positions shall be determined by a drawing conducted at a time and place determined appropriate by the Board Secretary. All candidates may attend such drawing by contacting the Board Secretary[.]; and

4. A notice shall be [signed by] forwarded to each certifying officer [acknowledging] electronically requesting that they acknowledge the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:16A-32 and 68.

(f) The Board shall assess the percentage of returned votes after the conclusion of each election and determine based upon an analysis of the frequency of use of the paper ballots versus the cost of providing the paper ballots whether or not a paper ballot should continue to be incorporated in the election packet in future elections as denoted in (e) above. The Secretary shall notify the vendor handling the next election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots shall no longer be included in the initial election packet, then the following shall apply to the distribution of paper ballots upon member request:

1. Active members may contact the vendor handling the election to request a paper ballot if the voter is unable to cast a ballot through any of the other electronic methods mentioned in (e) above. Members shall provide the vendor with their proper ballot and pension numbers and home address[.];

2. Upon proper request by an eligible voter, the vendor shall mail a paper ballot to the voter's home address, together with instructions for casting the ballot, biographical information about the candidates, and a postage-paid return envelope[.]; and

3. (No change.)

(g) The following shall apply to biographical information:

1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Board Secretary[.];

2. The Board Secretary shall inform each candidate that the biographical information shall be included with the election packet[.];

[3. The biographical information shall be distributed to the certifying officer of each employing agency at the time of distribution of the election packets, or otherwise distributed as approved by the Board of Trustees. The employer should post this information at appropriate places throughout the workplace of each employing agency so that the members of the retirement system shall have a reasonable opportunity to read and consider the biographical information regarding the candidates.]

3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet sent to employers for distribution; and

4. (No change.)

(h) The following shall apply to vote tabulation:

1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count[.];

2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be deemed to be elected to the position[.];

3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count[.]; and

4. (No change.)

(i) The following shall apply to recount procedures:

1. Any candidate or member who shall have reason to believe that an error has been made in counting or declaring the vote may request, in writing, within 20 days of the certification of the results of the election, that the Board [of Trustees], at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support their beliefs[.];

2. If a candidate or other interested party requests a recount in writing within the prescribed time, this request shall be reviewed and granted by the Board [of Trustees] if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board [of Trustees]. If a recount is not requested within 20 days, the ballots may be destroyed[.]; and

3. Upon election and the taking of an oath of office, police and fire member-trustees shall serve for a term of four years. In the event that no member is certified as the winner of an election, the incumbent trustee shall serve until a successor is certified by the Board [of Trustees].

(j) [If there are at least two candidates in an election for member-trustee and] In the event the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, [the candidate who obtained the next highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up,] the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a member-trustee's term begins upon the taking of the oath of office.

17:4-1.6 Records

(a) The approved minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board secretary.

[(b) The mailing addresses of all active members and retired members are considered to be a part of the member's confidential files and shall not be released for any purpose.

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

(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 shall 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 shall the report be released to any individual not authorized in writing to receive the report.]

[(e)] (b) The annual report of the Retirement System's actuary shall not be released until it has been [approved] accepted by the Board [of Trustees].

[(f)] (c) Original documents, if available, shall only be viewed by appointment at the Division [of Pensions and Benefits by contacting the Client Services section at (609) 292-7524].

17:4-1.7 Appeal from Board decisions

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

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

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

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

17:4-1.8 (Reserved)

17:4-1.13 Election of retired member-trustee

(a) The election procedures as required by N.J.S.A. 43:16A-13 for the election of a retired member-trustee to the PFRS Board [of Trustees of the Police and Firemen's Retirement System] are set forth within this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PFRS Board.

(b) Eligible candidates shall include all retired members of the [Police and Firemen's Retirement System] PFRS. A retired member is one who meets the criteria set forth in N.J.A.C. 17:4-6.3(a). All candidates shall comply with any and all requirements as provided by law and [these rules] this chapter. Any candidate who fails to comply with the law and [these rules] this chapter is automatically disqualified as a candidate.

(c) The following shall apply to the notice of election [notices]:

1. At least six months prior to the expiration of a term of office of a retired member-trustee or immediately upon a vacancy on the Board, a notice shall be prepared and [distributed by the Secretary of the Board to each retired member eligible to vote. This] posted to the Division's website and printed in the retiree newsletter. The notice will be sent to the member's last known mailing address and shall inform the members that the instructions for the nominating [petition forms] process are available [at the Office of] from the Board Secretary[, Police and Firemen's Retirement System.] at the Division;

2. The [election] notice of election shall [also]:

i.-ii. (No change.)

iii. State that [nominating petitions are required] the instruction for the nominating process are available from the Board Secretary at the Division;

iv. State the date[s] of the election;

v. (No change.)

vi. [Contain] Include any other information regarding a particular election as specified by the Board [of Trustees.]; and

3. [Election] The notice[s] of election shall be [forwarded] provided to each retired member, together with instructions.

(d) The following shall apply to the nominating [petitions] process:

1. [Nominating petition forms] The instructions for the nominating process shall be available at the Office of the Board Secretary of the [Police and Firemen's Retirement System.] PFRS;

[2. Nominating petitions shall be provided to each retired member requesting them after the Office of the Board Secretary verifies the retiree's eligibility to run for such election.]

2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;


3. The nominating [petition forms] instructions for retired member-trustees shall explain that [a minimum of] at least 100 retired members who are eligible to vote for the positions are required to [sign the nominating petition for the candidate.] register their nominations for the candidate through a designated website or, if necessary, a signed paper petition;

[4. The nominating petition form shall require the candidate's name and the name of the employing agency from which the member retired and shall require the social security number or retirement number of each retired member. If the social security number or retirement number is not provided, the name shall be disqualified.]

[5.] 4. The form shall explain that a retired member shall [sign] nominate only one [nominating petition for a] candidate seeking the retired-member trustee position[.];

[6.] 5. The last date[s] for [filing and returning the] nominating [petitions] a candidate shall be identified, as well as the approximate date the election packets shall be sent to the retired members[.];

[7. A candidate named on a nominating petition shall sign the petition in a designated space indicating that he or she is willing to be a candidate.]

[8.] 6. If only one candidate is nominated for the position, the candidate shall be deemed elected to the position without balloting. A notice [to the retired membership] on the Division's website shall be [distributed] posted indicating no contest since only one candidate was nominated [by petition.]; and

7. If no candidates qualify for the position, the position will remain vacant until the next election cycle and will be vacant for the remainder of the unexpired term.


(e) The following shall apply to the distribution of the election packets:

1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All eligible retired members shall have an opportunity to cast a ballot through one of the following:

i.-ii. (No change.)

iii. Paper ballot (postage-paid, self seal return mailer)[.];

2. For each eligible retired voter as defined within N.J.A.C. 17:4-6.3(a) there shall be forwarded to him or her [a ballot] an election packet, which shall include the following information and instructions:

i. The name of the eligible voter, pension retirement number, ballot number and personal identification number (PIN);

ii. (No change.)

iii. The name of each candidate nominated, [and the name of his or her employer at retirement] including a biographical sketch listing the candidate's background and former employer;

[iv. Instructions to the voter for the proper casting of the ballots shall be shown upon the ballot or on a separate sheet; and

v. Instructions that the candidate receiving a plurality of the legal votes cast shall be declared elected to the position.]

iv. Instructions on how to properly cast a vote, including notification that shall advise the member that mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined for whom the member intended to vote shall be declared invalid and not considered in the final election count;

v. Instruction on how to properly cast an electronic vote;

vi. Instruction on proper use of the PIN number;

vii. Notification that the candidate receiving a plurality of the legal votes cast shall be declared elected to the position;

viii. Notification that the first vote cast shall be counted as the official vote and subsequent votes shall be rejected; and

ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting;

3. The [ballot] positions listed on the ballot shall be determined by a drawing conducted at a time and place determined appropriate by the Board Secretary [of the Board of Trustees]. All candidates [shall be invited to] may attend [said] such drawing by contacting the Board Secretary[.];

[4. Voting for more candidates than instructed will be cause for rejection of the ballot.

5. Mutilated ballots, illegible ballots, ballots with a write-in vote or multiple votes or any other ballot where it cannot be determined for whom the voters intended to vote shall be declared invalid and cannot be considered.]

[6.] 4. The candidate receiving the highest number of legal votes shall be deemed to be elected to that position[.];

[7.] 5. The Secretary of the Board shall oversee the election procedure to ensure that the vendor complies with all of the requirements and assures the validity of the final election count[.];

[8.] 6. (No change in text.)

(f) The following shall apply to biographical information:

1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Board Secretary[.];

2. The Board Secretary shall inform each candidate that the biographical information shall be included with the election packet[.];

[3. The biographical information shall be distributed to the eligible voters at the time of distribution of the election packets or otherwise distributed as approved by the Board of Trustees so that the retired members of the retirement system shall have reasonable opportunity to read and consider the biographical information regarding the candidates.]

3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet; and

4. (No change.)

(g) The following apply to vote tabulation:

1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count[.];

2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be deemed to be elected to the position[.];

3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count[.]; and

4. (No change.)

(h) The following shall apply to recount procedures:

1. Any candidate or member who shall have reason to believe that an error has been made in counting or declaring the vote may request in writing, within 20 days of the certification of the results of the election, [request in writing] that the Board [of Trustees shall,] at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether [or not] a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. [Each candidate] Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support [his or her] their beliefs[.];

2. If a candidate or other interested party requests a recount within the prescribed time, this request shall be reviewed and granted by the Board [of Trustees] if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board [of Trustees]. If a recount is not requested within 20 days, the ballots may be destroyed[.]; and

3. Upon election and the taking of an oath of office, a retired police and fire member-trustee shall serve for a term of four years. In the event that no member is certified as the winner of an election, the incumbent trustee shall serve until a successor is certified by the Board [of Trustees].

(i) [If there are at least two candidates in an election for retired member-trustee and] In the event the victorious candidate dies or is unable or unwilling to serve as such retired member-trustee prior to the beginning of the candidate's term as trustee, [the candidate who obtained the next highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up,] the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a retired member-trustee's term begins upon the taking of the oath of office.

SUBCHAPTER 1A. DEFINITIONS

17:4-1A.1 Definitions

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

"Authorized to carry a firearm while engaged in the performance of his or her official duties" means so authorized by a statute. It is not required that an employee actually carries a firearm while engaged in official duties, but the employee shall be legally authorized and qualified to do so.

"Board of Trustees" or "Board" means the Board of Trustees of the PFRS established pursuant to N.J.S.A. 43:16A-13.

"Direct supervision" and "general supervision" includes conducting performance evaluations, disciplining, adjusting grievances, rewarding and assigning and directing the work of other employees.

"Director" means the Director of the Division of Pensions and Benefits in the Department of the Treasury.

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

"Employer" means the State of New Jersey or the county, municipality or political subdivision thereof that pays the particular police officer or firefighter.

"Final compensation" means the base salary received for the 12 months immediately preceding retirement. For employees enrolled into the PFRS on or after May 21, 2010 "final compensation" means the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary. Final compensation does not include extra compensation or money given in anticipation of retirement.

"Firefighter" shall have the meaning ascribed to that term by P.L. 1989, c. 204 (N.J.S.A. 43:16A-1).

"Firefighting unit" means a municipal fire department, a fire district or an agency of a county or the State that is responsible for control and extinguishment of fires.

"Law enforcement unit" means any police force or organization in a municipality, county or the State, which has by statute or ordinance the responsibility of detecting crime and enforcing the criminal laws of this State.

"Permanent firefighter" under a civil service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and receives a regular appointment in a civil service location pursuant to N.J.A.C. 4A:4-5.1(a). "Permanent firefighter" under a non-civil service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and is employed in a regular budgeted position.

"Permanent police officer" under a civil service jurisdiction means a full-time police applicant who receives a certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and receives a regular appointment pursuant to N.J.A.C. 4A:4-5.1(a). For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal police officer approved by the New Jersey PTC. "Permanent police officer" under a non-civil service jurisdiction means a full-time police applicant who receives certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and is employed in a regular budgeted position. For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal officer approved by the New Jersey PTC.

"PERS" means the Public Employees' Retirement System created pursuant to N.J.S.A. 43:15A-1 et seq.

"Police officer" shall have the meaning ascribed to that term by P.L. 1989, c. 204 (N.J.S.A. 43:16A-1).

"Police powers" means the statutory authority, under the appropriate circumstances in accordance with law, to arrest and detain and to control the actions of the public, or those individuals who come under the jurisdiction of the public employer's jurisdiction.

"Police Training Commission," which is established pursuant to N.J.S.A. 52:17B-70, shall mean an agency authorized to establish physical and mental fitness requirements applicable to the position of municipal police officer.

"Position" means a job title.

"Retirement System," "System" or "PFRS" means the Police and Firemen's Retirement System of New Jersey as defined in N.J.S.A. 43:16A-2.

"Years of service" means the amount of membership service credited to the member's PFRS account.

SUBCHAPTER 2. ENROLLMENT

17:4-2.1 Eligible positions

(a) All public employees actively employed in positions meeting the statutory definition "police officer" or "firefighter" found at N.J.S.A. 43:16A-1(2)(a) and (b) shall be members of the [Police and Firemen's Retirement System] PFRS of New Jersey.

[(b) The following words and terms, as used in this subchapter and in N.J.S.A. 43:16A-1 et seq. shall have the following meanings:

1. "An agency authorized to establish physical and mental fitness requirements applicable to the position of municipal police officer" means the Police Training Commission established by N.J.S.A. 52:17B-70.

2. "Authorized to carry a firearm while engaged in the performance of his official duties" means so authorized by a statute. It is not required that an employee actually carry a firearm while engaged in official duties, but the employee shall be legally authorized and qualified to do so.

3. "Board of Trustees" or "Board" means the Board of Trustees of the Police and Firemen's Retirement System established pursuant to N.J.S.A. 43:16A-13.

4. "Director" means the Director of the Division of Pensions and Benefits (Division) in the Department of the Treasury.

5. "Direct supervision" includes conducting performance evaluations, disciplining, adjusting grievances, rewarding, and assigning and directing the work of other employees.

6. "Employer" means the State of New Jersey or the county, municipality or political subdivision thereof which pays the particular police officer or firefighter.

7. "Firefighting unit" means a municipal fire department, a fire district, or an agency of a county or the State which is responsible for control and extinguishment of fires.

8. "Firefighter" shall have the meaning ascribed to that term by P.L. 1989, c.204 (N.J.S.A. 43:16A-1) as the same may be amended and supplemented from time to time.

9. "General supervision" means "direct supervision" of employees who perform "direct supervision" as defined by (b)5 above.

10. "Law enforcement unit" means any police force or organization in a municipality or county which has by statute or ordinance the responsibility of detecting crime and enforcing the criminal laws of this State.

11. "Permanent police officer" under a Civil Service jurisdiction means a full-time police applicant who receives a certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and receives a regular appointment pursuant to N.J.A.C. 4A:4-5.1(a). For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal police officer approved by the New Jersey PTC.

12. "Permanent police officer" under a non-Civil Service jurisdiction means a full-time police applicant who receives certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and is employed in a regular budgeted position. For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal officer approved by the New Jersey PTC.

13. "Permanent firefighter" under a Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and receives a regular appointment in a Civil Service location pursuant to N.J.A.C. 4A:4-5.1(a).

14. "Permanent firefighter" under a non-Civil Service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and employed in a regular budgeted position.

15. "Police officer" shall have the meaning ascribed to that term by P.L. 1989, c.204 (N.J.S.A. 43:16A-1) as the same may be amended and supplemented from time to time.

16. "Police powers" means the statutory authority, under the appropriate circumstances in accordance with law, to arrest and detain and to control the actions of the public, or those individuals who come under the jurisdiction of the public employer's jurisdiction.

17. "Position" means a job title.

18. "Retirement System" or "System" means the Police and Firemen's Retirement System of New Jersey as defined in N.J.S.A. 43:16A-2.]

[(c)] (b) Determinations by the Director and the Board [of Trustees] whether an employee of a law enforcement unit or firefighting unit is an administrative employee with the meaning of the definitions of "police officer" or "firefighter" under the law and [these rules] this chapter shall be on a case-by-case basis. An employee may perform some administrative functions without being an administrative employee. In determining whether an employee is an administrative employee, the Director and the Board [of Trustees] shall consider the following factors:

1.-3. (No change.)

[(d)] (c) Determinations by the Director and the Board [of Trustees] whether an employee of a law enforcement unit or firefighting unit is a supervisory employee within the meaning of the definitions of "police officer" or "firefighter" under the law and [these rules] this chapter shall be on a case-by-case basis. An employee may perform some supervisory functions without being a supervisor. In determining whether an employee is a supervisory employee, the Director and the Board [of Trustees] shall consider the following factors:

1.-4. (No change.)

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

[(f)] (e) If an employee of a "law enforcement" or "firefighting unit" holds a position [which] that has not been deemed eligible for inclusion in the [Police and Firemen's Retirement System] PFRS pursuant to P.L. 1989, c. 204 (N.J.S.A. 43:16A-1.2), and the employee or employer contends the duties of the position meet the definitions of police officer or firefighter as found in N.J.S.A. 43:16A-1 et seq., the employee or employer may submit a written request indicating why the position meets the above definitions. The appropriate documentation must accompany the request.

Recodify existing (g)-(m) as (f)-(l) (No change in text.)

17:4-2.2 Compulsory enrollment

Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, membership in the [Police and Firemen's Retirement System] PFRS of New Jersey is mandatory, and a condition of employment for every "police officer" or "firefighter" under the provisions of N.J.S.A. 43:16A-1 et seq.

17:4-2.3 Medical requirements

The employer must [furnish] certify evidence of good health sufficient to satisfy the Board [of Trustees]. If the Division or the Board has a question regarding the evidence of good health provided, the Division or Board may request that the applicant be examined by an independent physician designated to conduct such an examination for the Retirement System.

17:4-2.4 Training requirements

(a) As required under N.J.S.A. 43:16A-1(2)(a)(iii), permanent, full-time police officers are required to successfully complete the training requirement prescribed under N.J.S.A. 52:17B-66 et seq., (Police Training Commission (PTC)) or proof of comparable training requirements as determined by the Board of Trustees.

1. (No change.)

2. For positions that are not under the statutory authority of the PTC, all police applicants are required to complete comparable training to that prescribed by the PTC for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training. The [applicant or the] employer must [submit proof] certify to the Division of the completion of the aforementioned training.

3. An applicant may be exempt from some parts of the basic training course if the applicant has successfully completed police training conducted by a Federal, State or county agency if the requirements are substantially equivalent to the requirements of a municipal police officer and approved by the PTC.

i. (No change.)

ii. For those positions not under the statutory authority of the PTC, in order for the Division [of Pensions and Benefits] to consider whether the applicant qualifies under the comparable police training rule, the applicant must submit the following documents to the Division [of Pensions and Benefits] for review of the authorized training credit:

(1)-(3) (No change.)

4.-5. (No change.)

6. The applicant must successfully complete the remaining course work at either an approved PTC school in New Jersey or a school that offer[ed]s comparable training to that prescribed by the PTC as set forth in (a)2 above. The [applicant or the] employer must [submit evidence] certify to the Division [of Pensions and Benefits] that such basic training course was satisfactorily completed.

[7. Any current PFRS police members that have not successfully completed the PTC or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.]

(b) As required under N.J.S.A. 43:16A-1(2b), permanent, full-time firefighters are required to successfully complete the Firefighter I certification prescribed under N.J.A.C. 5:73-4.2, 4.3 and 4.4, or as determined by the Board [of Trustees].

1. (No change.)

[2. Any current PFRS firefighting members that have not successfully completed the firefighter 1 certification or comparable training by (18 months after the effective date of this new rule), will be removed from participation in the PFRS.]

17:4-2.5 Age requirements

(a) (No change.)

(b) The age of candidates for positions covered by the [Police and Firemen's Retirement System] PFRS with employers who have adopted the provisions of Title 11A of the New Jersey Statutes (Civil Service) is determined at the announced closing date of the examination offered by the [Department of Personnel] Civil Service Commission for those positions. Candidates must not be one day past the date of their 35th birthday on the announced closing date of the examination. Those candidates meeting the age requirements at that time will be considered as having met the age maximum requirement for the duration of the list promulgated as a result of such examination. [(N.J.S.A. 43:16A-3(1))]

(c)-(g) (No change.)

(h) Municipal statutes provide that in some situations volunteer and exempt [fire fighters] firefighters in municipalities may be appointed to full-time [fire fighter] firefighter positions if they are not over 40 years of age at the time of their appointments. This proper appointment of someone who is past their 35th birthday to a municipal fire department does not negate the eligibility requirement that someone not be past their 35th birthday to be enrolled in the PFRS. Therefore, any appointees under this provision are required to enroll in the [Public Employees' Retirement System] PERS.

17:4-2.7 Enrollment following deferred retirement

(a) For a member who has enrolled in the retirement system prior to May 21, 2010, the membership account under which a member elected deferred retirement who resumes regular service prior to age 55 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:16A-3(3), or the longer period provided by N.J.S.A. 43:16A-3(5).

(b) Should a member who has enrolled in the retirement system prior to May 21, 2010, who elected a deferred retirement, resume regular service prior to age 55 after the period for continued membership stipulated by N.J.S.A. 43:16A-3(3) or 43:16A-3(5) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment, except that such member shall not be required to again satisfy the age requirements for enrollment in the System.

(c) In the event that (b) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all PFRS eligible employment.


SUBCHAPTER 4. MEMBERSHIP

17:4-4.5 Deductions

(a) A full deduction shall be taken for the [Police and Firemen's Retirement System] PFRS in any payroll period in which the member is paid a sufficient amount to make a full normal deduction. If wages are sufficient, deductions should also be made for any arrears or loan deductions then in effect.

(b) No deductions shall be taken in any pay period in which the employee's salary is not sufficient to cover the required deductions for the [Police and Firemen's Retirement System] PFRS.

17:4-4.6 Minimum adjustment

In order to facilitate the reconciliation of a member's account upon death, no [rebates] refunds or additional contributions shall be made [where an adjustment involves an amount of $ 2.00 or less during a calendar quarter.] to a member's loan and arrearages balances, if such adjustments involve an amount of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.

17:4-4.8 [(Reserved)] Maximum compensation limit

(a) Employees who are enrolled on or after May 21, 2010 are subject to a maximum compensation limit for pension contributions. The maximum compensation limit is based on the annual maximum wage contribution base for Social Security, which is subject to change each calendar year. Compensation above the maximum will be subject to Defined Contribution Retirement Program (DCRP) rules.

(b) Members enrolled in the PFRS, who also participate in the DCRP pursuant to (a) above will receive service credit in their corresponding PFRS account, and will be eligible to retire under the rules of the PFRS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.


17:4-4.9 Loans

(a) Only active contributing members of the system may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000. The loan is subject to I.R.C. §72(p) of the Internal Revenue Code.

(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1 of each calendar year. An administrative fee in an amount set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 43:16A-16.1.


SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE

17:4-5.1 Eligibility for purchase

(a) (No change.)

(b) In order to be eligible to purchase service, a member must submit a [written] request to purchase such service and such purchase must be authorized by the member before the expiration date indicated on the purchase cost quotation 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 purchase request.

(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.

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

17:4-5.3 Optional purchases of eligible service

(a) (No change.)

(b) The types of purchases indicated in (b)1 through 5 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 actual base salary or highest fiscal year base salary. The computed lump sum purchase cost shall then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 43:16A-11.9, 11.11 and 11.12 provide 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 full-time duty in the active military service of the United States. 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. It does not include weekend drills or annual summer training of a [national guard] 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 midshipmen at one of the service academies. Military service before enrollment cannot be used to qualify for an ordinary disability retirement;

2.-5. (No change.)

(c) (No change.)

17:4-5.4 Methods of payment for purchase of service credit

(a) Methods of payment include:

1. (No change.)

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

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

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

[4.] (c) [Direct rollover/trustee-to-trustee transfer of funds:] Lump sum payments and partial lump sum payments can include the direct rollover or transfer of tax-deferred contributions from financial plans that qualify under terms specified [by the Internal Revenue Service] under I.R.C. §401(a)(31). All payments remitted to the Division must be accompanied by properly completed Direct Rollover Transfer Request for the Purchase of Service Credit form[s as specified by the Division]. 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.

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

17:4-5.5 Reinstatement of membership credit

(a) A member, whose account has been terminated by the withdrawal of contributions from the Annuity Savings Fund or whose account has been terminated because of a two-year lapse in contribution, may be reinstated to the System under the provisions of [Chapter 199,] P.L. 1967, c. 199 (N.J.S.A. 11A:4-9), [Chapter 303,] P.L. 1969, c. 303 (N.J.S.A. 40:47-11.1 and 11.2)[,] or [Chapter 439,] P.L. 1981, c. 439 (N.J.S.A. 11A:4-9), provided that the member meets the requirements of the System other than the age maximum[:].

1. A member reinstated under [Chapter 303,] P.L. 1969, c. 303 (N.J.S.A. 40:47-11.1 and 11.2), shall purchase the previous credit the member had established in the [Police and Firemen's Retirement System] PFRS at enrollment. The cost of purchasing the previous credit will be determined using the formula for calculating shared-cost purchases found at N.J.A.C. 17:4-5.3(a).

17:4-5.6 Elected officials[; continuation of membership]

Any member accepting an elective position may continue PFRS membership and contribute on the salary being received as an elected official, as long as the member holds elective office and remains a member of the retirement system.

SUBCHAPTER 6. RETIREMENT

17:4-6.1 Applications

(a) Applications for retirement must be made on forms required by the System. 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. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's PFRS eligible employment has ended.

(b) [In] Except for a disability retirement application, in the event a member files an incomplete application, [the] all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to [file a completed application with the Division] provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to refile. This section shall not apply to information provided by the employer.

(c) (No change.)

(d) [In addition to the requirements in (a) through (c) above] As to an application for disability retirement, the following shall apply:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by 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[; and]. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;

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. The required documentation must be received within six months of the date of filing the disability application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;

3. 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; and

4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.


(e) If a member's previous retirement allowance has been cancelled due to the member's return to employment and reenrollment in the Retirement System pursuant to the provisions of N.J.S.A. 43:16A-15.3, a new retirement application must be filed with the Division in accordance with (a) through [(d)] (c) above. The previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. [The] Except in the case of disability, the previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.

17:4-6.3 Effective dates; changes

(a) (No change.)

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

(c) (No change.)

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

[(e)] (d) Should the member continue to receive a salary beyond the effective date of retirement after approval of the retirement by the Board [of Trustees], 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 approved, 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.

17:4-6.9 Final compensation

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

(c) An employee who is enrolled on or after May 21, 2010 will have final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.


17:4-6.14 Compulsory retirement

(a)-(i) (No change.)

(j) Any member in service who attains 65 years of age shall be retired on a service retirement allowance on the first day of the next calendar month, except that a member hired prior to January 1, 1987 may remain a member of the System until the member attains age 68 years or 25 years of creditable service, whichever comes first pursuant to N.J.S.A. 43:16A-5.

SUBCHAPTER 7. TRANSFERS

17:4-7.3 Transfer of PFRS membership and return to employment from retirement

(a) Employees enrolled in the PFRS on or before May 21, 2010, who transfers employment within the PFRS, will retain his or her original membership status provided that there has not been a break in membership, two years or more without a pension contribution and/or the member has not withdrawn his or her PFRS account.

(b) If there has been a break in membership, the member has withdrawn his or her account or the member is a PFRS retiree who is returning to PFRS covered employment (except for disability retirees approved for return to active employment), upon meeting the eligibility requirements, the member will be regarded as a new enrollee; whereupon, the provisions N.J.S.A. 43:16A-1 will apply.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

43 N.J.R. 2568(a)

Proposed Readoption with Amendments: N.J.A.C. 17:5

Proposed New Rules: N.J.A.C. 17:5-1A and 3.2

Proposed Repeal: N.J.A.C. 17:5-1.7

Click here to view Interested Persons Statement

State Police Retirement System Rules Retirement

Authorized By: State Police Retirement System Board of Trustees, Wendy Jamison, Secretary.

Authority: N.J.S.A. 53:5A-30h.

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

Proposal Number: PRN 2011-215.

Submit comments by December 2, 2011 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 State Police Retirement System (SPRS) is responsible for reviewing the administrative rules within N.J.A.C. 17:5. When the Board becomes aware of a change in the laws or a court decision that could affect the SPRS, 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 and the Board's staff to determine if the current rules require clarification, whenever practicable, so that they are consistent with the rules governing the other retirement systems.

The Board of Trustees of the SPRS proposes to readopt the current rules within N.J.A.C. 17:5, which expire on June 6, 2013, with the following amendments, repeals and new rules. The rules proposed for readoption with amendments, repeals and new rules affect the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement and transfer aspects. Pursuant to N.J.S.A. 52:14B-5.1c(2), by filing this notice of proposal with the Office of Administrative Law on or before June 6, 2013, the expiration date of N.J.A.C. 17:5 is extended 180 days to December 3, 2013.

Members, 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 the individual accounts. The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirement for eligibility and amounts of benefits available that are mandated within the statutes governing the SPRS. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66 (1978), the chapter expired on May 12, 1985 and was adopted as new rules effective December 2, 1985. The chapter was readopted effective November 30, 1990 and expired on November 30, 1995. The chapter was adopted as new rules effective June 17, 1996. Chapter 5 was readopted effective March 22, 2001 and again was readopted effective June 6, 2006. The following is a discussion of the rules proposed for readoption with amendments, repeals and new rules. Throughout the rules, the Division of Pensions and Benefits is addressed as the Division and technical amendments are proposed to establish consistency and conformity in the language and the use of defined words and terms.
 
SUBCHAPTER 1. ADMINISTRATION

N.J.A.C. 17:5-1.1, Board meetings, is amended as discussed below under new Subchapter 1A, Definitions.

N.J.A.C. 17:5-1.2, Fiscal year, would remain unchanged.

N.J.A.C. 17:5-1.3, Officers and committees, subsection (a) remains unchanged and subsection (b) is amended as discussed below under new Subchapter 1A, Definitions. Subsection (c) remains unchanged.

N.J.A.C. 17:5-1.4, Certifying officer (employer), remains unchanged.

N.J.A.C. 17:5-1.5, Records, subsection (a) is amended to include the word "approved" minutes of the Board and subsections (b) through (d) are deleted since the text is available in N.J.A.C. 17:1-1.2. Subsection (e) is recodified as subsection (b) and the word "accepted" is added to replace "approved" since the Board does not approve but accepts the annual report by the system's actuary. Existing subsection (f) is recodified as subsection (c) and is amended as discussed below under new Subchapter 1A, Definitions.

N.J.A.C. 17:5-1.6, Appeal from board decisions, the first paragraph of the mandated statement is amended so that the word "you" is deleted and replaced with the word "member." Paragraphs (b) through (e) remain unchanged.

N.J.A.C. 17:5-1.7, Suspension of pension checks, is repealed as N.J.A.C. 17:1-1.13 governs this issue.

N.J.A.C. 17:5-1.8, State employees; biweekly salaries, and 1.9, Proof of age, remain unchanged.

New Subchapter 1A, Definitions, is added to define various terms that are used throughout this chapter. This section serves to provide a central location for frequently used terms. Amendments are proposed throughout the chapter to use the newly defined terms.
 
SUBCHAPTER 2. INSURANCE AND DEATH BENEFITS

N.J.A.C. 17:5-2.1, Computation of insurance benefits, 2.2, Survivor benefits, 2.3, Leave for illness, and 2.4, Acceptable designations of beneficiaries remain unchanged.
 
SUBCHAPTER 3. MEMBERSHIP

N.J.A.C. 17:5-3.1, Creditable salary, subsections (a) through (c) remain unchanged. Subsection (d) is amended as discussed in new Subchapter 1A, Definitions.

New N.J.A.C. 17:5-3.2, Enrollment after May 21, 2010; Maximum compensation limit, contains new regulations that are a result of the enactment of N.J.S.A. 53:5A-3. These pension reforms changed the maximum compensation upon which contributions will be made for SPRS members who enroll in the system on or after the law's effective date of May 21, 2010. New subsection (a) sets forth that the maximum amount will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. A new member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program (DCRP) for the excess portion of compensation beyond the Social Security cap. New subsection (b) states that members enrolled in the SPRS and also participate in the DCRP will receive service credit in their corresponding SPRS account and retire under the rules of the SPRS. New subsection (c) states that for those employees enrolled into the SPRS on or after May 21, 2010 will have their retirement allowance calculated on any three fiscal years of membership providing the largest possible benefit, instead of the final year of service.

N.J.A.C. 17:5-3.3, Deductions, is amended at subsections (a) and (b) as discussed in new Subchapter 1A, Definitions. Subsection (c) remains unchanged.

N.J.A.C. 17:5-3.4, Minimum adjustment, is amended since the loan and arrearages adjustment has been increased to $ 50.00. Unresolved differences of $ 50.00 or less will be written off. Therefore, there will be no refunds or additional contributions upon the reconciliation of a member's account upon death if such adjustments involve the amount of $ 50.00 or less. 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.

N.J.A.C. 17:5-3.5, Suspension, remains unchanged.

N.J.A.C. 17:5-3.6 remains reserved.

At N.J.A.C. 17:5-3.7, Eligibility for loan, the heading is amended to "Loans," since this section refers to more than just the eligibility for a loan. The existing text is codified as subsection (a) and amended to state that loans from the SPRS are subject to I.R.C. § 72(p) (2007) of the Internal Revenue Code and that the maximum amount of the loan is the lesser of either 50 percent of the member's accumulated deductions or $ 50,000. A new subsection (b) is added to address the change in the rate of interest per annum for loans, as well as the administrative fee pursuant to N.J.S.A. 53:5A-29.

N.J.A.C. 17:5-3.8, Termination; withdrawal, remains unchanged.
 
SUBCHAPTER 4. PURCHASES AND ELIGIBLE SERVICE

N.J.A.C. 17:5-4.1, Eligibility for purchase, subsection (a) remains unchanged. New Subsection (b) is added to include the Division's administrative practice, that is, if the purchase cost quotation expires prior to authorization, 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. New subsection (c) is added to address the Division's administrative practice regarding the denial of a purchase request. Existing subsection (b) is recodified as subsection (d) and amended as discussed in new Subchapter 1A, Definitions.

N.J.A.C. 17:5-4.2, Optional purchases of eligible service, paragraph (a)1 is amended as discussed in new Subchapter 1A, Definitions. Paragraphs (a)2 and 3 remain unchanged.

At N.J.A.C. 17:5-4.3, Methods of repayment, the heading is amended to add "for purchase of service credit," to clarify the subject of the section. Paragraph (a)1 remains unchanged. Paragraphs (a)2, 3 and 4 are amended to delete the word "extra" and replace it with the word "additional" since it is additional payroll deductions not extra deductions. Paragraph (a)5 is amended to clarify that payments for a purchase can include the direct rollover and transfers of funds from financial plans that qualify under terms specified under the Internal Revenue Code. Federal law was amended 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).
 
SUBCHAPTER 5. RETIREMENT

N.J.A.C. 17:5-5.1, Applications, is amended in subsection (a) as discussed in new Subchapter 1A, Definitions, and includes the requirement that applications cannot be filed beyond a one-year time frame. Frequently, the member's retirement plans are not finalized resulting in changes to the retirement date, type, option, beneficiary and sometimes cancellation. These changes may also result in loss of health benefit coverage to the member and his or her dependents. This requirement is necessary to ensure that Division resources are allocated to support the efficient and timely processing of retirements. Subsection (b) is amended due to concerns expressed from the Division staff that a reasonable time frame must be established in order to receive the documentation necessary to process the various types of retirements. A 90-day time frame to provide the Division with the requested additional information is reasonable and is consistent with other Division processing time frames. Subsection (c) remains unchanged. Subsection (d) is amended since it addresses only disability retirements. Paragraphs (d)1 and 2 are amended to state that the required documentation must be received within six months of the date of filing a disability retirement application. If it is not received, the retirement will be canceled and the member will be required to complete a new disability application for a future retirement date. Disability applicants require more time to obtain medical records, incident and accident reports, Workers' Compensation reports and other information that will support the member's claim regarding the disability. New paragraphs (d)3 and 4 provide clarity in the disability retirement process since members should only file one retirement application at a time. Filing multiple applications may cause processing errors in a member's pension account and creates unnecessary work for the Division staff. If the Board denies the disability application then the member must submit a written statement accepting the alternate retirement type within 30 days of the Board's decision to retain the original retirement date.

N.J.A.C. 17:5-5.2, Effective date; death prior thereto, 5.3, Effective dates; changes, and 5.4, Willful negligence, remain unchanged.

N.J.A.C. 17:5-5.5, Outstanding loan, paragraph (a)1 remains unchanged. Paragraph (a)2 is amended to cite the statutory authority for repayment of a loan into retirement pursuant to N.J.S.A. 53:5A-29. Subsection (b) remains unchanged.

N.J.A.C. 17:5-5.6 and 5.8 remain reserved and N.J.A.C. 17:5-5.7, Disability determination, remains unchanged.

N.J.A.C. 17:5-5.9, Determination of final compensation, the existing text is codified as subsection (a). New subsection (b) is added since the enactment of P.L. 2010, c. 1 changed the definition of final compensation for an employee who enrolled on or after the enactment of the legislation. An employee who is enrolled on or after May 21, 2010 will have final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.

N.J.A.C. 17:5-5.10, Employer initiated disability application; employee notice, 5.11, Service retirement; eligibility, 5.13, Compulsory retirement, 5.14, Employer and employee notices, 5.15, Medical examinations; physicians, 5.16, Work-related travel; accidental disability retirement and accidental death benefit coverage, and 5.17, Waiver, remain unchanged. N.J.A.C. 17:5-5.12 remains reserved.
 
SUBCHAPTER 6. TRANSFERS

N.J.A.C. 17:5-6.1, Interfund transfers; other State systems, subsection (a) is amended as discussed in new Subchapter 1A, Definitions. Subsections (b), (c), (d), (e) and (f) remain unchanged. Subsection (g) is amended as discussed 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 State Police Retirement System benefit 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 retirement system. 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. Some are proposed as a result of the passage of major pension reform legislation impacting the SPRS retirement benefit structure and enrollment eligibility. In the case of P.L. 2010, c. 1, these reforms include a maximum compensation upon which contributions will be made for SPRS who become members on or after the effective date of the law. The maximum amount will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. In addition, legislation also changes the provisions of the SPRS to provide that a member who is enrolled in the retirement system after the effective date of the law would have the member's retirement allowance calculated using the average annual compensation received by the member during any three fiscal years of membership.

It is important to note that the Division has made various changes in the language of the SPRS rules to mirror the language found in PFRS. Also, some of the clarifications made in the proposed amendments to the rules explain the 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 rules proposed for readoption with amendments, new rules and a repeal, will not present any economic effects on the public; they will continue existing, and are long-standing regulatory requirements. The rules do not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration and operation of the SPRS. The rules 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. 17:5 have proven to be effective over time in the proper administration of the SPRS. 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 positive economic and administrative impacts. The amendment to minimum adjustment, which increased the amount of adjustment to a member's account from $ 2.00 to $ 50.00 will have a positive administrative impact since there will be a decrease in the number of accounts audited by the Division. In addition, the amendment to loans that provides that the rate of interest per annum for loans from the State-administered retirement system shall be a commercially reasonable rate as required by the Internal Revenue Code and the inclusion of an administrative fee for processing loans will impact the number of loans processed by the Division. The administrative fee will have a positive economic impact to the retirement system.

The enactment of P.L. 2010, c. 1, will have a positive economic impact to State and local government employers, since it will provide savings from the benefits paid to public employees. In the case of an employee who becomes a member of the retirement system on or after the effective date of P.L. 2010, c. 1, "final compensation" means the average annual compensation for service for which contributions are made during any three fiscal years of membership providing the largest possible benefit to the member or the member's beneficiary. The reduction in the retirement benefits, which will vary depending on the member's compensation history, will provide savings to both State and local government employers.

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 provision in these rules that would impose any hardship or costs on the members of the SPRS or the public in general.
 
Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption with amendments, new rules and a repeal because N.J.S.A. 53:5A-30h governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking, other than those mentioned below.

The proposed amendment to N.J.A.C. 17:5-3.7 will provide further clarification regarding the requirement that loans from the SPRS are subject to Federal regulation. In addition, N.J.A.C. 17:5-3.7 continues to ensure compliance with the Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. § 72(p) (2007), which requires that loan balances not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000.

The proposed amendment to N.J.A.C. 17:5-4.3 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.
 
Jobs Impact

The operation of the rules proposed for readoption with amendments, new rules and a repeal will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of the rules proposed for readoption with amendments, new rules and a repeal with their written comments.
 
Agriculture Industry Impact

The rules proposed for readoption with amendments, new rules and a repeal will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

The rules of the SPRS only affect public employers and employees. Thus, the rules proposed for readoption with amendments, new rules, and a 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-16 et seq. Therefore, a regulatory flexibility analysis is not required.
 
Smart Growth Impact

The rules proposed for readoption with amendments, new rules and a repeal will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact Analysis

The rules proposed for readoption with amendments, new rules and a repeal will not have any impact on affordable housing in New Jersey and the rules will not evoke a change in the average costs associated with housing because the rules only apply to the administration of the SPRS.
 
Smart Growth Development Impact Analysis

The rules proposed for readoption with amendments, new rules and a repeal will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the rules only apply to the administration of the SPRS.
 
Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:5.
 
Full text of the proposed amendments, new rules and repeal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 1.    ADMINISTRATION
 
17:5-1.1   Board meetings
 
The Board [of Trustees] shall meet at the call of the chairperson and secretary at such time as may be deemed necessary by the Board.
 
17:5-1.3   Officers and committees
 
(a) (No change.)
 
(b) The Director of the Division [of Pensions and Benefits] shall appoint a qualified employee of the Division to be Secretary of the Board.
 
(c) (No change.)
 
17:5-1.5   Records
 
(a) The approved minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board Secretary.
 
[(b) The mailing addresses of all active and retired members are considered to be a part of the member's confidential files and shall not be released for any purpose.
 
(c) The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released upon a signed release by the active member or retiree or after the death of the active member or retiree.
 
(d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board. The Division shall 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 shall the report be released to any individual not authorized in writing to receive the report.]
 
[(e)] (b) The annual report of the System's actuary shall not be released until it has been [approved] accepted by the Board.
 
[(f)] (c) Original documents, if available, shall only be viewed by appointment at the Division [of Pensions and Benefits by contacting the Client Services Section at (609) 292-7524].
 
17:5-1.6   Appeal from board decisions
 
The following statement shall be incorporated in every written notice setting forth the Board's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative:
 
"(a) If [you] the member disagrees with the determination of the Board, [you] the member may appeal by submitting a written statement to the Board within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for [your] the member's disagreement with the Board's determination and shall include any relevant documentation supporting [your] the claim. If no such written statement is received within the 45-day period, the determination by the Board shall be final.
 
17:5-1.7   [Suspension of pension checks] (Reserved)
 
[(a) The disbursement of pension checks shall be suspended under the following circumstances and the suspension shall continue during the period in default:
 
1. If a widow, widower, parent or guardian of a minor child(ren) fails to file a certificate of eligibility which is normally mailed to such beneficiaries on a periodic basis;
 
2. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this instance shall be suspended until a proper legal representative has been appointed; or
 
3. If a retirant does not complete a policy assignment of group life insurance as requested by the Board.]
 
SUBCHAPTER 1A.      DEFINITIONS
 
17:5-1A.1   Definitions
 
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:
 
"Average annual compensation" means compensation received by the member during any three fiscal years of membership providing the largest possible benefit pursuant to N.J.S.A. 53:5A-3.
 
"Board of Trustees" or "Board" means the Board of Trustees of the SPRS established pursuant to N.J.S.A. 53:5A-30.
 
"Creditable service" means service rendered for which credit is allowed on the basis of contributions made by the member or the State.
 
"DCRP" means the Defined Contribution Retirement Program.
 
"Director" means the Director of the Division of Pensions and Benefits in the Department of the Treasury.
 
"Division" means the Division of Pensions and Benefits, Department of the Treasury, in the State of New Jersey.
 
"Employer" means the State of New Jersey.
 
"Final compensation" means, for employees enrolled into the SPRS on or before May 20, 2010, the average compensation received by the member in the last 12 months of creditable service preceding his or her retirement or death. Such term includes the value of the member's maintenance allowance for this same period. For employees enrolled into the SPRS on or after May 21, 2010, "final compensation" means the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary. Final compensation does not include extra compensation or money given in anticipation of retirement pursuant to N.J.S.A. 53:5A-3, regardless of the date of enrollment.
 
"Position" means a job title.
 
"Retirement System," "System" or "SPRS" means the State Police Retirement System of New Jersey as defined in N.J.S.A. 53:5A-4.
 
SUBCHAPTER 3.    MEMBERSHIP
 
17:5-3.1   Creditable salary
 
(a)-(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 reasonably anticipated annual compensation increases for members of the retirement system based upon consideration of the Consumer Price Index for the time period of the increases, the table of assumed salary increases recommended by the actuary and adopted by the Board, and the annual percentage increases of salaries as indicated in data from the Public Employment Relations Commission, or through other reliable industry sources of information regarding average annual salary increases. Those cases where a violation of the statute or rules is suspected shall be referred to the Board.
 
17:5-3.2   [(Reserved)] Enrollment after May 21, 2010; maximum compensation limit
 
(a) An employee who is enrolled into the SPRS on or after May 21, 2010, will be subject to the benefit changes as a result of N.J.S.A. 53:5A-3. A maximum compensation limit will be imposed on members of the system on or after May 21, 2010. The maximum amount will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contribution Act. A new member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program with regard to the remaining compensation, unless the member irrevocably elects to waive the participation. The amount of compensation over the maximum compensation will have a 5.5 percent deduction as a contribution to DCRP. When a member of the SPRS also becomes a participant in the DCRP, the life insurance and disability benefit provisions of that program will be available for that participant.
 
(b) Members enrolled in the SPRS, who also participate in the DCRP will receive service credit in their corresponding SPRS account, and will be eligible to retire under the rules of the SPRS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.
 
(c) An employee who is enrolled into the SPRS on or after May 21, 2010 will have the member's retirement allowance calculated on the average annual compensation received by the member during any three fiscal years of membership providing the largest possible benefit.
 
17:5-3.3   Deductions
 
(a) A full deduction shall be taken for the [State Police Retirement System] SPRS for any payroll period in which the member is paid a sufficient amount to make a full normal pension deduction. If wages are sufficient, deductions shall also be made for any arrears or loan deductions then in effect.
 
(b) No deductions shall be taken in any pay period in which the employee's salary is not sufficient to cover the required deductions for the [State Police Retirement system] SPRS.
 
(c) (No change.)
 
17:5-3.4   Minimum adjustment
 
In order to facilitate the reconciliation of a member's account, upon death no [rebates] refunds or additional contributions shall be made [where an adjustment involves an amount of $ 2.00 or less during a calendar quarter.] to a member's loan and arrearages balances, if such adjustments involve the amount of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.
 
17:5-3.7   [Eligibility for loan] Loans
 
(a) Only active contributing members of the [Retirement] System may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000. The loan is subject to [26 U.S.C. §72(p)] I.R.C. § 72(p) (2007) of the Internal Revenue Code.
 
(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1st of each calendar year. An administrative fee in an account set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 53:5A-29.
 
SUBCHAPTER 4.    PURCHASES AND ELIGIBLE SERVICE
 
17:5-4.1   Eligibility for purchase
 
(a) (No change.)
 
(b) In order to be eligible to purchase service, a member must submit a request to purchase such service and such purchase must be authorized by the member before the expiration date indicated on the purchase cost quotation 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 purchase request.
 
(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.
 
[(b)] (d) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board [of Trustees] shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.
 
17:5-4.2   Optional purchases of eligible service
 
(a) The types of purchases indicated below will be calculated on the basis of the actuarial factor established for the member's age at the time of the purchase times the member's current salary:
 
1. Former [State Police Retirement System] SPRS membership credit: Service covered by former membership in this system will be included in the computation of retirement benefits in the same manner and value as current service. All or a portion of the service from a former membership may be included in the purchase of such service.
 
2.-3. (No change.)
 
17:5-4.3   Methods of repayment for purchase of service credit
 
(a) Methods of repayment include the following:
 
1. (No change.)
 
2. Partial lump sum; balance by [extra] additional payroll deductions;
 
3. [Extra] Additional payroll deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years;
 
4. [Extra] Additional payroll deductions will include regular interest for the term of the installment; and
 
5. [Direct rollover/trustee-to-trustee transfer of funds:] Lump sum payments and partial lump sum payments can include the direct rollover or transfer of tax-deferred contributions from financial plans that qualify under terms specified [by the Internal Revenue Service] under I.R.C. § 401(a)(31) (2007). All payments remitted to the Division must be accompanied by a properly completed direct rollover Transfer Request for the Purchase of Service Credit form[s] [as specified by the Division]. 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.
 
SUBCHAPTER 5.    RETIREMENT
 
17:5-5.1   Applications
 
(a) Applications for retirement must be made on forms required by the System. Such forms must be completed in all respects and filed with the Division [of Pensions and Benefits (Division)] 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. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's SPRS eligible employment has ended.
 
(b) [In] Except for a disability retirement application, in the event a member files an incomplete application, [the] all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to [file a completed application with the Division] provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to re-file. This subsection shall not apply to information provided by the employer.
 
(c) (No change.)
 
(d) [In addition to the requirements in (a) through (c) above:] As to an application for disability retirement, the following shall apply:
 
1. An application for a physical disability retirement must be supported by at least two medical 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]. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
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. The required documentation must be received within six months of the date of filing the disability application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
3. 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; and
 
4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.
 
17:5-5.5   Outstanding loan
 
(a) Any member who has an outstanding loan balance at the time of retirement shall repay the loan balance, with 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 interest, is repaid as authorized [by P.L. 1999 c.132] in accordance with N.J.S.A. 53:5A-29. 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) (No change.)
 
17:5-5.9   Determination of final compensation
 
(a) In computing the salary upon which pension contributions were based during the member's last year of service, a total of 26 biweekly pays will be used including any retroactive salary payments which are attributable to those 26 biweekly pay periods. The total salary will be adjusted by factors supplied by the actuary to compensate for State biweekly payroll schedules. The biweekly pay periods for which no contributions were made shall not be used in the calculation.
 
(b) An employee who is enrolled on or after May 21, 2010 will have final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.
 
SUBCHAPTER 6.    TRANSFERS
 
17:5-6.1   Interfund transfers; other State systems
 
(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public official or employee. Therefore, the Board [of Trustees] of the present System shall disallow the transfer of all or a portion of prior service of any member of the System for misconduct occurring during the member's prior public service, which renders that prior service, or part thereof, dishonorable.
 
(b)-(f) (No change.)
 
(g) A member shall meet all age and physical requirements for enrollment into the [State Police Retirement System] SPRS before an interfund transfer into the SPRS shall take effect.


ADOPTIONS


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

43 N.J.R. 447(a)

Adopted Amendment: N.J.A.C. 17:2-1.4

Election of Member-Trustee

Proposed: October 4, 2010 at 42 N.J.R. 2316(a).

Adopted: January 19, 2011 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Filed: January 20, 2011 as R.2011 d.057, without change.

Authority: N.J.S.A. 43:15A-1 et seq.

Effective Date: February 22, 2011.

Expiration Date: June 16, 2015.

Summary of Public Comment and Agency Response:

The Division of Pensions and Benefits (Division) received one comment from the New Jersey State AFL-CIO, Charles Wowkanech, President and Laurel Brennan, Secretary-Treasurer.

The Public Employees' Retirement System Board of Trustees wishes to thank the commenter for their valuable comments.

The Commenter has the following four issues with the proposed amendment:

1. Access to the Internet is a concern for some members and may restrict participation in the nominating process to elect a member-trustee.

2. The ability to obtain paper petitions should not be restricted in anyway. Further, a more detailed description of any restrictions placed on the ability to gather signatures should be noted in this regulation.

3. The Division should adopt and update their computer system to recognize the very basic security precautions that many financial institutions and others have implemented - requiring the last four digits of the social security number.

4. The proposed regulation should specify the procedure by which a candidate can be informed on the number of valid signatures submitted on their behalf throughout the nominating process via the online system for their petitions.

RESPONSE: The Board thanks the commenter for their valuable opinion. The proposed amendment to N.J.A.C. 17:2-1.4, Election of member-trustee, is necessary since the Board has the responsibility to ensure that every effort is taken to decrease the administrative cost for the election of a member-trustee. Many processes within the Division have been electronically updated in order to administer benefits more quickly and accurately. State and local governments are hard pressed during these economic times to continue to efficiently administer benefits with shrinking budgets and limited resources. Therefore, any changes that will decrease cost to public employers are usually implemented and supported. The following four responses address the commenter's issues.

1. If a member does not have access to the Internet from home or work, the local library can provide this service. In addition, all candidates may request paper petitions. In no circumstances will a member be excluded from the election process. Although, the preferred method to elect a member-trustee will be electronic, certainly a paper petition will be provided when necessary.

2. The Board believes it is not necessary to amend the proposed rule to include in the language that the ability to obtain a paper petition by candidates will not be restricted in any way. It would be difficult to add language to the rule that would describe any restrictions that this rule may place on the ability to gather signatures via paper petitions, when the Board does not foresee any additional restrictions. The proposed amendment will make the nominating process easier and more efficient for the member.

3. The issue to adopt and update the Division's computer system to recognize the last four digits of the social security number is a valid suggestion. The current process of signing the petition form to support a candidate does pose a security risk to members providing their social security numbers or membership number. Since the forms are passed from member to member there is a security risk to the participant by giving others the ability to view their personal information. The proposed amendment to the rule addresses the security issues by allowing members to support their candidate through a secured website that will not list personal member information. The suggestion to recognize the last four digits of the member's social security number would require a major upgrade of the Division's computer systems and at this time, with limited resources available, the Board cannot recommend such a suggestion nor support such a significant initiative.

4. Lastly, the commenter suggests amending the rule to include the specific procedures by which candidates can be informed of the number of valid signatures submitted on their behalf through the online system for their petitions. There already is a procedure in place for candidates to have access to view the total number of nominating signatures. The candidates are provided with a secure pin number that will allow them to view only the number of signatures they have received at any given time.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq., 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 adoption follows:

17:2-1.4 Election of member-trustee

(a) The procedures as required by N.J.S.A. 43:15A-17 for the election of a State, municipal or county trustee representative to the PERS Board are set forth in this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PERS Board.

(b) Eligible candidates shall include any active or retired member of the PERS. Only State members may seek State seats, only municipal members may seek municipal seats and only county members may seek county seats on the Board. All candidates shall comply with any and all requirements as provided by law and these rules. Any candidate who fails to comply with the law and this chapter is automatically disqualified as a candidate.

(c) The following shall apply to the notice of election:

1. At least nine months prior to the next election cycle a notice shall be prepared and distributed electronically by the Secretary of the Board or a contracted vendor, through the certifying officers, to provide to each member who is eligible to vote;

2. The notice of election shall:

i.-ii. (No change.)

iii. State that instructions for the nominating process are available from the Board Secretary at the Division;

iv.-vi. (No change.)

3. A notice of election shall be provided to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices;

4. The employing agency shall be required to respond electronically that the notice of election has been properly distributed to those identified in (c)3 above; and

5. Election notices shall be distributed electronically to each eligible member through the certifying officer of each employing location. In addition, this notice will be posted to the Division's website. Only active members of the PERS may vote in the election of member-trustees of the Board of Trustees of the PERS.

(d) The following shall apply to the nominating process:

1. The instructions for the nominating process shall be available from the Office of the Board Secretary of the PERS;

2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;

3. The nominating instructions shall explain that:

i. For State trustee, at least 500 active State members, who are eligible to vote for the position, are required to register their nomination for the candidate through a designated website or, if necessary, paper petition;

ii. For municipal trustee, at least 500 active municipal members, who are eligible to vote for the position, are required to register their nomination for the candidate through a designated website or, if necessary, paper petition;

iii. For county trustee, at least 500 active county members, who are eligible to vote for the position, are required to register their nomination for the candidate through a designated website or, if necessary, paper petition;

iv. To register a nomination for a candidate, the petitioner shall be required to designate their candidate selection either electronically through a designated website or, if necessary, through a petition form;

v. An active member shall nominate only one candidate, with State members petitioning for a State candidate, municipal members petitioning for a municipal candidate and county members petitioning for a county candidate; and

vi. The last date for nominating a candidate shall be identified, as well as the approximate date that election packets shall be sent to employers for distribution to voters;

4. (No change in text.)

5. If no candidates receive the requisite 500 signatures to qualify for the position, the vacancy will remain vacant until the next election cycle and the position will be for the remainder of the unexpired term;

6. In the event there are two positions for the same election because a vacancy causes an unexpired term and another term expires (State, municipal or county) and only two candidates qualify, the Office of the Board Secretary shall hold a drawing by lot to determine which candidate shall fill the full-term position and which candidate shall fill the unexpired position; and

7. In the event there are two positions for the same election, (State, municipal or county) and more than two candidates qualify, an election by ballot shall be held. The candidate receiving the highest number of votes will fill the full-term position. The candidate receiving the second highest number of votes will fill the unexpired term position.

(e) The following applies to distribution of election packets:

1. (No change.)

2. For each eligible voter, there shall be forwarded to the certifying officer, individual member packets with instructions for balloting, which shall include the following information:

i.-vi. (No change.)

vii. Notification that the candidate receiving the highest number of legal votes cast shall be declared elected to the position;

viii.-ix. (No change.)

3. (No change.)

4. A notice shall be forwarded to each certifying officer electronically requesting that they acknowledge the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:15A-67 and 80.

(f)-(i) (No change.)

(j) In the event, the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the candidate who obtained the second highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up, the Board shall conduct a new election to fill the Board vacancy for the remainder of the term during the next election cycle.


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

43 N.J.R. 449(a)

Adopted Repeal: N.J.A.C. 17:3-4.7

Service and Salary Credit: Awards of Back Pay
 
Proposed: May 17, 2010 at 42 N.J.R. 897(a).
 
Adopted: January 6, 2011 by the Teachers' Pension and Annuity Fund, Board of Trustees, Mary Ellen Rathbun, Secretary.
 
Filed: January 26, 2011 as R.2011 d.065, without change.
 
Authority: N.J.S.A. 18A:66-56.
 
Effective Date: February 22, 2011.
 
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. 18A:66-56 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.
 
Full text of the adoption follows:
 
SUBCHAPTER 4.  MEMBERSHIP
 
17:3-4.7   (Reserved)


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

43 N.J.R. 449(b)

Adopted Repeal: N.J.A.C. 17:4-4.8

Service and Salary Credit: Awards of Back Pay

Proposed: May 17, 2010 at 42 N.J.R. 898(a).

Adopted: January 10, 2011 by the Police and Firemen's Retirement System, Board of Trustees, Wendy Jamison, Secretary.

Filed: January 26, 2011 as R.2011 d.064, without change.

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

Effective Date: February 22, 2011.

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. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

SUBCHAPTER 4. MEMBERSHIP

17:4-4.8 (Reserved)


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

43 N.J.R. 449(c)

Adopted Repeal: N.J.A.C. 17:5-3.6

Service and Salary Credit: Awards of Back Pay
 
Proposed: May 17, 2010 at 42 N.J.R. 899(a).
 
Adopted: January 25, 2011 by the State Police Retirement System, Board of Trustees, Wendy Jamison, Secretary.
 
Filed: January 26, 2011 as R.2011 d.066, without change.
 
Authority: N.J.S.A. 53:5A-30h.
 
Effective Date: February 22, 2011.
 
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. 53:5A-30h governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.
 
Full text of the adoption follows:
 
SUBCHAPTER 3.    MEMBERSHIP
 
17:5-3.6   (Reserved)


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

43 N.J.R. 662(a)

Special Adopted New Rules: N.J.A.C. 17:6

Defined Contribution Retirement Program

Adopted: January 24, 2011 by Andrew P. Sidamon-Eristoff, State Treasurer.

Filed: January 25, 2011 as R.2011 d.063.

Authority: N.J.S.A. 43:15C-1.

Effective Date: January 25, 2011.

Expiration Date: January 25, 2012.

Take notice that, in compliance with the provisions of N.J.S.A. 43:15C-1, the State Treasurer promulgated rules implementing the provisions of N.J.S.A. 43:15C-1 et seq.

Full text of the special adopted new rules follows:

CHAPTER 6

DEFINED CONTRIBUTION RETIREMENT PROGRAM

SUBCHAPTER 1. ESTABLISHMENT OF PROGRAM

17:6-1.1 Program established

This document restates the provisions of the Defined Contribution Retirement Program (the "Program") originally established effective July 1, 2007 by P.L. 2007, c. 92 and amended by P.L. 2007, c. 103; P.L. 2008, c. 89, and P.L. 2010, c. 1; N.J.S.A. 43:1-1 et seq., 43:3C-1, 43:3C-3, 43:3C-4, 43:3C-5, 43:3C-6, 43:3C-8, 43:3C-9, 43:3C-9.1, 43:3C-9.2, 43:3C-9.3, 43:3C-9.4, 43:3C-9.5, 43:3C-9.6, 43:3C-10 and 43:15C-1 et seq.; and N.J.A.C. 17:1. The provisions of N.J.S.A. 43:15C-1 et seq. are incorporated into the Program as if fully set out in this chapter.

17:6-1.2 Program consists of three plans

(a) The Defined Contribution Retirement Program (DCRP) consists of three benefit plans: the DCRP Retirement Plan (the "Retirement Plan"), which is a defined contribution retirement plan intended to qualify for favorable Federal income tax treatment under Internal Revenue Code (IRC) § 401(a); the DCRP Group Life Insurance Plan (the "Group Life Insurance Plan"); and the DCRP Group Disability Benefit Plan (the "Group Disability Plan"). Assets held in the Trust under the Program for the Retirement Plan shall not be available for the payment of premiums, benefits or administrative expenses with respect to the Group Life Insurance Plan and/or the Group Disability Plan.

1. DCRP Retirement Plan. The DCRP Retirement Plan is a plan of retirement benefits for the benefit of eligible employees and their beneficiaries. The Retirement Plan is intended to be a tax-qualified defined contribution money purchase pension plan under IRC §§ 401(a) et seq., and is further intended to be a "governmental plan" within the meaning of 29 U.S.C. § 1002(32) and IRC § 414(d). The Plan Administrator intends to maintain the Retirement Plan as a plan that qualifies for favorable income tax treatment under IRC § 401(a). The Retirement Plan is an individual account plan which provides for an individual account for each participant and for benefits based solely upon the amount of contributions, investment gains and losses, fees, and expenses allocated to the participant's account. Assets of the Trust with respect to the Retirement Plan shall be used solely for the purpose of providing benefits under the Retirement Plan, and for paying the administrative expenses of the Retirement Plan.

2. DCRP Group Life Insurance Plan. The DCRP Group Life Insurance Plan is a plan for the provision of group life insurance benefits for eligible employees.

3. DCRP Group Disability Benefit Plan. The DCRP Group Disability Benefit Plan is a plan for the provision of group disability insurance benefits for eligible employees.

17:6-1.3 ERISA does not apply

The United States Code provisions created by Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., do not apply to this Program.

17:6-1.4 Governmental plan rules

The Program is intended to be a governmental plan within the meaning of 29 U.S.C. § 1002(32) and IRC § 414(d).

17:6-1.5 Exclusive benefit

The Program, the Plans under the Program, and the Trust are established for the exclusive benefit of participants and their beneficiaries. Consistent with IRC § 401(a)(2), no amount held under the Defined Contribution Retirement Program Retirement Plan will ever inure to the benefit of the Plan Sponsor, any employer, the Plan Administrator, or any successor of any of them, and all Retirement Plan investments and amounts will be held for the exclusive purpose of providing benefits to the Retirement Plan's participants and their beneficiaries. Notwithstanding anything in this chapter to the contrary, it shall be impossible at any time before the satisfaction of all liabilities to participants, beneficiaries, and alternate payees for any part of the Program assets to be used for or diverted to purposes other than for the exclusive benefit of participants, beneficiaries, and alternate payees, except that payment of taxes and administration expenses may be made from the Program assets as provided by the Program, an applicable Plan under the Program or as permitted by applicable law.

17:6-1.6 No third-party beneficiary

The Plan Sponsor and each employer does not intend by any of the Program's provisions to make any person other than a participant, an alternate payee designated by a Qualified Domestic Relations Order, or a beneficiary under an applicable Plan following the death of the participant, a third-party beneficiary of the Program or any Plan under the Program. Further, nothing in the Program can be construed or interpreted to authorize any person other than a participant, alternate payee, or beneficiary after the participant's death to maintain any cause of action under or relating to the Program. The duties, obligations, and responsibilities of the Plan Administrator and each employer concerning third parties will remain solely as imposed by applicable law.

SUBCHAPTER 2. DEFINITIONS

17:6-2.1 Definitions

Whenever used in the Program or with respect to an applicable Plan, each of the following terms has the meaning stated below. To the extent that any term is not defined in this subchapter or otherwise by this chapter, such term has the meaning given by N.J.S.A. 43:15C-1 et seq. or by the Internal Revenue Code.

"Account" means the total of the individual sub-account(s) maintained on behalf of each participant, beneficiary, or alternate payee under the investment option(s) held pursuant to the Retirement Plan.

"Alternate payee" means a person who is an alternate payee (within the meaning of IRC § 414(p)(8)) under an order directed to the Retirement Plan that the Plan Administrator has determined to be a Qualified Domestic Relations Order.

"Annuity payment option" means a payment option under the Retirement Plan, if permitted by the Plan Administrator, which includes a provision for payments based, in whole or in part, upon the life of a natural person.

"Applicable form" means the appropriate form as designated and furnished by the Plan Administrator or DSP to make an election or provide a notice as required by the Program, including a form in electronic medium with an electronic signature in compliance with E-SIGN and applicable law. As used in this definition, the following terms have the following meanings:

1. "E-SIGN" means 15 U.S.C. §§ 7001 to 7006, 7021 and 7031; and 47 U.S.C. § 231 note - the Federal Electronic Signatures in Global and National Commerce Act.

2. "Electronic" means, consistent with E-SIGN, 15 U.S.C. § 7006(2), of or relating to technology having electrical, digital, magnetic, optical, electromagnetic, or similar capabilities regardless of medium.

3. "Electronic signature" means, consistent with E-SIGN, 15 U.S.C. § 7006(5), information or data in electronic form, attached to or logically associated with an electronic record, and executed or adopted by a person or an electronic agent of a person, with the intent to sign a contract, agreement, or record.

"Applicable law" means the law of the United States of America or the law of the State of New Jersey that is applicable to the governance or administration of the Program or an applicable Plan under the Program.

"Base salary" means a participant's regular base salary; except that for a participant described in N.J.A.C. 17:6-4.1(e), it shall mean the excess over the maximum compensation as specified in that paragraph. Base salary includes employee contributions as well as salary reduction contributions and other amounts excluded from gross income with respect to such base salary under, without limitation, IRC §§ 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), 414(h)(2) or 457(b). Base salary excludes overtime or other forms of extra compensation, including but not limited to longevity lump sum payments, lump sum terminal sick leave or vacation pay, the value of maintenance, individual pay adjustments made within or at the conclusion of the participant's final year of service, retroactive salary adjustments or other pay adjustments made in the participant's final year of service unless the adjustment was made as a result of a general pay adjustment for all personnel of the public office or agency in which the participant is employed, or any unscheduled individual adjustment made in the final year to place the participant at the maximum salary level within salary range.

"Beneficiary" means each person a participant designates by a valid beneficiary designation to receive any undistributed benefit payable on or after the participant's death.

"Beneficiary designation" means a valid and effective beneficiary designation made according to N.J.A.C. 17:6-8.

"Benefit" refers to the right under the Retirement Plan of the participant (or beneficiary or other payee) to receive a distribution of all or any portion of the participant's account.

"Board" means the Defined Contribution Retirement Program Board established under N.J.S.A. 43:15C-4.

"Civil union partner" means the individual that is the participant's civil union partner under the laws of the State of New Jersey.

"Contributions" means contributions under the provisions of the Retirement Plan, including employee contributions and employer contributions.

"Designated service provider" or "DSP" is a company designated as a provider by the Defined Contribution Retirement Program Board under N.J.S.A. 43:15C-4.

"Direct rollover" means a payment under the Retirement Plan to an eligible retirement plan specified by the distributee.

"Distributee" means any person who receives, or but for his or her instruction to the Plan Administrator is entitled to receive, a distribution. A distributee includes an alternate payee to whom the Plan Administrator is directed to make a payment under a Qualified Domestic Relations Order.

"Distribution" means, as appropriate in the context, any kind of distribution or the particular kind of distribution provided by the Retirement Plan.

"Distribution commencement date" means the first date on which a distribution (or any payment under a distribution) is paid or becomes payable.

"Effective date" means July 1, 2007 for eligible employees as of the Retirement Plan implementation date and as effective with respect to payroll periods starting on and after that date. The effective date of this chapter is January 25, 2011. See N.J.A.C. 17:6-5.2 and 5.3 with respect to the making of catch-up employee mandatory contributions and associated employer contributions.

"Eligible employee" means an individual described in N.J.A.C. 17:6-4.1 and not excluded under N.J.A.C. 17:6-4.2, consistent with the requirements of N.J.S.A. 43:15C-2, and who is an eligible employee on or after the Retirement Plan implementation date. Subject to the approval of the Plan Administrator, the employer's classification of a person as an employee or other individual with the status of an eligible employee for purposes hereof shall be final and conclusive.

"Employee contributions" means the sum of employee mandatory contributions and employee voluntary contributions.

"Employee mandatory contributions" means those contributions in the percentage amount of base salary required from a participant under the first sentence of N.J.S.A. 43:15C-3(a).

"Employee voluntary contributions" means those contributions in addition to the employee mandatory contribution that the Plan Administrator, pursuant to authority under the second sentence of N.J.S.A. 43:15C-3(a), may permit the participant to irrevocably elect upon initial enrollment in the Retirement Plan (or, if later, following the voluntary contribution implementation date).

"Employer" means the State or a political subdivision thereof, or an agency, board, commission, authority or instrumentality of the State or a subdivision, that pays the base salary of a participant for services rendered by the participant. Except as described in the following sentence, each employer with eligible employees shall be a participating employer with respect to the Plan for the benefit of its eligible employees as described in N.J.A.C. 17:6-4.1 and not excluded under N.J.A.C. 17:6-4.2, and shall not be required to take affirmative action to adopt this Plan for its eligible employees or to enter into any contractual arrangement regarding its obligations to contribute to the Plan except as may be required by the Plan Administrator. Notwithstanding the foregoing, the Plan Administrator may determine that an employer is not eligible to maintain this Plan for its employees if the Plan Administrator reasonably concludes that the employer is not an employer that can maintain a "governmental plan" within the meaning of section 414(d) of the Internal Revenue Code or Section 3(32) of the Employees Retirement Income Security Act of 1974, 29 U.S.C. § 1002(32), as amended. The Plan Administrator's determination in this regard shall be final and conclusive.

"Employer contributions" means those contributions made by the employer under N.J.S.A. 43:15C-3(b).

"Enabling statute" means N.J.S.A. 43:15C-1 et seq.

"Fees" means any fees required or permitted to be charged against the participant's (or beneficiary's or alternate payee's) Retirement Plan account according to any one or more of the following: the Retirement Plan, the Trust Agreement, the participation agreement, an investment option including redemption fees, an investment advisory agreement, any other writing signed by the participant (or, after the participant's death, the beneficiary), any written notice given by or on behalf of the Plan Administrator or the Trustee that is accepted or deemed accepted by the participant (or beneficiary), or any court order. Additionally, the Plan Administrator may impose fees to pay for expenses it deems proper to administer the Retirement Plan. The fees may be charged to the participants' accounts according to an equitable method determined by the Plan Administrator.

"Fiduciary" means a person that is a fiduciary within the meaning of applicable law regarding the Program or an applicable Plan under the Program.

"Group Disability Plan" means the Defined Contribution Retirement Program Group Disability Benefit Plan as described in this chapter and as it may hereinafter be amended.

"Group Life Insurance Plan" means the Defined Contribution Retirement Program Group Life Insurance Plan as described in this chapter and as it may hereinafter be amended.

"Internal Revenue Code" or "IRC" means the Internal Revenue Code of 1986, as amended, and including any regulations and rulings (or other guidance of general applicability) under the IRC, as applicable to a governmental plan as defined by IRC § 414(d).

"Investment law" means, as applicable or relevant in the context, any Federal or State banking law, insurance law, securities law, and other rules of the National Association of Securities Dealers, Inc. (NASD), NYSE and any stock exchange or commodities exchange, to the extent approved or not disapproved by the SEC.

"Investment option" means any investment option selected by the Board (see N.J.A.C. 17:6-3.2) in accordance with the Retirement Plan's investment policy and approved by the Plan Administrator, for investment by participants (or beneficiaries) of their Retirement Plan accounts. Default investment funds (in which a Retirement Plan account shall be invested in the event the participant or beneficiary has not filed a valid investment direction (see N.J.A.C. 17:6-6.8), shall be selected by the Plan Administrator, with the approval of the Division of Investment.

"Limitation year" means each 12-month period ended December 31.

"N.J.S.A." means the New Jersey Statutes Annotated.

"NYSE" means the New York Stock Exchange.

"Participant" means the eligible employee (or former eligible employee) who is enrolled in the Program or an applicable Plan under the Program and, with respect to the Retirement Plan, for whom contributions under the Retirement Plan have been made or accrued and whose account has not been fully distributed under the Retirement Plan.

"Participation agreement" means the applicable form that designates the participant's investment options and such other information as the Plan Administrator may prescribe for the efficient or convenient administration of the Program or an applicable Plan under the Program.

"Payment option" means any of the options for payment of a participant's Retirement Plan account that is permitted by the Plan Administrator consistent with the terms of the Retirement Plan and an applicable Retirement Plan investment option. A payment option shall not be based on gender-distinct actuarial tables. A payment option must satisfy all applicable provisions of the Retirement Plan, including, but not limited to, N.J.A.C. 17:6-11.2.

"Person" means a natural person, a corporation, a limited liability company, an unincorporated association, a partnership, a joint venture, a business trust, or anything that is a person within the meaning of applicable law.

"Personal representative" means the person duly appointed by an order of the court (or of a registrar or administrator under the court's supervision) having jurisdiction over the estate of the participant that grants the person the authority to receive the property of the deceased participant and to act as the personal representative of the participant's probate estate.

"Plan" means the Retirement Plan, the Group Disability Plan and/or the Group Life Insurance Plan, as the context requires.

"Plan Administrator" means the Director of the New Jersey Division of Pensions and Benefits.

"Plan Sponsor" means the State of New Jersey.

"Plan Year" means each 12-month period ended June 30.

"Program" means the New Jersey Defined Contribution Retirement Program provided by the enabling statute, as described by this chapter. The Program consists of the Retirement Plan, the Group Life Insurance Plan and the Group Disability Plan.

"Qualified Domestic Relations Order" or "QDRO" means a domestic relations order directed to the Retirement Plan that creates or recognizes the existence of the right of an alternate payee to receive all or a portion of any benefit payable to a participant under the Retirement Plan and that further meets all requirements for a qualified domestic relations order stated by IRC § 414(p) as applied to a governmental plan and N.J.A.C. 17:6-8.

"Retirement Plan" means the Defined Contribution Retirement Program Retirement Plan as described in this chapter, and as it may hereafter be amended.

"Retirement Plan implementation date" means April 1, 2008, the date following which eligible employees are first enrolled as participants following the Plan's effective date.

"SEC" means and refers to the Securities and Exchange Commission, an agency of the government of the United States of America, established by § 4(a) of the Federal Securities Exchange Act of 1934, 15 U.S.C. § 78d.

"Severance from employment" means the date the participant terminates employment with an employer with no obligation for future services to be performed for an employer by the participant. The Plan Administrator is entitled to rely upon the date of severance from employment certified by the employer.

"Spouse" means, except for the purposes of IRC § 401(a)(9), the individual that is the participant's spouse under applicable law.

"State" means the State of New Jersey unless the context clearly indicates otherwise.

"Treasurer" means the Treasurer of the State of New Jersey. In the event there is no Treasurer then serving, the Acting Treasurer shall perform the functions described in this chapter.

"Trust" means and refers to the legal entity and the legal relationship created to hold and invest the assets of the Retirement Plan. Consistent with IRC § 401(a)(2), the Trust must be solely for the purposes of the Retirement Plan Program.

"Trust Agreement" means any agreement or declaration of trust executed under the Plan to hold and invest the assets of the Retirement Plan.

"Trustee" means the corporate trustee appointed and acting under the Trust Agreement.

"Valuation date" means any day on which both the NYSE is open for regular trading and the applicable DSP is open for regular business at its principal office. A valuation date ends at the earliest of:

1. 4:00 P.M. New York time;

2. The time that the NYSE closes trading; or

3. The time that any investment option must value its assets and price its shares.

In addition, the Plan Administrator may make reasonable rules governing the time of day after which an instruction will be treated as received on the next valuation date.

"Voluntary contribution implementation date" means the date, if any, designated by the Plan Administrator for the initial implementation of employee voluntary contributions described at N.J.A.C. 17:6-5.2 and authorized by the second sentence of N.J.S.A. 43:15C-3(a).

SUBCHAPTER 3. DEFINED CONTRIBUTION RETIREMENT PROGRAM BOARD

17:6-3.1 Composition

(a) The Board shall consist of:

1. The Director of the Division of Pensions and Benefits or a designee;

2. The Director of the Division of Investment or a designee;

3. The Commissioner of the Department of Banking and Insurance or a designee;

4. The Director of the Office of Management and Budget or a designee; and

5. A person appointed by the Director of the Division of Pensions and Benefits who is an active participant or retiree of the Defined Contribution Retirement Program.

17:6-3.2 Powers

(a) The Board shall select one or more designated service providers (DSPs), licensed or otherwise authorized to transact business in New Jersey, for the administration of all or part of the Program, including the management and investment of contributions to the Retirement Plan. The DSP or DSPs shall be selected in accordance with all applicable State laws and regulations.

(b) The Board shall determine investment options to be offered with respect to the investment of Retirement Plan accounts, including, but not limited, to mutual funds, subject to such rules and regulations as the Division of Pensions and Benefits may adopt, in accordance with all Internal Revenue Code rules and regulations. The Division of Pensions and Benefits as the Plan Administrator may direct the Trustee or DSP with respect to the investment options that may be made available to participants and beneficiaries, and may enter into such contractual arrangements with the Trustee or DSP (for example, to participate in a collective trust for the holding of benefit plan assets) as may be necessary or desirable to implement the provisions of the investment options.

SUBCHAPTER 4. PARTICIPATION IN THE RETIREMENT PLAN

17:6-4.1 Eligibility

(a) The following persons shall be eligible and shall participate in the Defined Contribution Retirement Program, provided they are eligible employees of an employer on or after the Retirement Plan implementation date:

1. A person who commences service on or after the effective date in an elective public office of the State or of a political subdivision thereof other than such a person who holds elective public office on the effective date and is enrolled in the Public Employees' Retirement System while that person continues to hold that elective office without a break in service. Service in the Legislature shall be considered a single elective public office;

2. A person who commences service on or after the effective date in an employment, office or position of the State or of a political subdivision thereof, or an agency, board, commission, authority or instrumentality of the State or of a subdivision, pursuant to an appointment by the Governor that requires the advice and consent of the Senate, or pursuant to an appointment by the Governor to serve at the pleasure of the Governor only during his or her term of office. This paragraph shall not be deemed to include a person otherwise eligible for membership in the State Police Retirement System or the Judicial Retirement System;

3. A person who commences service on or after the effective date in an employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, pursuant to an appointment by an elected public official or elected governing body, that requires the specific consent or approval of the elected governing body of the political subdivision that is substantially similar in nature to the advice and consent of the Senate for appointments by the Governor of the State as that similarity is determined by the elected governing body and set forth in an adopted ordinance or resolution, pursuant to guidelines or policy that shall be established by the Local Finance Board in the Department of Community Affairs or the Department of Education, as appropriate to the elected governing body. This paragraph shall not be deemed to include the classes of persons excluded from participation in N.J.A.C. 17:6-4.2.

4. A person who is granted a pension or retirement allowance under any pension fund or retirement system established under the laws of this State and elects to participate pursuant to section 1 of P.L. 1977, c. 171 (N.J.S.A. 43:3C-3) upon being elected to public office;

5. A person who is a member of the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System for whom compensation is defined as the amount of base or contractual salary equivalent to the annual maximum wage contribution base for old age Social Security benefits, pursuant to the Federal Insurance Contributions Act, 26 U.S.C. §§ 3101 et seq., for contribution and benefit purposes in either of those retirement systems, for whom participation in the Retirement Plan shall be with regard to any excess over the maximum compensation only; and

6. A person in employment, office or position for which the annual salary or remuneration is less, or the hours of work per week are fewer, than that which is required to become a member of the Teachers' Pension and Annuity Fund or the Public Employees' Retirement System, or to make contributions to those systems as a member on the basis of any such employment, office or position, after November 1, 2008.

(b) The classification by the Plan Administrator of a person as an eligible employee, or not, shall be conclusive.

17:6-4.2 Ineligibility

(a) No person shall be eligible to participate in the Program with respect to any public employment, office or position if:

1. The base salary for such employment, office, or position is less than $ 5,000 per year;

2. The person holds such employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, consistent with N.J.A.C. 17:6-4.1(a)3, and is otherwise eligible for membership in the Teachers' Pension and Annuity Fund or the Police and Firemen's Retirement System;

3. The person holds such employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, consistent with N.J.A.C. 17:6-4.1(a)3, and is employed or appointed in the regular or normal course of employment or appointment procedures and consented to or approved in a general or routine manner appropriate for and followed by the political subdivision, or the agency, board, commission, authority or instrumentality of a subdivision;

4. The person holds such employment, office or position in a political subdivision of the State, or an agency, board, commission, authority or instrumentality of a subdivision, consistent with N.J.A.C. 17:6-4.1(a)3, holds a professional license or certificate to perform, and is performing as a:

i. Certified health officer;

ii. Tax assessor;

iii. Tax collector;

iv. Municipal planner;

v. Chief financial officer;

vi. Registered municipal clerk;

vii. Construction code official;

viii. Licensed uniform subcode inspector;

ix. Qualified purchasing agent; or

x. Certified public works manager;

5. The person is, on the basis of service in such employment, office, or position, eligible for membership or enrolled as a member of another State or locally-administered pension fund or retirement system established under the laws of the State, including the Alternate Benefit Program, except as otherwise specifically provided in N.J.A.C. 17:6-4.1;

6. The person is receiving a benefit as a retiree from any other State or locally-administered pension fund or retirement system established under the laws of the State, except as provided in section 1 of P.L. 1977, c. 171 (N.J.S.A. 43:3C-3); or

7. The person is an officer or employee of a political subdivision of the State or of a board of education, or of any agency, authority or instrumentality thereof, who is ineligible for membership in the Public Employees' Retirement System pursuant to section 20 of P.L. 2007, c. 92 (N.J.S.A. 43:15A-7.2).

17:6-4.3 Waiver of participation

(a) A person eligible and required to participate in the Retirement Plan pursuant to N.J.A.C. 17:6-4.1(a)5 may elect to waive participation with regard to that employment, office, or position by filing, when first eligible, on an applicable form required by the Plan Administrator, a written waiver with the Plan Administrator that waives all rights and benefits that would otherwise be provided by the Retirement Plan. To the extent permitted by the Internal Revenue Code and related guidance, such a person may thereafter elect to participate in the Retirement Plan by filing, on an applicable form required by the Plan Administrator, a written election to participate in the Retirement Plan, and participation in the Retirement Plan pursuant to such election shall commence on the January 1 next following the filing of the election to participate.

(b) A waiver election under (a) above must be made on the applicable form and filed with the Plan Administrator and the appropriate officer of the employer.

(c) An eligible employee who has not made the waiver election permitted by (a) above within 30 calendar days of the latest of the participant's first date of paid employment with an employer under N.J.S.A. 43:15C-2, the Retirement Plan implementation date, and the date the Plan Administrator notifies the eligible employee of the waiver election opportunity, is deemed to have not waived membership in the Retirement Plan and is deemed to have irrevocably elected to participate in this Plan.

17:6-4.4 Service credit not recognized to determine eligibility for employer-paid retiree health care benefits

Service credited to a participant in the Retirement Plan shall not be recognized as service credit to determine eligibility for employer-paid health care benefits in retirement pursuant to P.L. 1961, c. 49 (N.J.S.A. 52:14-17.25 et seq.), N.J.S.A. 40A:10-16 et seq., P.L. 1979, c. 391 (N.J.S.A. 18A:16-12 et al.), or any other law, rule or regulation.

SUBCHAPTER 5. CONTRIBUTIONS TO THE RETIREMENT PLAN

17:6-5.1 Enrollment

(a) Employer and employee contributions with respect to the Retirement Plan shall be made with respect to eligible employees on and after the Retirement Plan implementation date who have enrolled as participants in the Retirement Plan.

1. An eligible employee shall be automatically enrolled as a participant in the Retirement Plan, with respect to employee mandatory contributions, as of his or her date of hire as an eligible employee (except as otherwise provided by N.J.A.C. 17:6-4.3) or, if later, the first payroll period following the Retirement Plan implementation date. Pursuant to such automatic enrollment, each eligible employee shall make employee mandatory contributions (within the parameters permitted by N.J.S.A. 43:15C-3(a) as well as catch-up employee mandatory contributions as described in N.J.A.C. 17:6-5.2).

2. Each eligible employee shall be afforded the opportunity, coincident with or as soon as practicable following his or her date of hire as an eligible employee (or, if later, the Retirement Plan implementation date) to file a participation agreement on an applicable form with the Plan Administrator. By filing the participation agreement, the eligible employee may designate the investment option or options in which employee contributions and employer contributions shall be initially invested following the filing of the participation agreement. (If no such election of investment option or options is made (or if such election does not provide investment directions with respect to 100 percent of the participant's account), the Plan Administrator shall direct the investment of the participant's account in one or more default investment options as the Plan Administrator may designate from time to time, with the approval of the Division of Investment).

i. A participant may elect, to the extent permitted by State law and as provided in the participation agreement (or on a separate participation agreement), to make (in addition to his or her employee mandatory contributions) additional employee voluntary contributions in such amount and in accordance with such rules as shall be established by the Plan Administrator provided such election is filed no later than 60 days following the later of the participant's date of hire as an eligible employee or the voluntary contribution implementation date. Such election to make employee voluntary contributions shall authorize the employer to reduce such participant's base salary by a percentage amount each payroll period (after the filing of the participation agreement with respect to the employee voluntary contributions) for contribution to the Retirement Plan as an employee voluntary contribution.

17:6-5.2 Employee contributions

(a) For each participant enrolled in the Retirement Plan and making employee contributions, the employer shall, subject to N.J.A.C. 17:6-5.7, make employee mandatory contributions, including catch-up employee mandatory contributions (if applicable) and, if the participant so elects pursuant to his or her timely filing of a participation agreement, employee voluntary contributions, in the percentage amount applicable to the participant multiplied by the participant's base salary for each payroll period beginning on and after the effective date of the participant's enrollment, provided the participant remains an eligible employee. For participants described in N.J.A.C. 17:6-4.1(a)5, employee contributions shall be made only with respect to that portion of base salary, if any, which is in excess of the annual maximum wage contribution base for Social Security benefits, pursuant to the Federal Insurance Contributions Act, 26 U.S.C. §§ 3101 et seq.

1. The enrollment of the participant in the Retirement Plan with respect to employee mandatory contributions shall, subject to N.J.A.C. 17:6-4.3, be effective as of the later of the effective date or the date on which the individual becomes an eligible employee. Because the Retirement Plan implementation date is later than the effective date, there shall be deducted, to the extent practicable, from the participant's base salary an additional amount equal to the catch-up employee mandatory contribution. The catch-up employee mandatory contribution is equal to the total employee mandatory contributions that are contributable for the period between the effective date (or the participant's date of hire as an eligible employee, if later) and the first payroll period following the Retirement Plan implementation date as of which the participant's employee mandatory contribution is in fact deducted from his or her base salary for contribution to the Retirement Plan.

i. The Plan Administrator shall establish rules, which shall be uniformly applied with respect to participants the Plan Administrator determines are similarly situated, regarding the number of payroll periods over which the participant's base salary shall be additionally reduced in order to make the catch-up employee mandatory contribution. The Plan Administrator shall, for purposes of measuring the employer contribution with respect to such catch-up mandatory employee contribution, designate the past period or periods to which the catch-up employee mandatory contribution relates.

2. To the extent permitted by State law, the Plan Administrator is empowered to promulgate rules and procedures, consistent with N.J.S.A. 43:15C-3(a), regarding the maximum and minimum percentages of base salary which an eligible employee may elect for his or her employee voluntary contributions. Because all employee contributions are "picked up" by the employer and treated as employer contributions, the percentage amount of employee voluntary contributions, once elected by eligible employee within 60 days of date of hire as an eligible employee (or the voluntary contribution implementation date, as applicable), are irrevocable and cannot thereafter be changed except as may be permitted by the IRC and approved by the Plan Administrator.

17:6-5.3 Employer contributions

(a) For each participant enrolled in the Retirement Plan and making employee mandatory contributions, the employer shall, subject to N.J.A.C. 17:6-5.7, make employer contributions in the percentage amount provided by N.J.S.A. 43:15C-3(b) multiplied by the participant's base salary for each payroll period beginning on or after the effective date of the participant's enrollment, provided the participant remains an eligible employee. For participants described in N.J.A.C. 17:6-4.1(a)5, employer contributions shall be made only with respect to that portion of base salary, if any, which is in excess of the annual maximum wage contribution base for Social Security benefits, pursuant to the Federal Insurance Contributions Act, 26 U.S.C. §§ 3101 et seq.

1. Employer contributions with respect to catch-up employee mandatory contributions. The employer shall make an additional employer contribution with respect to each payroll period for which a catch-up employee mandatory contribution is made, in the percentage amount provided by N.J.S.A. 43:15C-3(b) multiplied by the participant's base salary for the period to which the catch-up employee mandatory contribution relates.

17:6-5.4 Employee contribution pick-up

Each employer shall pick up employee contributions with respect to all base salary paid after the effective date with respect to enrolled participants. The employee contributions so picked up shall be treated as employer contributions pursuant to IRC § 414(h)(2). The employer shall pay the picked-up contributions directly to the Plan Administrator, instead of paying such amounts to the participants, and such contributions shall be paid from the same funds that are used in paying salaries to participants. Such contributions, although designated as employee contributions, shall be paid by the employer in lieu of contributions by participants. Participants may not elect to receive such contributions directly instead of having them paid by the employer to the Retirement Plan. Employee contributions so picked up shall be treated for all purposes of the Retirement Plan and State law, other than Federal tax law, in the same manner as employer contributions made without a pick-up.

17:6-5.5 Contributions transmitted to DSP

(a) Employer and employee contribution amounts for each pay period shall be transmitted to the DSP for crediting to the participant's account not later than the fifth business day after the date on which the participant is paid for that pay period.

1. Delinquent contributions. The Plan Administrator may adopt rules and procedures to address delinquent contributions.

17:6-5.6 Allocation of contributions to participant's account

(a) The DSP shall credit to each participant's account (and each applicable sub-account; see N.J.A.C. 17:6-2.1) the contributions actually received with respect to the participant. Such contributions shall be invested in the investment option or options as elected by the participant, or in the default investment option or options designated by the Plan Administrator, with the approval of the Division of Investment, if the participant has made an invalid or incomplete investment election, in accordance with rules and procedures promulgated by the Plan Administrator.

(b) The following sub-accounts shall be maintained by the DSPs:

1. An employer account to which employer contributions (and associated investment earnings and administrative expenses, if any) shall be credited or debited, as applicable;

2. An employee mandatory account to which employee mandatory contributions (and associated investment earnings and administrative expenses, if any) shall be credited or debited, as applicable;

3. An employee voluntary account to which employee voluntary contributions (and associated investment earnings and administrative expenses, if any) shall be credited or debited, as applicable; and

4. A rollover account to which rollovers (and associated investment earnings and administrative expenses, if any) shall be credited or debited, as applicable.

(c) If the participant designates more than one beneficiary, after the death of the participant and upon the written request of any beneficiary or upon an approved claim payable to any beneficiary and not all beneficiaries, the DSP shall, to the extent permitted by the investment option, maintain a separate account with respect to the interest of each beneficiary, beginning as of the next valuation date that occurs after the beneficiary's request or claim is received by the DSP.

17:6-5.7 Contributions limited by IRC § 401(a)(17)

In addition to other applicable limits stated by the Retirement Plan and notwithstanding any other provision of this chapter to the contrary, the amount of base salary or compensation determined for the purposes of the contributions to the Retirement Plan for any calendar year shall not exceed the limit prescribed by IRC § 401(a)(17) for the calendar year in which the Plan Year begins, as adjusted each calendar year according to IRC § 401(a)(17)(B).

17:6-5.8 Plan to satisfy limit on annual additions

(a) To the extent required under IRC § 415(c), in no event shall the "annual addition," as defined in this section for a participant for any Plan Year, exceed the lesser of:

1. $ 45,000, as adjusted; or

2. One hundred percent of the "compensation," as defined in this section, of such participant received during the Plan Year.

(b) For purposes of this section and subject to IRC § 415(f)(1)(B), all defined contribution plans of each employer are to be treated as a single defined contribution plan.

(c) If the annual addition for a participant under the Retirement Plan, determined without regard to the limitation of (a) above, would have been greater than the annual addition for such participant as limited by (a) above, then the excess shall be corrected as permitted under the Employee Plans Compliance Resolution System (or similar Internal Revenue Service correction program).

(d) For purposes of this section, "annual addition" means the annual addition as defined in IRC § 415(c)(2) and as modified in IRC § 415(l)(1) and 419A(d)(2). In general, IRC § 415(c)(2) defines the annual addition as the sum of the following amounts credited to a participant's account for the limitation year under the Retirement Plan and any other qualified defined contribution plan maintained by an employer:

1. Employer contributions; and

2. Employee contributions.

(e) For purposes of this section, the following types of contributions are not treated as employer contributions and are not "annual additions":

1. The restoration of an employee's accrued benefit, or any other restoration, by the employer in accordance with IRC § 411(a)(3)(D) or IRC § 411(a)(7)(C) will not be considered an annual addition for the limitation year in which the restoration occurs.

2. The transfer of funds from one qualified plan to another will not be considered an annual addition for the limitation year in which the transfer occurs.

(f) For purposes of this section, the following types of contributions are not treated as employee contributions and are not "annual additions":

1. Rollover contributions (as defined in IRC §§ 402(c)(1), 403(a)(4), 408(d)(3), 401(a)(31), 403(b)(8) and 457(e)(16);

2. Repayments of amounts described in IRC § 411(a)(7)(B); or

3. The direct transfer of employee contributions from one qualified plan to another.

(g) For purposes of this section, "compensation" means compensation as defined in IRC § 415(c)(3), as determined by the Plan Administrator consistent with the regulations under that IRC section. In general, IRC § 415(c)(3) defines compensation as all of a participant's wages as defined in IRC § 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in IRC § 3401(a)(2)); provided, however, compensation shall also include the amount of any elective deferrals, as defined in IRC § 402(g)(3), and any amount contributed or deferred by the employer at election of the employee and which is not includible in the gross income of the employee by reason of IRC § 125, 132(f), or 457. "Compensation" for purposes of this section shall not include any picked-up employee contributions to the Plan under IRS § 414(h). Compensation for a limitation year is the compensation actually paid or includable in gross income during such limitation year; provided, however, amounts earned during that limitation year but paid after the limitation year solely because of the timing of pay periods and pay dates shall be included if the amounts are paid during the first few weeks of the next limitation year, the amounts are included on a uniform and consistent basis with respect to all similarly situated participants, and no such compensation is included in more than one limitation year. However, compensation paid by the later of two and one-half months after severance from employment or the end of the limitation year that includes such severance from employment shall be included in compensation if it is payment that, absent a severance from employment, would have been paid to the participant while the participant continued in employment with the employer and is:

1. Regular compensation for services during the participant's regular working hours, or compensation for services outside the participant's regular work hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and the compensation would have been paid to the participant prior to a severance from employment if the participant had continued employment with the employer;

2. Payments for unused accrued bona fide sick, vacation or other leave, but only if the participant would have been able to use the leave if employment had continued; or

3. Payments pursuant to a nonqualified unfunded deferred compensation plan, but only if the payments would have been paid to the participant at the same time if the participant had continued employment with the employer and only to the extent that the payment is includible in the participant's gross income.

(h) Any payment to a participant paid by the employer not described above is not considered compensation if paid after severance from employment, even if it is paid within two and one-half months following severance from employment except as otherwise provided under N.J.A.C. 17:6-16.23.

(i) For purposes of this section, an employee who is in qualified military service (within the meaning of Internal Revenue Code Section 414(u)(1)) shall be treated as receiving compensation from the employer during such period of qualified military service equal to:

1. The compensation the employee would have received during such period if the employee were not in qualified military service, determined based on the rate of pay the employee would have received from the employer but for the absence during the period of qualified military service; or

2. If the compensation the employee would have received during such period was not reasonably certain, the employee's average compensation from the employer during the 12-month period immediately preceding the qualified military service (or, if shorter, the period of employment immediately preceding the qualified military service).

(j) For purposes of this section, compensation of each participant shall not exceed the applicable limit established by IRC § 401(a)(17) as of the first day of the limitation year, as increased for the Cost of Living Adjustment ($ 245,000 for 2011). The Cost of Living Adjustment in effect for a limitation year applies to compensation for the Plan Year that begins with or within such limitation year.

SUBCHAPTER 6. INVESTMENTS AND INVESTMENT DIRECTION

17:6-6.1 Duty of investment direction

Each participant and, when applicable, each beneficiary or alternate payee, shall, subject to the requirements of applicable investment law and any procedures established by the DSP, with the approval of the Plan Administrator, direct the investment of his or her account(s) under the Retirement Plan. Accounts may only be invested in those investment options offered by the DSP and approved by the Board.

17:6-6.2 Procedure for giving investment direction

The participant, beneficiary, or alternate payee must give investment direction according to the provisions of the Retirement Plan, including any procedure required by the DSP with the approval of the Plan Administrator. Each investment direction shall be on the applicable form and shall not be proper unless it is signed by the participant, beneficiary, or alternate payee. Only the DSP has authority to accept an investment direction and any direction is effective only when received.

17:6-6.3 Limits on frequency of investment directions

(a) The Plan Administrator, or the DSP with the consent of the Plan Administrator, may, but only on a uniform and consistent basis, impose reasonable restrictions on the frequency with which a participant, beneficiary, or alternate payee may give investment directions. In addition to such restrictions, a participant, beneficiary, or alternate payee may not give more than one investment direction in any valuation day; therefore, the latest investment direction in a valuation day cancels all earlier inconsistent investment directions in that valuation day.

(b) Redemption fees may be imposed by an investment option and will be charged to the participant's account in accordance with the investment option's written policy.

17:6-6.4 Who directs investment

(a) During the participant's life, the participant shall direct the investment of his or her account. After the participant's death, the beneficiary shall direct the investment of that beneficiary's separate account. If following a QDRO, the Plan Administrator maintains a separate account for the alternate payee, the alternate payee will direct investments of that separate account. During the participant's, beneficiary's, or alternate payee's disability or incompetence, investments shall be directed by the person that is the court appointed and currently serving conservator or guardian of the estate of the participant, or if there is no conservator or guardian, the person who has authority to act for the participant under a power-of-attorney accepted by the Plan Administrator.

(b) A participant, beneficiary, or alternate payee may authorize an agent or attorney-in-fact to direct investment for all of his or her account by giving written notice acceptable to the Plan Administrator and furnishing a power-of-attorney that is accepted by the Plan Administrator.

17:6-6.5 Duty to accept investment direction

(a) The DSP must accept every proper investment direction with respect to an investment option approved by the Board, and the DSP is obligated to comply with such proper investment direction.

(b) As of each valuation date with respect to an investment option, the DSP shall credit or debit to each participant's account the investment gain or loss with respect to such account's allocable share of the investment option since the previous valuation date.

(c) The Plan Administrator and the DSP may not charge the participant's, beneficiary's, or alternate payee's account for the expenses of executing his or her investment direction except as provided by N.J.A.C. 17:6-6.3. If such expenses are so charged, the Plan Administrator or the DSP shall inform the participant, beneficiary, or alternate payee of the charges. Any expenses charged by a DSP must be approved by the Plan Administrator.

17:6-6.6 Plan Administrator not responsible

(a) If any person, including a DSP, provides any investment education or investment information or investment advice of any kind, the Plan Administrator shall not be liable for any loss or liability arising out of such investment education or investment information or investment advice.

(b) To the extent of the participant's, beneficiary's, or alternate payee's investment direction, the Plan Administrator is relieved of any fiduciary responsibility and every kind of liability, and is not responsible for any damage or loss or expense or other claim which may arise from any participant's, beneficiary's, or alternate payee's investment direction or failure to exercise his or her duty of investment direction.

17:6-6.7 Failure to give investment direction

If at any time a participant, beneficiary, or alternate payee fails to exercise his or her duty of investment direction, or an investment direction is refused, the Plan Administrator shall, to the extent of the failure of proper investment direction, cause the account to be invested according to the default investment option or options designated from time to time by the Plan Administrator, with the approval of the Division of Investment. The Plan Administrator shall direct the Trustee or other DSP with respect to the investment of accounts in a default investment option or options.

SUBCHAPTER 7. VESTING AND FORTEITURE

17:6-7.1 Vesting schedules

(a) A participant's interest in that portion of his or her account attributable to employee contributions shall immediately become and shall at all times remain fully vested and nonforfeitable.

(b) Under N.J.S.A. 43:15C-3(c), a participant's interest in that portion of his or her account attributable to employer contributions shall become and shall remain fully vested and nonforfeitable on the date the participant commences the second year of employment. However, if at the time of the participant's initial employment, the participant either participates in a program substantially similar to the Retirement Plan, or is a member of another State-administered pension fund or retirement system, the participant's interest in that portion of his or her account attributable to employer contributions shall be immediately and fully vested.

(c) Notwithstanding the vesting schedule described in (b) above, a participant's interest in that portion of his or her account attributable to employer contributions shall be vested and nonforfeitable upon his or her attainment, while employed by an employer, of age 65.

17:6-7.2 Forfeitures

Forfeitures of non-vested and other amounts under the Retirement Plan shall be used to reduce future employer contributions to the Retirement Plan under N.J.S.A. 43:15C-3(b). Forfeitures shall not be reallocated among the accounts of participants.

17:6-7.3 Forfeiture of employer contributions for dishonorable service

(a) In accordance with N.J.S.A. 43:1-3 and N.J.A.C. 17:1-6.1, 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, a member's dishonorable service will result in a total or partial forfeiture of the retirement benefits under this plan, as determined by the Plan Administrator.

1. When a member is indicted or dismissed, the matter shall be referred to the Director of the Division of Pensions and Benefits to determine the status of any claim which may be filed by the member.

2. No credit shall be granted for the period during which the member's salary has been terminated while under indictment or suspension, until the outcome of the proceedings determines the basis for the award of such credit, if any.

3. All claims for retirement, death benefits and the return of contributions cannot be processed until the matter has been completely resolved to the satisfaction of the Director of the Division of Pensions and Benefits. Resolution of the indictment, dismissal or other charges must be verified by contact with the County Prosecutor's Office, the Attorney General's Office, the Department of Education, the Department of Personnel or other responsible agencies.

4. Likewise, in cases where anything pertaining to a member's employment is in litigation, or under appeal, the matter shall be held in abeyance until the Division of Pensions and Benefits determines if claims can be processed or whether the processing of such claims are to be postponed pending a final resolution of the litigation or appeal.

5. If an indictment regarding charges related to a member's public employment is received by the Division of Pensions and Benefits after the member's date of retirement, the Director of the Division of Pensions and Benefits may suspend retirement benefits pending the outcome of the indictment.

6. Where an individual's pension has been forfeited for dishonorable service, any monies accrued in the employer account designated for such individual shall be forfeited. The individual shall retain amounts in his or her employee account, including earnings.

17:6-7.4 Vesting rules

The Retirement Plan shall be construed consistently with IRC § 401(a)(7) as in effect on September 1, 1974.

SUBCHAPTER 8. BENEFICIARY

17:6-8.1 Beneficiary designation

(a) At any time before his or her death, a participant may designate a beneficiary or beneficiaries, subject to the terms of the Retirement Plan and such rules as may be established by the Plan Administrator. The participant will have the right to change his or her beneficiary designation at any time, subject to the terms of the Retirement Plan and such rules as may be established by the Plan Administrator. After the participant's death, no person will have any right or power to designate a beneficiary or change any beneficiary (except a beneficiary's disclaimer of his, her, or its benefit as permitted by N.J.A.C. 17:6-14.10). Any attempt to state such a provision in a beneficiary designation or otherwise is void.

(b) A beneficiary designation must be on the applicable form. A beneficiary designation is not effective until the Plan Administrator (or its designee for this purpose) accepts it. Each beneficiary designation completely revokes and cancels any and every previous beneficiary designation.

1. A participant must designate each beneficiary by name. A participant cannot designate a beneficiary by relationship or by class, and any such attempted beneficiary designation is void. Notwithstanding the preceding sentence, if the Plan Administrator finds that a beneficiary designation sufficiently describes a trust, the Plan Administrator may construe the beneficiary designation as naming the duly appointed and currently acting trustee of that trust. Likewise, if the Plan Administrator finds that a beneficiary designation sufficiently describes an estate, the Plan Administrator may construe the beneficiary designation as naming the duly appointed and currently acting personal representative of that estate.

i. Any statement in a beneficiary designation attempting to state or create a condition or restriction on the beneficiary's receipt or enjoyment of any benefit is invalid and the beneficiary is entitled to the benefit without regard to any attempted condition or restriction.

ii. Notwithstanding anything to the contrary in any beneficiary designation in the participation agreement or any other document or otherwise (including any court order), any designation of a beneficiary cannot be irrevocable and any such designation will be construed as a revocable designation of that beneficiary.

2. If the participant designates as beneficiary more than one person, all persons of the same beneficiary designation (primary or contingent) have equal shares, unless the participant specifies otherwise. "Per stirpes" designations are not allowed.

i. If a beneficiary designation divides a benefit between or among two or more beneficiaries, the primary beneficiary designation must allocate the share of each such beneficiary solely by specifying a percentage of the participant's account and the contingent beneficiary designation must allocate the share of each such beneficiary solely by specifying a percentage of the participant's account. Without limiting the comprehensive effect of the preceding sentence, any division of any benefit under a beneficiary designation will be ineffective to the extent that it would ask the Plan Administrator to consider any fact other than the amount of the participant's account.

3. Any common-law doctrine or construction or interpretation principle of substantial compliance with the rules for making a beneficiary designation or nomination (or under the law of contracts generally) will not apply to the Program.

17:6-8.2 Construction of beneficiary designation

(a) A beneficiary designation will be construed according to the following provisions:

1. Any statement in a beneficiary designation referring to a beneficiary's relationship to the participant is for convenience or information only, and has no effect in the construction or interpretation of the beneficiary designation.

2. A beneficiary designation will be construed to dispose all the remaining Plan account and all benefits. For example, if a beneficiary designation specifies shares that total less than 100 percent of the benefit, the Plan Administrator may adjust the shares pro rata so that the shares equal 100 percent.

3. Except as otherwise provided by the Program, a beneficiary designation that uses a term or phrase that would have significance in construing or interpreting a conveyance or disposition of a decedent's estate will, except as otherwise specified by the participant, be construed or interpreted according to Title 3B of the New Jersey Statutes (without regard to the participant's domicile at the time he or she made the beneficiary designation or at the time of his or her death). Likewise, if a beneficiary designation remains ambiguous after applying all provisions and construction rules stated by this chapter but would be resolved by applying the rules of construction and interpretation of the Uniform Probate Code for construing a beneficiary designation or conveyance, such rules will apply to the beneficiary designation, except as otherwise provided by the Program. Notwithstanding the preceding sentences, the Plan Administrator will not give effect to any Uniform Probate Code provision concerning the effect of divorce or marital separation. Also, the Plan Administrator will not give effect to any Uniform Probate Code provision or any construction or interpretation principle that would require the Plan Administrator to consider information not in the Program's records.

17:6-8.3 Beneficiary must be alive when the distribution becomes payable

Notwithstanding any beneficiary designation or any law to the contrary, a person will not be a beneficiary unless he or she is living or it exists when the distribution otherwise would become payable. Further, a person that would receive a distribution as a trustee or other fiduciary will not be a beneficiary unless the person that the trustee or fiduciary serves is living or exists when the distribution would become payable. Any right of a beneficiary is strictly personal to that beneficiary and lapses on his or her death or its non-existence. Any undistributed benefit that would have been distributable to a person had he or she lived or it existed is not distributable to that person's legatees or heirs. On a beneficiary's death, any undistributed benefit attributable to that beneficiary becomes distributable to the remaining primary beneficiaries or beneficiary if any, or if none, to the remaining contingent beneficiaries or beneficiary, in each case to be distributable in equal shares to all living beneficiaries of the applicable primary or contingent beneficiary class.

17:6-8.4 Marriage or status has no effect

Notwithstanding any law to the contrary, a marriage, civil union, or domestic partnership, or a divorce, dissolution, annulment, revocation, or other end of a marriage, civil union, or domestic partnership, or any other creation, interruption, or end of a spouse or other family relationship has no effect concerning whether a person is (or is not) a beneficiary.

17:6-8.5 Lack of beneficiary designation

If a participant failed to designate a beneficiary (including a failure because the participant's beneficiary designation is invalid or ineffective) or no beneficiary designated by the participant is living or exists when the distribution otherwise would become payable, the participant's beneficiary or beneficiaries designated with respect to his or her group life insurance benefit under the Group Life Insurance Plan is the beneficiary to the extent of the failure or invalid or ineffective designation. If there is no designated beneficiary with respect to the participant's Group Life Insurance Plan benefit, then the participant's estate is the beneficiary to the extent of the failure or invalid or ineffective designation. For the purposes of this setion, the Plan Administrator may rely on an appropriate court order or the personal representative's written statement as to the identity (including name, address, and taxpayer identifying number under IRC § 6109) of and shares allocable to the persons entitled to such estate.

17:6-8.6 A slayer cannot be a beneficiary

A named beneficiary who feloniously and intentionally kills the participant or beneficiary is not a beneficiary and is not entitled to any distribution or any other right under the Program or any Plan under the Program; and any benefit is available as though the killer had predeceased the participant or beneficiary.

SUBCHAPTER 9. QUALIFIED DOMESTIC RELATIONS ORDER

17:6-9.1 QDRO procedures

(a) Upon receipt of a final court order directed to the Retirement Plan, the Plan Administrator (or, to the extent authority is so delegated to it, the DSP) will take the following steps:

1. The Plan Administrator will promptly notify the participant and each alternate payee of receipt of an order and the Retirement Plan's procedures for deciding whether an order is a QDRO.

2. On receipt by the Plan Administrator of an order and during the period in which the Plan Administrator has not yet determined whether an order is a QDRO, the Plan Administrator will not instruct any payment that would be inconsistent with the order to the extent that the order might be a QDRO.

3. The Plan Administrator will continue the participant's investment direction until the Plan Administrator makes its determination.

4. The Plan Administrator will determine, with the advice of legal counsel to the extent necessary, whether the order is a QDRO, considering the factors set forth in N.J.A.C. 17:6-9.3.

5. If the Plan Administrator determines an order is a QDRO, it will:

i. Send notice to the participant and each alternate payee;

ii. Keep Retirement Plan accounts consistent with the QDRO; and

iii. Instruct the Trustee to pay the distribution provided by the QDRO.

6. If the Plan Administrator determines an order is not a QDRO, it will not instruct any distribution from the participant's account for a period of 18 months, unless the alternate payee either releases a claim to the benefits or such an escrow is resolved by the Plan Administrator in a manner consistent with the QDRO.

7. The Plan Administrator may delay the commencement of its consideration of any order until the later of the date that is 30 days after receipt of the signed, certified order, or 30 days after the date of the order or the date that the Plan Administrator is satisfied that all rehearing and appeal rights on the order have expired.

17:6-9.2 Age of alternate payee

Consistent with IRC § 414(p)(4), an order does not fail to be a QDRO solely because the order directs a distribution or payment to be paid or payable to the alternate payee at a time that is earlier than the participant's earliest retirement age. The alternate payee may request a distribution at any time after the QDRO is approved.

17:6-9.3 Required findings for QDRO

(a) An order will not be determined by the Plan Administrator to be a QDRO unless the Plan Administrator finds that:

1. The order does not require the Retirement Plan to provide any type or form of benefit or any option not otherwise provided under that Plan;

2. The order does not require the Retirement Plan to provide an increased benefit;

3. The order does not require the payment of benefits to an alternate payee that are required to be paid to another alternate payee under another order that the Plan Administrator (or a state court) previously determined to be a QDRO; and

4. The order clearly specifies:

i. The name and the last known mailing address (if any) of the participant, and the name and the mailing address of each alternate payee;

ii. The amount or percentage, or the manner in which the amount or percentage is to be determined, of the participant's account to be paid (or payable) to each alternate payee; and

iii. The form of payment, and the number of payments or period to which the order applies.

(b) The Plan Administrator may assume that the alternate payee named by the court order is a proper payee and need not inquire into whether the person named is a spouse or former spouse of the participant.

17:6-9.4 Investment direction during domestic relations matter

Notwithstanding any notice to the Plan Administrator or to any other person dealing with or performing services regarding the Retirement Plan that a domestic relations order is or may be presented to be determined as a QDRO, the participant shall continue to exercise his or her duty of investment direction as required by the Retirement Plan unless a court order expressly provides otherwise and the Plan Administrator determines that the court order is a QDRO. If a QDRO provides for an alternate payee or any person other than the participant to have a right of investment direction under the Retirement Plan, the Plan Administrator shall give effect to that court order to the extent permitted by the Retirement Plan.

17:6-9.5 Inability to locate alternate payee

An alternate payee is responsible for maintaining a current residence address on file with the Plan Administrator and the DSP. The Plan Administrator has no duty to locate any alternate payee other than by sending written notice to the last known address on file with it.

SUBCHAPTER 10. NO LOAN OR EARLY DISTRIBUTION

17:6-10.1 No loan

The Retirement Plan does not permit any loan to a participant or other interested person.

17:6-10.2 No hardship or in-service distributions

The Retirement Plan does not permit hardship or other in-service distributions to a participant or other interested person prior to the participant's severance from employment.

SUBCHAPTER 11. DISTRIBUTIONS AND MINIMUM DISTRIBUTION REQUIREMENTS

17:6-11.1 Distribution

(a) Upon a participant's severance from employment, the participant is entitled to apply to receive his or her vested account(s) under the Retirement Plan in a single sum distribution or, if permitted by the Plan Administrator in a uniform matter with respect to participants similarly situated, in any other payment option, if any. The Plan Administrator shall prescribe the payment option(s), if any, in addition to the single sum distribution and the rules for determining the payments under any such payment options. The Plan Administrator may, but shall not be required to, permit a participant to postpone distribution of his or her account, but not beyond the required beginning date (as defined in N.J.A.C. 17:6-11.3).

(b) Upon a participant's death with undistributed amounts in his or her Retirement Plan account, such amounts will be distributed in a single sum to the participant's designated beneficiaries, as soon as practicable following the receipt of notice by the Plan Administrator of the participant's death. Notwithstanding the foregoing, the Plan Administrator may, but is not required to, promulgate rules regarding the distribution of amounts in a participant's account following his or her death other than in an immediate single sum distribution, in a payment option consistent with N.J.A.C. 17:6-11.2.

17:6-11.2 Minimum distribution

(a) The requirements of this section will take precedence over any inconsistent provisions of this chapter.

(b) All distributions required under this section will be determined and made in accordance with IRC § 401(a)(9) and the Treasury Regulations under IRC § 401(a)(9).

(c) Distributions to a participant and his or her beneficiaries under this section shall only be made in accordance with the incidental death benefit requirements of IRC § 401(a)(9)(G) and the Treasury Regulations thereunder.

1. The participant's entire interest will be distributed, or begin to be distributed, to the participant no later than the participant's required beginning date (as defined in N.J.A.C. 17:6-11.3).

2. If the participant dies before distributions begin, and subject to the payment option(s), if any, in fact permitted by the Plan Administrator in addition to a single sum distribution, the participant's entire interest must be distributed, or begin to be distributed, no later than as follows:

i. If the participant's surviving spouse is the participant's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70 1/2, if later.

ii. If the participant's surviving spouse is not the participant's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died.

iii. If there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

iv. If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this subparagraph, rather than (c)2i above, will apply as if the surviving spouse were the participant. For purposes of this subsection, unless this subparagraph applies, distributions are considered to begin on the participant's required beginning date (as defined in N.J.A.C. 17:6-11.3). If this subparagraph applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under (c)2i above. If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant's required beginning date or to the participant's surviving spouse before the date distributions are required to begin to the surviving spouse, the date distributions are considered to begin is the date distributions actually commence.

3. If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of IRC § 401(a)(9) and the Treasury Regulations thereunder.

17:6-11.3 Definitions

As used in this subchapter, the following terms shall have the following meanings, unless the context clearly indicates otherwise.

"Designated beneficiary" means the individual who is designated as the beneficiary under this Program.

"Required beginning date" means the April 1 of the calendar year following the later of;

1. The calendar year in which the participant attains age 70 1/2; or

2. The calendar year in which the participant retires.

17:6-11.4 Default retirement distribution

If a distribution is required to begin according to N.J.A.C. 17:6-11.2 and the participant has not filed a claim by the date that is 90 days before the participant's required beginning date (as defined in N.J.A.C. 17:6-11.3), or if the Plan Administrator has denied a claim and an acceptable claim has not been filed before the applicable date, the Plan Administrator shall direct payment in a single sum distribution to the participant or beneficiary, as the case may be.

17:6-11.5 Minimum distribution life expectancy

If an annuity payment option is permitted by the Plan Administrator, then the participant, alternate payee, or beneficiary may elect on the applicable form whether to recalculate life expectancy (or any element of it) to the fullest extent permitted by IRC § 401(a)(9)(D). If the participant, alternate payee, or beneficiary does not timely make this election, the participant, alternate payee, or beneficiary is deemed to have elected the "default" method specified by the applicable annuity payment option with respect to an investment option, or to the extent that no method is so specified, that no recalculation shall apply with respect to any individual's life expectancy.

17:6-11.6 Minimum distribution period

If a participant has not furnished evidence of his or her spouse's date of birth, the Plan Administrator or DSP will use the participant's age in determining the minimum distribution period according to Treasury Reg. § 1.401(a)(9)-5/Q&A-4(a) without regard to Treasury Reg. § 1.401(a)(9)-5/Q&A-4(b).

17:6-11.7 Distributions in cash

All distributions shall be paid in cash, less required withholding.

17:6-11.8 Corrective distributions

The amounts corrected by a corrective distribution are disregarded for all purposes of the Retirement Plan, except as otherwise expressly provided by the Retirement Plan. A corrective distribution cannot be counted as a required minimum distribution under IRC § 401(a)(9). A corrective distribution is not an eligible rollover distribution (as that term is used in N.J.A.C. 17:6-13). A corrective distribution includes (but is not limited to) a corrective disbursement under Treasury Reg. § 1.415-6(b)(6) or IRS Rev. Proc. 92-93.

17:6-11.9 Required minimum distribution waiver of 2009

(a) Notwithstanding any other provisions of this subchapter, a participant or beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of IRC § 401(a)(9)(H) ("2009 RMDs"), and who would have satisfied that requirement by receiving distributions that are equal to the 2009 RMDs or one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participant's designated beneficiary, or for a period of at least 10 years ("Extended 2009 RMDs"), will not receive those 2009 distributions unless the participant or beneficiary elects to receive such distribution. Participants and beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence.

(b) Notwithstanding any other provisions of the Plan, and solely for purposes of applying the rollover provisions of the Plan, 2009 RMDs (amounts that would have been required minimum distributions for 2009 but for the enactment of IRC § 401(a)(9)(H)) and Extended 2009 RMDs (one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participant's designated beneficiary, or for a period of at least 10 years), will be treated as eligible rollover distributions as provided in N.J.A.C. 17:6-13.1.

SUBCHAPTER 12. ACCOUNTS

17:6-12.1 Account statement or confirmation

Each account statement or confirmation furnished by (or on behalf of) the Plan Administrator is intended as a legally significant statement of the accrued benefit under the Retirement Plan. As to each account statement or confirmation, if, by the date that is 180 days after the date that the statement or confirmation was mailed or otherwise sent or delivered, the participant, beneficiary, or alternate payee has not delivered a written objection as to the accuracy of the statement or confirmation, the accounting reported is then settled and conclusive and an account stated. If an objection to any account statement or confirmation is withdrawn or is adjusted to the participant's, beneficiary's, or alternate payee's satisfaction, the accounting is then settled and conclusive and an account stated. To the extent that an account statement or confirmation is an account stated, the Plan Administrator and DSP are discharged from any liability that might otherwise arise out of the account as fully as if the account had been settled by an appropriate court proceeding.

17:6-12.2 Account balance

The account balance is the total amount or value of the account (or sub-account or separate account as applicable) reduced by any applicable investment option or trust charges, fees, expenses, and taxes. At any time, the amount or value of any account or sub-account is the applicable account balance as of the last valuation date.

SUBCHAPTER 13. ROLLOVERS

17:6-13.1 Direct rollover of funds to other plans

Consistent with IRC § 401(a)(31), for any distribution that is an eligible rollover distribution, the distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to instruct the DSP to have any portion of an eligible rollover distribution paid directly to an eligible Retirement Plan specified by the distributee.

17:6-13.2 Definitions

For purposes of this subchapter, the following definitions shall apply:

"Distributee" includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in IRC § 414(p), are distributees with regard to the interest of the spouse or former spouse. A distributee also includes the participant's nonspouse designated beneficiary (including, without limitation, a civil union partner) under N.J.A.C. 17:6-8.2. In the case of a nonspouse beneficiary, the direct rollover may be made only to an individual retirement account or annuity ("IRA") described in IRC §§ 408(a) or 408(b) that is established on behalf of the designated nonspouse beneficiary and that will be treated as an inherited IRA pursuant to the provisions of IRC § 402(c)(11). Also, in this case, the determination of any required minimum distribution under IRC § 401(a)(9) that is ineligible for rollover shall be made in accordance with Internal Revenue Service Notice 2007-7, Q&A 17 and 18, 2007-5 I.R.B. 395.

"Eligible Retirement Plan" is any program defined in IRC §§ 401(a)(31) and 402(c)(8)(B) that accepts the Distributee's Eligible Rollover Distribution, as follows:

1. An individual retirement account under IRC § 408(a);

2. An individual retirement annuity under IRC § 408(b) (other than an endowment contract);

3. A Roth individual retirement plan under IRC § 408A;

4. A qualified trust;

5. An annuity plan under IRC § 403(a);

6. An eligible deferred compensation plan under IRC § 457(b), which is maintained by an eligible governmental employer under IRC § 457(e)(1)(A) (so long as the plan agrees to separately account for amounts rolled into the plan); and

7. An annuity contract under IRC § 403(b).

"Eligible rollover distribution" is any distribution from the Retirement Plan of any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include:

1. Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more;

2. Any distribution to the extent such distribution is required under IRC § 401(a)(9); or

3. The portion of any distribution that is not includible in gross income, provided that any portion of any distribution that is not includible in gross income may be an eligible rollover distribution for purposes of a rollover to either:

i. A traditional individual retirement account or individual retirement annuity under IRC §§ 408(a) or 408(b); or

ii. A qualified trust which is part of a plan which is a defined contribution plan under IRC §§ 401(a) or 403(a) that will separately account for the distribution, including the taxable and non-taxable portions of the distribution, in a direct trustee-to-trustee transfer.

17:6-13.3 Rollover of funds from other plans

(a) The Retirement Plan will accept participant rollover contributions and/or direct rollovers of eligible rollover distributions made after December 31, 2001, as described below:

1. Pre-tax contributions from a qualified plan described in IRC §§ 401(a), 401(k) or 403(a), an annuity contract described in IRC § 403(b) and an eligible deferred compensation plan described in IRC § 457(b) which is maintained by an eligible governmental employer under IRC § 457(e)(1)(A); and

2. A participant rollover of the portion of a distribution from an individual retirement account or annuity described in IRC §§ 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includible in gross income.

(b) The Retirement Plan does not accept direct rollovers of after-tax or Roth contributions.

17:6-13.4 Eligible rollover distribution payable without delay

The Plan Administrator may (but is not required to) authorize commencement of the eligible rollover distribution less than 30 days after giving an eligible rollover distribution notice only if the following requirements are met. To the extent required by IRC § 402(f) and Treasury Reg. § 1.402(c)-2, the Plan Administrator or DSP must inform the distributee in an eligible rollover distribution notice or otherwise that the distributee has a right to a period of at least 30 days after receiving the eligible rollover distribution notice to consider the decision of whether to elect such a distribution and any available payment option, and the distributee after receiving the eligible rollover distribution notice must affirmatively elect such a distribution.

SUBCHAPTER 14. ADMINISTRATION OF DISTRIBUTIONS

17:6-14.1 Claim for distribution

(a) Any distribution under the Retirement Plan shall be paid only upon a claim made on the applicable form, and submission of additional information requested by the Plan Administrator, including, but not limited to:

1. If the distribution is made under N.J.A.C. 17:6-11.1, appropriate evidence that the participant has a severance from employment;

2. If the distribution is an eligible rollover distribution (as defined in N.J.A.C. 17:6-13.2), the distributee's instruction as to whether the distribution (or a portion of the distribution) is to be paid directly to an eligible retirement plan (as defined in N.J.A.C. 17:6-13.2), and if any amount is to be paid directly to such an eligible Retirement Plan, the name and address of the trustee or plan administrator of that eligible Retirement Plan together with any other information that the Plan Administrator or DSP reasonably requests pursuant to Treasury Reg. § 1.401(a)(31)-1T;

3. If the distribution is made on account of the participant's death, appropriate evidence of the participant's death;

4. Whenever required by the Plan Administrator, the date of birth of any person as relevant to the distribution;

5. If the account consists of more than one investment option, the order in which any investment options are to be charged or redeemed to pay the distribution;

6. Any other evidence or information that the Plan Administrator finds is relevant to administer a provision of the Retirement Plan in the participant's, beneficiary's or other distributee's circumstances;

7. Absent contrary evidence actually known to the Plan Administrator, an appropriate death certificate or a court order stating that the participant is found to be absent and presumed dead shall constitute appropriate evidence of the participant's death; and

8. If the distributee fails to submit proper instructions, the Plan Administrator may to the extent provided by the investment option contract determine which Plan investment option(s) are to be charged.

17:6-14.2 Minimum advance notice

The Plan Administrator may require for payment of any distribution a minimum advance notice, uniformly determined and consistently applied.

17:6-14.3 Payor may rely on apparent entitlement

(a) The Plan Administrator and the DSP are not liable for having made a payment under an unclear beneficiary designation or participation agreement to a person not entitled to the payment, or for having taken or omitted any other action in good faith reliance on a person's apparent entitlement under the Retirement Plan, before the payor actually received written notice of a claimed lack of entitlement under the Retirement Plan.

(b) Any payor of any distribution is not liable for having made a payment or having transferred an item of property to a beneficiary designated in a beneficiary designation (or in a similar writing reasonably believed to constitute a beneficiary designation) who is not entitled to the distribution, or for having taken any other action in good faith reliance on the beneficiary's apparent entitlement under the terms of the beneficiary designation before the payor received written actual notice alleging that the beneficiary was not entitled to the distribution.

17:6-14.4 Valuation of payments

Except to the extent otherwise expressly provided by the investment option(s), any payment or payment option shall be determined as of the valuation date requested by the participant or beneficiary, or if later, as of the valuation date that next follows the DSP's or Trustee's receipt in good order (within the meaning of the investment option(s) or applicable law) of a request for payment approved by the Plan Administrator.

17:6-14.5 Delay of payment

(a) The Plan Administrator may delay approval of a distribution and the DSP may delay payment of an approved distribution:

1. To receive any necessary information;

2. To permit a valuation of the account;

3. To permit any necessary or appropriate liquidation of assets;

4. If a dispute arises as to the proper payee;

5. If the Plan Administrator or the DSP has written notice of a domestic relations case or petition that may involve the applicable account;

6. If the Plan Administrator or the DSP has written notice of a bankruptcy case or petition that may involve the applicable account;

7. If the Plan Administrator or the DSP has notice of any legal proceeding or petition that may involve the applicable account;

8. For any reason described elsewhere in this chapter;

9. For any other lawful purpose;

10. Without limiting the comprehensive effect of (a)1 through 9 above, to the extent that any distribution requires a redemption or transfer of an investment option's shares, the Plan Administrator shall delay the distribution during any period when the NYSE is closed other than for a weekend or a holiday, or when trading on the NYSE is restricted (as determined by the SEC), or when an emergency exists making disposal of an investment option's securities or valuation of an investment option's net assets not reasonably practicable, or when the SEC has required or permitted the suspension of redemptions or transfers by order, or during any period otherwise described by section 22(e)(1) through (3) of the Investment Company Act of 1940, as amended (15 U.S.C. § 80a-22(e)(1) through (3)). Also, the Plan Administrator or the DSP may delay any distribution if doing so is necessary or appropriate to avoid exceeding an investment option's "large transaction amount" requirement that applies to the Trust; or

11. If the participant received an allocation of employer contributions for a period that included his or her absence under a Federal or state Family and Medical Leave Act, the Plan Administrator shall delay payment of any distribution until the Plan Administrator is satisfied that the participant has returned to work from such absence or that the participant will not or did not return to work from such absence.

17:6-14.6 Dispute as to proper recipient

If a dispute arises as to the proper recipient of any payment(s) under the Retirement Plan, the Plan Administrator, in his or her sole discretion, may instruct the DSP to withhold payment until the dispute is determined by a court of competent jurisdiction or is settled by the parties concerned.

17:6-14.7 Distribution to minor beneficiary

(a) If a distribution under the Retirement Plan is to be made to a minor beneficiary, any payment(s) may, except to the extent prohibited by applicable law, be paid to a responsible person according to the following order. If the amount is under $ 10,000 per year:

1. As instructed by an appropriate court pursuant to a written court order which has been provided to the Plan Administrator before the distribution is made;

2. To the duly court-appointed and currently acting conservator of the beneficiary, evidence of which has been provided to the Plan Administrator before the distribution is made;

3. To the duly appointed and currently active guardian of the beneficiary, evidence of which has been provided to the Plan Administrator before the distribution is made;

4. To the custodial parent of the beneficiary;

5. To a custodial adult with whom the beneficiary maintains his or her residence; or

6. To the court having jurisdiction over the estate of the beneficiary.

(b) If the amount is over $ 10,000 a year, a conservator must be appointed by the court to receive the payment. This payment shall be in full satisfaction of all claims. The Plan Administrator has no duty to supervise or inquire into the application of any amount so paid.

(c) If at the time a distribution begins, the beneficiary is a minor and the Plan Administrator begins payments to another person under (a) or (b) above, the Plan Administrator may continue all payments under the distribution to the other person notwithstanding that the beneficiary may have attained full age, unless the beneficiary files a written claim according to all of the requirements of the Retirement Plan, including furnishing satisfactory evidence that he or she is of full age.

17:6-14.8 Distribution to incompetent participant, beneficiary or alternate payee

(a) If a participant, beneficiary, or alternate payee is unable to manage property effectively for any reason including, but not limited to, mental illness, mental deficiency, physical illness, physical disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance, any payment may be paid according to the terms of the applicable investment option(s) (if any) or according to applicable investment law (if any), or the Plan Administrator may direct payment(s) according to the following order:

1. As instructed by an appropriate court pursuant to a written court order;

2. To the duly court-appointed and currently acting conservator of the participant, beneficiary, or alternate payee;

3. To the duly court-appointed and currently acting legal guardian of the estate of the participant, beneficiary, or alternate payee;

4. To the duly appointed and currently acting attorney-in-fact under a durable power-of-attorney if the Plan Administrator finds that the power-of-attorney provides sufficient power to authorize the attorney-in-fact to receive the benefit; or

5. To the court having jurisdiction over the estate of the participant, beneficiary, or alternate payee.

(b) Payment under (a) above shall be in full satisfaction of all claims. The Plan Administrator has no duty to determine if a person is unable to manage his or her affairs and is only required to act pursuant to the order in (a) above if he or she is provided written evidence of the incapacity through a document showing one of the circumstances in (a) above prior to the distribution. The Plan Administrator has no duty to supervise or inquire into the application of any amount(s) so paid.

(c) Restoration of competency. If at the time a distribution begins, the participant, beneficiary, or alternate payee is an incompetent or is incapacitated (as described in (a) above) and the Plan Administrator begins payments to another person under (a) above, the Plan Administrator may continue all payments under the distribution to the other person notwithstanding that the participant, beneficiary, or alternate payee may have become competent or may have been adjudicated as competent, unless the participant, beneficiary, or alternate payee files a written claim according to all of the requirements of the Retirement Plan, including furnishing satisfactory evidence that he or she is competent to manage his or her benefit.

17:6-14.9 Payment to personal representative

Any payment (or delivery of property) to the duly appointed personal representative of the participant shall, to the extent of the payment (or delivery of property), bar recovery by any other person or entity, including every beneficiary, and shall, to the extent of the payment (or delivery of property), discharge any obligation under the Retirement Plan.

17:6-14.10 Disclaimer by beneficiary

Any beneficiary may renounce or disclaim all or any part of any benefit by filing a written irrevocable disclaimer not later than 31 days before the distribution begins or any payment is otherwise to be made and before acceptance of any benefit. An acceptance may be express or may be inferred from actions or facts and circumstances, including, but not limited to, those actions described in Title 3B of the New Jersey Statutes as establishing an inference of acceptance. In addition to any requirements under State law, the disclaimer is not effective unless the disclaimer describes the benefit renounced, expressly declares the renunciation and the extent of it, expressly states the beneficiary's belief upon reasonably diligent examination that no creditor of the beneficiary (or, if the beneficiary is an executor or trustee or guardian or other fiduciary, of any current or reasonably anticipated beneficiary of the estate or trust or guardianship or other fiduciary relationship or entity) would be adversely affected by the disclaimer, expressly states that the disclaimer is irrevocable, is signed by the beneficiary, meets all requirements of IRC § 2518 such that the disclaimer would be treated as effective for Federal gift and estate tax purposes, and otherwise is made in a form that is acceptable to the Plan Administrator. Notwithstanding any State law that would permit otherwise, if the beneficiary is a minor or an incapacitated person, any disclaimer cannot have any effect regarding the Program until the court having jurisdiction of the minor's or incapacitated person's estate authorizes the disclaimer after finding that it is advisable and will not materially prejudice the rights of any interested person. Any benefit disclaimed shall be payable as if the beneficiary who submitted the disclaimer died before the participant.

SUBCHAPTER 15. PLAN ADMINISTRATION

17:6-15.1 Plan Administrator has full authority

(a) The Plan Administrator has full and complete authority and discretion to control and manage the operation of the Program. The Plan Administrator has any and all powers as may be necessary or advisable to discharge its duties under the Program, and has complete discretionary authority to decide all matters and questions under the Program.

(b) Without limiting the comprehensive effect of (a) above, the Plan Administrator's discretionary decisions may include, but shall not be limited to, any decision as to:

1. Whether a natural person is an employee;

2. Whether an employee belongs to a particular employment classification;

3. Whether an employee is an eligible employee, the amount of a participant's base salary, and the amount of contributions to be made;

4. Whether an amount of contributions exceeds the limits prescribed by the Retirement Plan or applicable law;

5. Whether a payment option is an annuity payment option;

6. Whether a participant has a severance from employment;

7. Whether a beneficiary designation is valid or effective, and who is the proper beneficiary;

8. Whether a participant or beneficiary is a minor or incompetent, the person who is a proper recipient for a participant or beneficiary who is a minor or an incompetent; and

9. Whether any power-of-attorney is effective and acceptable to act with respect to the Program.

(c) The discretionary decisions of the Plan Administrator are final, binding, and conclusive on all interested persons for all purposes.

17:6-15.2 DSP responsibilities

Each DSP will be responsible for participant communication, administration, recordkeeping, and investment management services as set forth in the applicable RFP and response/proposal submitted by the DSP and the contracts entered into pursuant to those documents.

17:6-15.3 Determinations to be uniformly made

To the extent required by the enabling statute, any determination or decision required or permitted to be made for the purposes of the Program, or any Plan under the Program, by the Plan Administrator shall be uniformly and consistently made according to reasonable procedures established and maintained by the Plan Administrator.

17:6-15.4 Plan Administrator responsibilities

The Plan Administrator is responsible for performing or delegating to the DSP all duties required for the operation of the Program and each Plan under the Program. The Plan Administrator is responsible for supervising the performance of the DSP.

17:6-15.5 Information from employer

To enable the Plan Administrator to perform his or her responsibilities, the employer shall promptly provide to the Plan Administrator complete and accurate information on any matter that is required by the Plan Administrator in order to make any decision or determination under the Program. The Plan Administrator shall rely upon this information as supplied by the employer, and shall have no duty or responsibility to verify this information.

17:6-15.6 Plan Administrator may delegate or contract

(a) To the extent permitted by the enabling statute or other State law, the Plan Administrator may, except when expressly prohibited by this Program, delegate any of his or her duties to any DSP or employer as appropriate.

(b) The Plan Administrator may contract with any person to provide services to assist in the administration of the Program. The Plan Administrator must make such contracts in compliance with the enabling statute and other applicable State and local law.

(c) Any person other than the Plan Administrator who performs services regarding the Program, including, but not limited to, a DSP, is subject to the supervision and direction of the Plan Administrator, and does not have authority to control the operation of the Program.

17:6-15.7 Plan Sponsor's right to terminate the Program

The Plan Sponsor may terminate or discontinue the Program, or any Plan under the Program, at any time.

17:6-15.8 Final allocation

If on termination of the Retirement Plan any amount is not allocated, all such amounts will be allocated among participants in the ratio of each participant's total account balance on the valuation day that immediately precedes this allocation to the total account balances of all participants on such valuation day.

SUBCHAPTER 16. GENERAL PROVISIONS

17:6-16.1 Anti-alienation

To the extent allowed by law, any benefit or interest available under a Plan, or any right to receive or instruct payments under a Plan, or any distribution or payment made under the Program, or any Plan under the Program, shall not be subject to assignment, alienation, garnishment, attachment, transfer, anticipation, sale, mortgage, pledge, hypothecation, commutation, execution, or levy, whether by the voluntary or involuntary act of any interested person under a Plan, except (with respect to the Retirement Plan) for an interest which becomes payable pursuant to a Qualified Domestic Relations Order. However, the preceding sentence shall not be construed to preclude the payment of any fees or expenses (including taxes) of the issuer(s) or the trust under the Retirement Plan.

17:6-16.2 Levy or judgment

Notwithstanding any other provision of the Retirement Plan, the Plan Administrator may pay to the Internal Revenue Service or Federal agency from a participant's, beneficiary's, or alternate payee's account the amount that the Plan Administrator finds is demanded under an Internal Revenue Service levy or Federal restitution order with respect to that participant, beneficiary, or alternate payee or is sought to be collected by the United States under a judgment resulting from an unpaid tax assessment or restitution order against the participant, beneficiary, or alternate payee.

17:6-16.3 Audit

The Plan Administrator may engage a public accountant to audit or review the financial statements and/or internal control procedures with respect to the Program, and any fees paid or incurred for such audit or review and related accounting and auditing services shall be an expense that may be charged to the DSP according to their contract. To the extent the audit is not paid by the DSP, the expense can be charged to all participants' accounts in an equitable manner determined by the Plan Administrator.

17:6-16.4 Claims procedure

(a) By the terms of the Program, the claimant (or other aggrieved person) shall not be entitled to take any legal action or otherwise seek to enforce a claim to benefits or rights under the Program until he or she has exhausted all claims and appeals procedures provided by the Program.

(b) In considering claims under the Program and/or any Plan hereunder, the Plan Administrator has full power and discretionary authority to construe and interpret the provisions of the Program or Plan.

17:6-16.5 Expenses

(a) The expenses incurred by the Plan Administrator in connection with the operation of the Retirement Plan, including, but not limited to, the expenses incurred by reason of the engagement of professional assistants and consultants, shall, unless payable by the employer pursuant to N.J.S.A. 43:15C-3(b), be expenses of the Retirement Plan and shall be payable from the Trust fund at the direction of the Plan Administrator.

(b) Upon the Plan Administrator's written instruction, the Plan Administrator, the DSP or other person providing administrative services to the Retirement Plan may be reimbursed from the Trust Fund for any reasonable expenses approved by the Plan Administrator which are incurred in performing administrative services regarding the Retirement Plan. Except as otherwise provided or permitted, the reimbursement shall, with respect to the Retirement Plan, be effected by deducting a charge against all accounts according to an equitable method determined by the Plan Administrator.

(c) If the Internal Revenue Service determines, and the determination is not contested, or if contested, is finally upheld (or otherwise finally determined), or if a final court order (that is not appealed) decides that any payment of expenses with respect to the Retirement Plan is a violation of IRC § 401(a)(2), the Plan Administrator may assess the employers on a pro rata basis according to the number of participants in the Retirement Plan for these expenses.

17:6-16.6 Fiduciary responsibility

(a) Any fiduciary will have only those specific powers, duties, responsibilities, and obligations specifically provided by the Program consistent with applicable law, or that are expressly required under a written agreement that is executed by or approved by the Plan Administrator if the written agreement is not inconsistent with the Program and applicable law.

(b) Each fiduciary warrants that any instruction or direction given, information furnished, or action taken by it will be according to the Program's provisions (or an instruction of the Plan Administrator).

(c) Each fiduciary will be responsible only for the proper exercise of his, her, or its own powers, duties, responsibilities, and obligations, and any fiduciary will not be liable for any act or omission (failure to act) of another fiduciary, except as provided in (d) below.

(d) A fiduciary will be liable for a breach of fiduciary responsibility of another fiduciary in the following circumstances:

1. If the fiduciary participates knowingly in, or knowingly undertakes to conceal, an act or omission of the other fiduciary, knowing such act or omission is a breach of the other fiduciary's responsibility;

2. If, by the fiduciary's failure to comply with his, her, or its duty in the administration of the fiduciary's specific responsibility that gives rise to the fiduciary's status as a fiduciary, the fiduciary has enabled the other fiduciary to commit a breach of the other fiduciary's responsibility; or

3. If the fiduciary has knowledge of a breach by the other fiduciary, unless the fiduciary makes reasonable efforts under the circumstances to remedy the breach.

17:6-16.7 Governing law

The Program, and actions under or relating to the Program or any Plan under the Program, and the statute of limitations for such actions shall be governed by and enforced by the laws of the State of New Jersey and shall be construed, to the extent that any construction beyond this chapter is necessary, according to the laws of the State of New Jersey or the Internal Revenue Code or other Federal law, where applicable.

17:6-16.8 Internal Revenue Service approval

If, under any application filed by or on behalf of the Retirement Plan, the Internal Revenue Service determines that the Retirement Plan as amended and restated does not qualify under IRC § 401(a), and the determination is not contested, or if contested, is finally upheld (or otherwise finally determined), the Plan Administrator, without further authorization or consent from the Plan Sponsor, may retroactively amend the Retirement Plan to the earliest date permitted by Treasury Regulations to the fullest extent that the Plan Administrator considers necessary to obtain an Internal Revenue Service determination that the Retirement Plan qualifies under IRC § 401(a).

17:6-16.9 Mistaken contributions

If any contribution (or any portion of a contribution) is made by the employer by a good faith mistake of fact, upon receipt in good order of a proper request by the Plan Administrator, the Trustee or the DSP shall return the amount of the mistaken contribution(s), except as limited below, to the employer. A return of a mistaken contribution will not be made if the return will not be made within one year from the date of the mistaken payment of the contribution, or if the participant has had a severance from employment and received the distribution of his or her account. Upon any return of a mistaken contribution, earnings attributable to the mistaken contributions will not be returned and losses attributable to the mistaken contribution shall reduce the amount to be returned.

17:6-16.10 Necessary information

(a) The participant, beneficiary, or alternate payee shall provide upon any request of the Plan Administrator or DSP any information that may be needed for the proper and lawful operation and administration of the Program, including, but not limited to, full legal name, Social Security Number (SSN) or other Taxpayer Identification Number (TIN), current address and current address of spouse and of any beneficiary(s), evidence of age, and evidence of marital status. The participant shall promptly respond to and fully answer any reasonable inquiry related to these purposes. A failure to provide any information described above or which otherwise may be necessary or appropriate for the lawful operation of the Program may result in a delay of eligibility for participation, in a delay of the payment of contributions, or in a delay or refusal by the Plan Administrator, in his or her discretion, to authorize or permit any payment to be made.

(b) The Plan Administrator (and any party acting for him or her) shall have the right to rely on any information or representation given by any participant or beneficiary or other person interested in the Program. The Plan Administrator shall have no duty to inquire into the accuracy or adequacy or truth of any such information or representation. Any such representation shall be binding upon any party seeking to claim a benefit through the participant.

17:6-16.11 No contract of employment

Under no circumstances shall the Program constitute or modify a contract of employment or in any way obligate the employer to continue the services of any employee.

17:6-16.12 No rights other than those provided by the Program

The establishment of the Program and the Plans under the Program and the purchase of any investment option(s) under the Retirement Plan shall not be construed as giving to any participant, beneficiary, alternate payee or any other person any legal or equitable right against the employer or the Plan Administrator or their representatives, except as is expressly provided by the Program.

17:6-16.13 Taxes

The employer and the Plan Administrator do not guarantee that any particular Federal or state income, payroll, or other tax consequences would occur because of participation in this Plan.

17:6-16.14 Notices

Each participant, beneficiary, or alternate payee shall be responsible for furnishing the Plan Administrator and the DSP with his or her current address at all times. Any notice required or permitted to be given under the Program shall be deemed given if directed to the proper person at the current address in any Program (or investment option) record and mailed or otherwise delivered to that address. This section shall not be construed to require the mailing or the delivery of any notice otherwise permitted to be given by posting or by publication.

17:6-16.15 Program is binding

The Program, and all acts and decisions taken under it, is binding and conclusive, for all purposes, upon every participant, beneficiary, alternate payee, any person claiming through a participant or beneficiary or alternate payee, all other interested persons, and upon the personal representatives, executors, administrators, heirs, successors and assigns of any and all such persons. The Program shall not affect contracts or other dealings with a person who is not an interested person, unless a written agreement executed by that person expressly so provides.

17:6-16.16 Power-of-attorney

(a) A power-of-attorney is not effective to permit the attorney-in-fact to submit any claim, instruction, direction, or consent under the Program or otherwise act regarding the Program, unless the Plan Administrator, in his or her discretion, finds that the power-of-attorney is acceptable.

(b) Without limiting the effect of the preceding sentence, the Plan Administrator will not accept a power-of-attorney until he or she finds that the power-of-attorney:

1. Is a properly executed and filed durable power-of-attorney pursuant to the law of the jurisdiction in which it was created, which will remain effective despite the later incapacitation or disability of the participant;

2. Indemnifies the Plan Administrator and every person that may rely on the durable power-of-attorney against any liability that may arise out of the Plan Administrator's acceptance of the power-of-attorney;

3. Contains the following provision or a substantially similar provision: "No person who may act in reliance upon the representations of my attorney-in-fact for the scope of authority granted to the attorney-in-fact shall incur any liability as to me or to my estate as a result of permitting the attorney-in-fact to exercise this authority, nor is any such person who deals with my attorney-in-fact responsible to determine or ensure the proper application of funds or property."; and

4. Grants specific authority for the attorney-in-fact to conduct transactions with the participant's retirement plan or employee benefit plan.

(c) A general grant of power in the power-of-attorney for the attorney-in-fact to handle the participant's affairs, without specific authorization in the power-of-attorney to deal with the member's retirement benefits, does not authorize the attorney-in-fact to conduct any business on behalf of the participant with the Program.

(d) The attorney-in-fact may not designate himself or herself as the beneficiary for a retirement benefit unless the power-of-attorney authorizes the attorney-in-fact to designate himself or herself as a retirement beneficiary or authorizes the attorney-in-fact to give gifts of the participant's property to himself or herself.

17:6-16.17 Disclosure of information

(a) The Plan Administrator (and any other person acting for or at the request of the Plan Administrator) may disclose information concerning a participant, beneficiary, or alternate payee:

1. When requested by the participant's, beneficiary's, or alternate payee's agent who acts under a power-of-attorney accepted by the Plan Administrator;

2. When required by applicable law;

3. When required by a court order (including a subpoena);

4. Without a court order when reasonably requested by the Internal Revenue Service;

5. When necessary or appropriate for the Plan Administrator to obtain tax or legal advice;

6. When in the course of any domestic relations proceeding an attorney-at-law states in writing that he or she represents the participant's spouse (or former spouse) or child and that the information is reasonably related to such proceeding; or

7. When, in the course of the administration of a participant's, beneficiary's, or alternate payee's estate or succession, the personal representative (or an attorney-at-law who represents the personal representative) states in writing that he, she, or it needs the requested information to prepare a return of any estate tax, transfer tax, gift tax, inheritance tax, death tax, or similar tax, whether of the United States of America, any state, or any foreign nation.

17:6-16.18 Release

Any payment or any agreement to make payments under a payment option selected by the proper payee, shall, to the extent of the payment(s) or agreement, be in full satisfaction of all claims. If a dispute arises as to the proper payee of any payment(s), the Plan Administrator, in his or her sole discretion, may withhold or cause to be withheld any payment(s) until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by all the parties concerned.

17:6-16.19 Severability

If a court finds that any provision of the Program is invalid, that holding shall not affect the remaining provisions of the Program, or any Plan under the Program, which shall be construed and enforced as if the invalid provision had not been included in the Program or Plan, unless such a construction of the Program or Plan would be clearly contrary to the enabling statute.

17:6-16.20 Statute of limitations

As to any action at law or in equity under or with respect to this Program, the action shall be governed by (or precluded by) the relevant statute of limitations according to New Jersey law.

17:6-16.21 Uniformity

To the extent required by the enabling statute or applicable State law, provisions of the Program and any Plan under the Program shall be construed and applied in a non-discriminatory manner.

17:6-16.22 Venue

If any person bound by the Program under N.J.A.C. 17:6-16.15 or otherwise brings any proceeding against the Plan Administrator or the Board, such person submits to exclusive venue in the New Jersey courts sitting at Trenton, New Jersey.

17:6-16.23 Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)

(a) Notwithstanding any provisions of this Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) (as codified at Chapter 43, Title 38, of the United States Code); IRC § 414(u); and, effective January 1, 2007, IRC § 401(a)(37), as amended from time to time.

(b) For purposes of this section, "qualified military service" means any service in the uniformed services as defined in USERRA by any individual if such individual is entitled to reemployment rights under USERRA with respect to such service.

(c) Effective January 1, 2009, a participant receiving a differential wage payment within the meaning of IRC § 414(u)(12)(D) from the employer, may be treated as a participant and the differential wage payment may be treated as base salary and compensation under N.J.A.C. 17:6-5.8. This subsection shall be applied to all similarly situated individuals in a reasonably equivalent manner.

(d) If the participant timely resumes employment in accordance with USERRA after a qualified military leave, the employer shall make any employer contribution that would have been made if the participant had remained employed during the participant's qualified military service. Such contributions must be made no later than 90 days after the date of such reemployment or when contributions are normally due for the year in which the qualified military service was performed, if later. In determining the amount of employer contribution, a participant shall be treated as receiving base salary from the employer during such period of qualified military service equal to:

1. The base salary the participant would have received during such period if the participant were not in qualified military service, determined based on the rate of pay the participant would have received from the employer but for the absence during the period of qualified military service; or

2. If the base salary the participant would have received during such period is not reasonably certain, the participant's average compensation from the employer during the 12-month period immediately preceding the qualified military service (or, if shorter, the period of employment immediately preceding the qualified military service).

(e) Effective January 1, 2007, to the extent provided under IRC § 401(a)(37), in the case of a participant whose employment is interrupted by qualified military service and who dies while performing qualified military service, the survivor of such participant shall be entitled to any additional benefit (other than benefit accruals) provided under the Plan as if the participant timely resumed employment in accordance with USERRA and then, on the next day, terminated employment on account of death.

SUBCHAPTER 17. DEFINED CONTRIBUTION RETIREMENT PROGRAM GROUP LIFE INSURANCE PLAN

17:6-17.1 Benefit

(a) The Group Life Insurance Plan shall provide life insurance coverage under a group policy or policies issued by one or more insurance company providers as shall be selected from time to time by the Treasurer. The benefit shall be in an amount equal to one and one-half times the base annual salary of the participant, except that in the event of death after retirement, the amount payable shall equal 3/16 of the participant's base annual salary. For purposes of this subchapter, "base annual salary" means the annual rate of base salary upon which contributions by the participant and the participant's employer to the Retirement Plan were based as of the most recent January 1 or, if later, the date the participant first enrolled in the Program.

(b) For purposes of this section, a participant shall be deemed to be in service and covered by the Group Life Insurance Plan for a period of official leave of absence without pay when such leave is due to illness or any reason other than illness, with such period to be determined by the Plan Administrator, if satisfactory evidence is presented to the Plan Administrator of such official leave of absence. A participant shall be deemed to be on an official leave of absence only if the leave is formally approved by the employer prior to the time the leave commenced and timely notice is filed by the employer with the Plan Administrator. If timely notice is not filed, the employer shall be responsible for the payment of any benefits pursuant to this section if the participant was otherwise eligible for such benefits.

(c) In the event of the death of a participant in active service in the first year of participation as a result of an accident met in the actual performance of duty at some definite time and place, the death benefit payable pursuant to this section shall be computed at the annual rate of base salary.

(d) No beneficiary of a retired participant shall be entitled to receive the death benefit payable in the event of death after retirement pursuant to this section unless the participant either: had at least 25 years of credited participation in the Retirement Plan under this Program; or had at least 10 years of such credited participation and had attained 60 years of age and was an actively employed participant in the Retirement Plan under this Program in the year immediately preceding his or her distribution commencement date. For an eligible employee who is a participant pursuant to N.J.A.C. 17:6-4.1(a)5, service credit in the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System shall also be considered in determining if the participant met the requirements of this subsection.

17:6-17.2 Beneficiary designation

At any time before his or her death, a participant may designate a beneficiary or beneficiaries, subject to the terms of the group life policy applicable to the participant under the Group Life Insurance Plan. The terms of the group life policy shall govern the disposition of the participant's benefit in the event the participant fails to designate a valid beneficiary for all or any part of such life insurance benefit.

17:6-17.3 Life Insurance Premium Fund

(a) The Plan Administrator shall maintain the Defined Contribution Retirement Program Group Insurance Premium Fund (the "Life Insurance Premium Fund") created under N.J.S.A. 43:15C-6 for the purpose of receiving and holding employer contributions with respect to the Group Life Insurance Plan and transmitting such contributions from time to time to the appropriate insurance provider(s) for this benefit.

(b) Amounts in the Life Insurance Premium Fund shall not be part of the Trust with respect to the Retirement Plan, but shall be separately accounted for. The Plan Administrator may establish one or more bank accounts or otherwise designate a custodian with respect to the Life Insurance Premium Fund, and shall generally be empowered to take all actions as may be necessary or desirable to maintain and administer the Life Insurance Premium Fund.

SUBCHAPTER 18. DEFINED CONTRIBUTION RETIREMENT PROGRAM GROUP DISABILITY BENEFIT PLAN

17:6-18.1 Benefit

(a) The Group Disability Benefit Plan shall provide disability benefit coverage under a group policy or policies issued by one or more insurance company providers as shall be selected from time to time by the Treasurer. The benefit shall provide a monthly income if the participant becomes totally disabled (within the meaning of N.J.A.C. 17:6-18.3) from occupational or non-occupational causes for a period of at least six consecutive months following the effective date of the coverage. The monthly disability benefit may be paid by the insurance company so long as the participant remains disabled up to the participant's 70th birthday, provided the disability commenced prior to the participant's 60th birthday. The benefit shall terminate when the participant is no longer considered totally disabled or begins to receive his or her benefit under the Retirement Plan.

(b) A participant shall be deemed to be in service and covered by the Group Disability Benefit Plan for a period of no more than six months while on official leave of absence without pay if satisfactory evidence is presented to the Plan Administrator that such leave of absence without pay is due to illness and that the participant was not actively engaged in any gainful occupation during such period of leave of absence without pay.

(c) Disability benefit insurance provisions of the group policy or policies shall not cover disability resulting from or contributed to by pregnancy, act of war, intentionally self-inflicted injury, or attempted suicide whether or not sane. For purposes of such disability benefit coverage, the participant shall not be considered to be disabled while the participant is imprisoned or while outside the United States, its territories or possessions, or Canada.

(d) If the participant has recovered from the total disability for which the participant had received benefits and again becomes totally disabled while insured, the later disability shall be regarded as a continuation of the prior one unless the participant has returned to full-time covered employment for at least six months. If the later absence is due to an unrelated cause and the participant had returned to full-time work, it shall be considered a new disability. The disability benefit insurance cannot be converted to an individual policy.

(e) No participant shall be covered by the disability benefit provision of the group policy or policies except upon the completion of one year of full-time continuous employment in a position eligible for participation in the Program. For an eligible employee who is a participant pursuant to N.J.A.C. 17:6-4.1(a)5, completion of one year of full-time continuous employment in a position eligible for membership in the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System shall also be considered in determining if the participant met the requirements of this subsection.

17:6-18.2 Amount of benefit

(a) The disability benefit provided under a group policy or policies shall be in an amount equal to 60 percent of the participant's base monthly salary, reduced by periodic benefits to which the participant may be entitled during the period of total disability. For an eligible employee who is a participant pursuant to N.J.A.C. 17:6-4.1(a)5, base monthly salary for this disability benefit shall mean the base or contractual salary upon which contributions were made to the Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, or the Public Employees' Retirement System and to this Program.

(b) The periodic benefit by which the monthly disability benefit may be reduced shall include salary or wages, retirement benefits or benefits from any source for which the State or other public employer has paid any part of the cost or made payroll deductions, Social Security disability or other benefits, including dependents' benefits, and benefits paid by Social Security at the option of the participant before the age of 65, but not including any increase in Social Security benefits enacted after the disability benefit under such group policy or policies have commenced, and any other periodic benefits provided by law except on account of military service.

(c) When a participant begins to receive a disability benefit under such group policy or policies, the insurance company shall pay an amount equal to the employee contribution which would have been required of the participant and deducted from the participant's base salary in order to meet the participant's obligation for the Retirement Plan. Such amount shall be paid by the insurance company without reduction by any other periodic benefit which the participant is eligible to receive. Such amount shall be paid by the insurance company to the participant's account under the Retirement Plan.

17:6-18.3 Definition of total disability

The participant shall be considered totally disabled if the participant is unable to perform each duty of the participant's occupation and is under the regular care of a physician. After the 24 months following the commencement of disability benefit payments, the participant shall be unable to engage in any gainful occupation for which the participant is reasonably fitted by education, training or experience. Total disability shall not be considered to exist if the participant is gainfully employed. Following an agreement with the insurance company and the policyholder, the participant may continue to receive disability benefits for a limited time while performing some type of work. During the period of rehabilitation, the monthly benefit shall be the regular payment less 80 percent of the participant's earnings from such rehabilitative position.

17:6-18.4 Disability Premium Fund

(a) The Plan Administrator shall maintain the Defined Contribution Retirement Program Disability Premium Fund (the "Disability Premium Fund") created under N.J.S.A. 43:15C-14 for the purpose of receiving and holding employer contributions with respect to the Group Disability Benefit Plan and transmitting such contributions from time to time to the appropriate insurance provider(s) for this benefit.

(b) Amounts in the Disability Premium Fund shall not be part of the Trust with respect to the Retirement Plan, but shall be separately accounted for. The Plan Administrator may establish one or more bank accounts or otherwise designate a custodian with respect to the Disability Premium Fund, and shall generally be empowered to take all actions as may be necessary or desirable to maintain and administer the Disability Premium Fund.

SUBCHAPTER 19. AMENDMENT

17:6-19.1 Program amendment

Subject only to the New Jersey Constitution and N.J.A.C. 17:6-19.2, the New Jersey Legislature has the right to amend the Program at any time. To the extent consistent with the enabling statute, the Treasurer of the State of New Jersey has the right to amend the Program (including the terms of any Plan under the Program) and the separate premium funds with respect to the Group Life Insurance Plan and Group Disability Plan at any time and/or to adopt rules and regulations consistent with the Program and applicable law.

17:6-19.2 Amendment cannot change exclusive benefit

Any amendment of the Program shall not be effective to the extent that the amendment has the effect of causing any Program assets to be diverted to or inure to the benefit of the State, the Plan Administrator or any employer, or to be used for any purpose other than providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the Program.

SUBCHAPTER 20. CONSTRUCTION

17:6-20.1 Construction and interpretation of Program

The provisions of this subchapter govern the construction or interpretation of this Program. These rules of construction and interpretation shall apply for all provisions, and shall supersede any other construction or interpretation rules.

17:6-20.2 Construction of Retirement Plan as a qualified plan

(a) The Plan Sponsor intends that the Retirement Plan conform to the Internal Revenue Code's requirements for Federal tax treatment under IRC §§ 401(a) and 414(d), with employee contributions picked up under an arrangement consistent with IRC § 414(h)(2). Therefore, the Plan Administrator will construe and interpret the Retirement Plan to state provisions that conform to the requirements of IRC § 401, as applicable to a governmental plan under IRC § 414(d). When the Internal Revenue Code is amended through subsequent legislation, the Plan Administrator will construe and interpret the Retirement Plan as stating provisions consistent with such amendment.

1. To the extent required for the Retirement Plan to qualify under IRC § 401(a), the provisions of this Plan shall be construed, consistent with Treasury Reg. § 1.401-1(b)(1)(ii), to provide:

i. A definite pre-determined formula for allocating contributions;

ii. A definite pre-determined formula for allocating investment earnings (and losses) among accounts;

iii. Periodic valuation of Plan assets (including investment options) and Trust assets at least once each year; and

iv. Periodic valuation of accounts at least once each year; and distribution of accounts after attainment of a specified age or the occurrence of some event.

17:6-20.3 Conformance with Federal statutes

(a) The Retirement Plan has been drafted as a governmental plan intended to conform to the applicable requirements of the Uruguay Round Agreement Act, Pub. L. 103-465; the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. §§ 43 et seq.; the Small Business Job Protection Act of 1996, Pub. L. 104-188; the Taxpayer Relief Act of 1997, Pub. L. 105-34; the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206; and the Community Renewal Tax Relief Act of 2000, Pub. L. 106-554. Furthermore, the Retirement Plan is amended to comply with certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), Pub. L. 107-16; the Pension Protection Act of 2006 (PPA), Pub. L. 109-280; the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART), Pub. L. 110-245; and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110-458.

(b) Except as otherwise specifically provided in this chapter, this chapter establishes the rights and obligations with respect to individuals who are employees on and after such dates, as applicable, and to transactions under the Retirement Plan on and after such dates, as applicable. The rights and benefits, if any, of individuals who are not employees on or after such dates, as applicable, shall be determined in accordance with the terms and provisions of the Retirement Plan that were in effect on the date that their employment terminated, except as otherwise specifically provided in this chapter or in a subsequent amendment.

17:6-20.4 Conformance with enabling statute

The Program is established and maintained with the intent that the Program, and each Plan established under the Program conform to the applicable requirements of the enabling statute. The provisions of the Program shall be interpreted whenever possible to state provisions that conform to the applicable requirements of the enabling statute. When the enabling statute is amended or interpreted through subsequent legislation or regulations or an attorney general opinion, the Program should be construed as stating provisions consistent with such amendment or interpretation of the applicable law.

17:6-20.5 Reference to statutes and regulations

(a) Any reference to a section of the Internal Revenue Code shall be construed to also refer to any successor provision. Any reference to a section of Treasury Regulations shall be construed to also refer to any successor provision of such Treasury Regulations. Any reference to a Revenue Ruling or Revenue Procedure or Internal Revenue Service (IRS) Notice or IRS Announcement shall be construed to also refer to any guidance of general applicability that extends, amplifies, or modifies the Revenue Ruling or Revenue Procedure or IRS Notice or IRS Announcement.

(b) The Program refers to relevant regulations, including, but not limited to, Treasury Regulations under the Internal Revenue Code, without regard to whether the regulations are substantive or interpretive and without regard to whether the regulations are proposed or temporary or final; but it is intended that any provision that refers to a regulation shall be construed to refer to the regulation in the sense of the appropriate legal effect (under administrative procedure law and otherwise) that the regulation currently has at the time the construction is made.

(c) To the extent that a provision states a duty owed to any government (rather than a duty to a participant or beneficiary or other person or entity having an interest under the Program), the provision shall be construed as directory and shall be enforced only by such government. However, a provision that is necessary for the Retirement Plan to meet the requirements of a qualified plan within the meaning of IRC § 401(a) includes a duty owed to participants and beneficiaries and is not directory.

17:6-20.6 Consistent with investment law

Whenever, after applying the specific construction rules of any definition or provision or part and the general construction rules stated in this subchapter, the Retirement Plan may be susceptible to more than one construction or interpretation, a construction or interpretation that is consistent with or that is not inconsistent with applicable investment law is preferred over a construction or interpretation that is inconsistent with applicable investment law.

17:6-20.7 Construction of words and phrases

(a) The headings and codification of provisions in the Program and text that is stated within parentheses are included solely for convenience of reference and are not intended to limit, amplify, or affect the construction of any provision of the Program.

(b) The phrases "under the Program," "under the Plan," "under this Program" or "under this Plan" refer to the entire Program or Plan as a whole, as applicable, and not merely to any part of any document or provision in which the phrase appears. Any reference to a part of this chapter refers to the whole part. Any reference to a definition or provision of this chapter refers to the whole definition or provision, unless the reference specifies a particular portion or paragraph of the provision.

(c) The singular shall be construed to include the plural, unless the context clearly indicates otherwise.

(d) The words "as" or "if" shall be construed to mean the phrase, "to the extent that," as appropriate in the context.

(e) Any reference to the Plan Administrator shall be construed to refer to a DSP to the extent that the DSP is authorized to act on behalf of or under the direction of the Plan Administrator.

(f) Unless the provision states otherwise, any reference to a person or party shall be construed to refer also to any non-natural person or any entity (including, but not limited to, any trust or estate).

(g) Any reference to a corporation or similar organization shall be construed to include any successor to the corporation or similar organization.

(h) If any provision concerning a benefit under the Program is ambiguous, a construction or interpretation of the provision that would provide that such benefit is available in a non-discriminatory manner shall take precedence over a construction or interpretation that would not so provide.

17:6-20.8 Conformance with United States of America Constitution and New Jersey Constitution

When applying any of the preceding construction rules relating to the Internal Revenue Code or the enabling statute, the Plan Administrator need not consider any statute or regulation or order to the extent that its application is contrary to the Constitution of the United States of America or is contrary to the Constitution of the State of New Jersey.

17:6-20.9 Resolution of claims

In accordance with this chapter, a claimant or aggrieved individual shall file a claim with the Director of the Division of Pensions and Benefits. The Director has full power and discretionary authority to construe and interpret the provisions of the Defined Contribution Retirement Program and this chapter and to adjudicate claims thereunder. Decisions of the Director shall be rendered in accordance with N.J.A.C. 17:1-1.3.


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

43 N.J.R. 1036(c)

Adopted New Rule: N.J.A.C. 17:2-2.8

Enrollment Eligibility of Provisional or Temporary Employees Occupying Full-Time Police and Fire Titles
 
Proposed: December 20, 2010 at 42 N.J.R. 3045(a).
 
Adopted: March 16, 2011 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.
 
Filed: March 18, 2011 as R.2011 d.112, without change.
 
Authority: N.J.S.A. 43:15A-1 et seq.
 
Effective Date: April 18, 2011.
 
Expiration Date: June 16, 2015.
 
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. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. govern the subject of this rulemaking and there are no Federal requirements or standards that affect or are impacted by this rulemaking.
 
Full text of the adopted new rule follows:
 
17:2-2.8   Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles
 
(a) Any employee who has an active membership in the PERS and becomes employed provisionally or on a temporary basis in an eligible PFRS title and is under the age of 35 shall continue membership in the PERS until meeting the eligibility requirements for entry in the PFRS. This applies to both employees continuing employment with the same employer, and those leaving one public employer and taking a position with another.
 
1. State and county employees holding provisional or temporary PFRS titles who cannot meet the maximum age requirement for membership in the PFRS (age 35) shall remain in the PERS after attaining permanent appointments.
 
2. As a condition of municipal employment, employees holding provisional or temporary PFRS titles who cannot meet the maximum age requirements associated with those positions shall not continue employment in the PFRS covered position and shall not remain a member of the PERS while occupying the PFRS title.


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

43 N.J.R. 1370(b)

Adopted Amendment: N.J.A.C. 17:3-1.4

Election of Member-Trustee
 
Proposed: February 7, 2011 at 43 N.J.R. 274(a).
 
Adopted: May 5, 2011 by the Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.
 
Filed: May 5, 2011 as R.2011 d.160, without change.
 
Authority: N.J.S.A. 18A:66-56.
 
Effective Date: June 6, 2011.
 
Expiration Date: April 21, 2015.
 
Summary of Public Comment and Agency Response:

The Division of Pensions and Benefits (Division) received one comment from the New Jersey Education Association (NJEA) Research, James Jameson.

COMMENT:
NJEA has a concern regarding the use of Internet access to get copies of the Annual Report. Many retirees do not have computers and the ability to download and print the multiple pages of the Annual Report. Delegates and alternates should be able to request a mailed copy of the report from the Division of Pensions and Benefits prior to the meeting. Advising delegates that they can go to a public library to download the report is not an acceptable alternative.

RESPONSE: The proposed amendment to N.J.A.C. 17:3-1.4, Election of member-trustee, is necessary since the Board has the responsibility to ensure that every effort is taken to reduce the administrative cost for the election process. Many paper processes within the Division are now available electronically in order to administer benefits more economically and efficiently. State and local governments are hard pressed during these economic times to continue to administer benefits with shrinking budgets and limited resources. Therefore, any changes that will decrease cost to public employers and the taxpayers of New Jersey are usually implemented and supported.

The first sentence, of subsection (k) is clear that the Secretary of the Board shall provide by mail or electronically to each eligible delegate and alternate the materials for the convention. During the past two years, the annual report of the Board of Trustees has been made available on the Division's website. In addition, the Division no longer stores mass quantities of its paper publications and reports since most of them are easily accessed on the Division's website. The preferred method is to electronically distribute information or have it available on the Division's website since it provides the most cost savings.

The commenter suggests that the Division is advising delegates to go to the public library to download the report; certainly this is not the case. Delegates can however, avail themselves to the services of the public library for viewing documents. Instead, the notice of proposal Summary advises the membership that a complete list of the convention materials will be provided to the eligible delegates and alternates by the Secretary of the Board.

Finally, the proposed amendment to the rule will provide the Secretary of the Board with some flexibility pertaining to the distribution of information. Posting information on the Division's website is an administrative practice that permits all those who require the most updated information to receive it immediately.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. 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 adoption follows:
 
SUBCHAPTER 1.    ADMINISTRATION
 
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; and
 
2. Conducting a general discussion period.
 
(b) The convention shall be held annually at a time and location designated by the Board and at the recommendation of the Secretary of the Board.
 
(c)-(d) (No change.)
 
(e) The delegates and alternates attending the convention must be active or retired members of the Fund.
 
(f) The delegates and alternates attending shall be selected from the membership of each county. The selection date shall be determined by the County Superintendent.
 
1. (No change.)
 
2. The County Superintendent, within five days after the meeting, shall electronically forward to the Secretary of the Board information containing the membership numbers, retirement numbers, names, street and email addresses and school districts of the delegates and alternates.
 
(g) Each county shall be entitled to one delegate for each 550 members employed in or retired from the county.
 
(h) (No change.)
 
(i) Members wishing to be nominated are required to send a written letter of interest to the Secretary of the Board at least 45 days prior to the convention meeting date.
 
(j) (No change.)
 
(k) The Secretary of the Board shall provide by mail or electronically to each eligible delegate and alternate the following:
 
1. Identification for admission to the convention;
 
2. A copy of the election rules;
 
3. Convention agenda;
 
4. Division's web address for the annual report of the Board of Trustees for the preceding fiscal year;
 
5. Proposed minutes of the prior year's convention; and
 
6. Name(s) of the candidate(s) to be nominated for trustee who have registered with the Secretary of the Board.
 
(l)-(n) (No change.)
 
(o) The following procedure will be followed for the election of a member-trustee.
 
1. If only one candidate has registered with the Board Secretary in accordance with (j) above, for the position of trustee, the candidate shall be deemed elected without ballot.
 
2. In the event that more than one candidate has registered with the Board Secretary in accordance with (j) above, the candidate to be elected must receive a majority of the total votes cast by the seated delegates or their alternates to be elected. In the event no candidate receives a majority, the candidate who has received the least number of votes shall be eliminated. This procedure shall be repeated on each succeeding ballot until one candidate has received a majority of the total vote.
 
(p) The trustee must be employed in or retired from a county in Group A, Group B or Group C. Members elected 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. The term of this position shall be the remainder of the unexpired term.
 
(q) Only delegates with proper identification will be admitted to the convention.
 
(r) Delegates, alternates and visitors shall be seated in a specified area.
 
(s) The secretary of the convention will conduct a roll call of the delegates. Alternates will be seated in the place of respective county absentee delegates in the order in which they are listed by the secretary of the county meeting.
 
(t)-(w) (No change.)


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

43 N.J.R. 1899(a)

Adopted Repeal and New Rule: N.J.A.C. 17:3-2.7

Enrollment Following Deferred Retirement
 
Proposed: April 18, 2011 at 43 N.J.R. 953(a).
 
Adopted: July 7, 2011 by the Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.
 
Filed: July 7, 2011 as R.2011 d.209, without change.
 
Authority: N.J.S.A. 18A:66-56.
 
Effective Date: August 1, 2011.
 
Expiration Date: April 21, 2015.
 
Summary of Public Comment and Agency Response:

The Division of Pensions and Benefits (Division) received one comment from the New Jersey Education Association (NJEA) Research, James Jameson.

COMMENT: NJEA has a concern that former Teacher's Pension and Annuity Fund (TPAF) members who have vested accounts and return to public employment after a two-year period of inactivity should be able to reopen their vested account and return to their former status (currently Tier 1.). Also, concern was expressed that the Economic Impact statement in the notice of proposal incorrectly states that the proposed repeal and new rule will have a positive economic impact on the TPAF, employers and members (43 N.J.R. 953(a) at 954). This rule simply reflects the clear intent of the law, which has always permitted a member to retain rights and benefits up to two years after the member ceases making contributions.

RESPONSE: The proposed repeal and new rule at N.J.A.C. 17:3-2.7, Enrollment following a deferred retirement, is necessary since there has been pension reform legislation enacted that has changed the enrollment and retirement criteria for TPAF members enrolled as of certain dates. These differences in membership are referred to as "membership tiers" and are defined in the statute as follows:

— Membership Tier 1 - Members who were enrolled prior to July 1, 2007.

— Membership Tier 2 - Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008 - pursuant to the provisions of P.L. 2007, c. 92 and c. 103.

— Membership Tier 3 - Members eligible to enroll on or after November 2, 2008 and on or before May 21, 2010 - pursuant to the provisions of P.L. 2008, c. 89.

— Membership Tier 4 - Members eligible to enroll after May 21, 2010 - pursuant to the provisions of P.L. 2010, c. 1.

Before the above laws were enacted, an inactive member who returned to employment covered by the TPAF after two years of inactivity could reopen the former account simply for ease of administration. However, since the provisions of these laws changed membership eligibility, benefit calculations and qualifications for retirement, it is necessary to propose this repeal and new rule.

N.J.S.A. 18A:66-7(a), Cessation of membership, clearly states that membership of any person shall cease "if, except as provided in section 18A:66-8, he shall discontinue his service for more than two consecutive years[.]" As such, if a former member has left active service and returns after two years have passed, the new member must be enrolled in the current Tier applicable at the time of re-enrollment. Neither the Division nor the TPAF Board of Trustees has the discretion to ignore the clear mandate of the law. This rule making is necessary to clarify the current status of the law.

In addition, the commenter has a concern regarding the Economic Impact statement that under the repeal and new rule, the result will be for the members to have a diminished pension amount upon retiring under an early retirement. Members that defer retirement and return to public employment prior to the expiration of the former account can resume their original membership with the original benefit structure intact, thus remaining cost neutral.

While it is true that a former member who returns to employment after the enactment of any of the pension reform will have a different pension calculation, the impact on the TPAF members is minimal. Further, this will only affect those who have left service for a period of two years or more and then returned to a new membership Tier.

Finally, the statute N.J.S.A. 18A:66-7 is clear that membership of any person shall cease if he shall discontinue his service for more than two consecutive years.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. 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 adoption follows:
 
17:3-2.7   Enrollment following deferred retirement
 
(a) For a member who has enrolled in the retirement system prior to November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 60 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 18A:66-7(a) or the longer period provided by N.J.S.A. 18A:66-8(a).
 
(b) Should a member who has enrolled in the retirement system prior to November 2, 2008, who elected a deferred retirement, resume regular service prior to age 60 after the period for continued membership stipulated by N.J.S.A. 18A:66-7(a) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.
 
(c) For a member who has enrolled in the retirement system on or after November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 62 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 18A:66-7(a), or the longer period provided by N.J.S.A. 18A:66-8(a).
 
(d) Should a member who has enrolled in the retirement system on or after November 2, 2008, and who elected a deferred retirement, resume regular service prior to age 62 after the period for continued membership stipulated by N.J.S.A. 18A:66-7(a) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.
 
(e) In the event that either (b) or (d) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all TPAF eligible employment.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

43 N.J.R. 2364(b)

Readoption with Amendments: N.J.A.C. 17:4

Adopted New Rules: N.J.A.C. 17:4-1A, 2.7 and 4.8

Adopted Repeal: N.J.A.C. 17:4-1.8

Adopted Repeals and New Rules: N.J.A.C. 17:4-4.9 and 7.3

Police and Firemen's Retirement System Rules
 
Proposed: May 2, 2011 at 43 N.J.R. 1177(a).
 
Adopted: August 8, 2011 by the Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary.
 
Filed: August 8, 2011 as R.2011 d.235, with technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).
 
Authority: N.J.S.A. 43:16A-13(7).
 
Effective Dates:   August 8, 2011, Readoption;
 
September 6, 2011, Amendments, Repeals and New Rules.
 
Expiration Date:  August 8, 2018.
 
Summary of Public Comment and Agency Response:

The Division of Pensions and Benefits (Division) received one comment from the New Jersey State Nurses Association (NJSNA), Carolyn Torre RN, MA, APN.

COMMENT: On behalf of the members who are advanced practice nurses (APNs), there is a request to include advanced practice nurse (APN) where the term "physician" or "personal or attending physician" is used in N.J.A.C. 17:4-2.3, Medical requirements, and 6.1, Applications. They state that, "APNs are increasingly the NJ consumer's primary care provider of choice credentialed and empanelled by an expanding pool of health care insurers." In addition, they assert that allowing only a physician to make an assessment of disability deprives the member of choice of provider and results in duplicative and costly care.

RESPONSE: The amendments to N.J.A.C. 17:4-2.3, Medical requirements, addresses the issue that the employer must certify evidence of good health sufficient to satisfy the Board and N.J.A.C. 17:4-6.1, Applications, includes the timeframe when applications can be filed and documentation to be received by the Division when members file for disability retirement. There were no amendments to the rules regarding the terms "physician" or "personal or attending physician" since it is required that for a physical disability at least two medical reports, one by 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 shall be submitted to the Division.

To amend these sections to include APNs is not warranted at this time. The other State retirement systems have similar rules that require a physician to either conduct the medical examination or affirm a disability. The Medical Review Board that consults with the various boards regarding disability retirements are physicians selected by the retirement systems. The issue of other groups affirming good health or diagnosing disability has been raised in the past. It was not until recently that a statute was enacted to give a licensed chiropractor by the State Board of Chiropractic Examiners, the authority to sign or certify temporary or permanent impairments and other certifications consistent with chiropractic practice, such as pre-employment screenings (N.J.S.A. 45:9-14.5(c)(2)). Therefore, the Board will accept reports supporting a member's disability from these professionals as well. At this time, there is no statutory authority to support the inclusion of APNs in the rules.
 
Federal Standards Statement

A Federal standards analysis is not required for the rules readopted with amendments, new rules and repeals because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there are no Federal requirements or standards that affect the subject of this rulemaking, other than those mentioned below.

The amendment to N.J.A.C. 17:4-4.9 will provide further clarification regarding the requirement that loans from the PFRS are subject to Federal regulation. In addition, N.J.A.C. 17:4-4.9 continues to ensure compliance with Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. § 72(p), which requires that loan balances not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000.

The amendment to N.J.A.C. 17:4-5.4(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) of the Internal Revenue Service.
 
Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:4.
 
Full text of the adopted amendments and new rules follows (additions to proposal indicated in boldface with asterisks *thus*; deletions from proposal indicated in brackets with asterisks *[thus]*):
 
SUBCHAPTER 1.    ADMINISTRATION
 
17:4-1.3   Officers and committees
 
(a) The chairperson, first vice chairperson and second vice chairperson of the Board will be elected by a majority vote of the members in attendance at the first meeting of July, not less than six members to be present at such meeting.
 
1. A representative to the Pension System Actuary Selection Committee, as provided by N.J.S.A. 43:4B-1, shall be elected by the Board whenever the selection of a new actuary is needed.
 
2. A representative to the State Investment Council shall be elected pursuant to N.J.S.A. 52:18A-83 from the retirement system's membership for the next term.
 
(b) (No change.)
 
(c) The Director of the Division shall appoint a qualified employee of the Division to be Secretary of the Board.
 
(d) (No change.)
 
17:4-1.4     Election of active member-trustee
 
(a) The election procedures as required by N.J.S.A. 43:16A-13 for the election of a police or fire trustee representative to the PFRS Board are set forth in this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PFRS Board.
 
(b) Eligible candidates shall include any active member of the PFRS. Only police members may seek police seats, and only fire members may seek firefighter seats on the Board. All candidates shall comply with any and all requirements as provided by law and this chapter. Any candidate who fails to comply with the law and this chapter is automatically disqualified as a candidate.
 
(c) The following shall apply to the notice of election:
 
1. At least nine months prior to the expiration of the term of each elected trustee or immediately upon a vacancy on the Board, a notice shall be prepared and distributed electronically by the Secretary of the Board or a contracted vendor, through the certifying officers to be provided to each member who is eligible to vote. Employers will post the notice in a prominent place and the Division will post it to its website;
 
2. The notice of election shall:
 
i.-ii. (No change.)
 
iii. State that the instructions for the nominating process are available from the Board Secretary at the Division;
 
iv.-v. (No change.)
 
vi. Include any other information regarding a particular election as specified by the Board;
 
3. A notice of election shall be provided to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices;
 
4. The employing agency shall be required to respond electronically that the notice of election has been properly distributed to those identified in (c)3 above; and
 
5. Election notices shall be distributed electronically to each eligible member through the certifying officer of each employing location. Employers will prominently post such notice. In addition, this notice will be posted to the Division's website. Only active members of the PFRS may vote in an election of member-trustee of the PFRS Board.
 
(d) The following shall apply to the nominating process:
 
1. The instructions for the nominating process shall be available at the Office of the Board Secretary of the PFRS and on the Division's website;
 
2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;
 
3. The nominating instructions shall explain the information in (d)3i, ii and iii below.
 
i. For police trustee, at least 500 active police members, who are eligible to vote for the position, are required to register their nomination for the candidate through a designated website or, if necessary, a signed paper petition.
 
ii. For fire trustee, at least 300 active fire members, who are eligible to vote for the position, are required to register their nomination for the candidate through a designated website or, if necessary, a signed paper petition.
 
iii. To register a nomination for a candidate, the petitioner shall be required to designate their candidate selection either electronically through a designated website or, if necessary, through a signed petition form;
 
4. The paper petition form shall require the candidate's name and employer, and the pension membership number or Social Security number of each petitioner.
 
5. An active member shall nominate only one candidate, with police members petitioning for a police candidate and fire members petitioning for a fire candidate;
 
6. The last date for nominating a candidate shall be identified, as well as the approximate date that election packets shall be sent to employers for distribution to voters;
 
7. If only one candidate is nominated for a position, the candidate shall be deemed elected to the position without balloting. A notice to the certifying officers shall be distributed for posting at the employing locations, indicating no contest since only one candidate was nominated;
 
8. If no candidates qualify for the position, the position will remain vacant until the next election cycle and the position will be for the remainder of the unexpired term;
 
9. In the event there are two positions for the same election because of a vacancy causing an unexpired term*[,]* (police or fire)*,* and only two candidates qualify, each candidate must declare whether they are running for the unexpired term or the full-term position; and
 
10. In the event there are two positions for the same election*[,]* (police or fire)*,* and more than two candidates qualify, an election by ballot shall be held. Since the candidates have already declared their interest in the unexpired term or full-term position, the candidate receiving the highest number of votes will be declared the winner of the chosen position.
 
(e) The following apply to distribution of election packets:
 
1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to cast a ballot through one of the following:
 
i.-ii. (No change.)
 
iii. Paper ballot (postage-paid, self seal return mailer);
 
2. For each eligible voter, there shall be forwarded to the certifying officer individual member packets with instructions for balloting, which shall include the following information:
 
i.-viii. (No change.)
 
ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting;
 
3. The ballot positions shall be determined by a drawing conducted at a time and place determined appropriate by the Board Secretary. All candidates may attend such drawing by contacting the Board Secretary; and
 
4. A notice shall be forwarded to each certifying officer electronically requesting that they acknowledge the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:16A-32 and 68.
 
(f) The Board shall assess the percentage of returned votes after the conclusion of each election and determine based upon an analysis of the frequency of use of the paper ballots versus the cost of providing the paper ballots whether or not a paper ballot should continue to be incorporated in the election packet in future elections as denoted in (e) above. The Secretary shall notify the vendor handling the next election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots shall no longer be included in the initial election packet, then the following shall apply to the distribution of paper ballots upon member request:
 
1. Active members may contact the vendor handling the election to request a paper ballot if the voter is unable to cast a ballot through any of the other electronic methods mentioned in (e) above. Members shall provide the vendor with their proper ballot and pension numbers and home address;
 
2. Upon proper request by an eligible voter, the vendor shall mail a paper ballot to the voter's home address, together with instructions for casting the ballot, biographical information about the candidates, and a postage-paid return envelope; and
 
3. (No change.)
 
(g) The following shall apply to biographical information:
 
1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Board Secretary;
 
2. The Board Secretary shall inform each candidate that the biographical information shall be included with the election packet;
 
3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet sent to employers for distribution; and
 
4. (No change.)
 
(h) The following shall apply to vote tabulation:
 
1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count;
 
2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be deemed to be elected to the position;
 
3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count; and
 
4. (No change.)
 
(i) The following shall apply to recount procedures:
 
1. Any candidate or member who shall have reason to believe that an error has been made in counting or declaring the vote may request, in writing, within 20 days of the certification of the results of the election, that the Board, at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support their beliefs;
 
2. If a candidate or other interested party requests a recount in writing within the prescribed time, this request shall be reviewed and granted by the Board if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board. If a recount is not requested within 20 days, the ballots may be destroyed; and
 
3. Upon election and the taking of an oath of office, police and fire member-trustees shall serve for a term of four years. In the event that no member is certified as the winner of an election, the incumbent trustee shall serve until a successor is certified by the Board.
 
(j) In the event the victorious candidate dies or is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a member-trustee's term begins upon the taking of the oath of office.
 
17:4-1.6   Records
 
(a) The approved minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board secretary.
 
(b) The annual report of the Retirement System's actuary shall not be released until it has been accepted by the Board.
 
(c) Original documents, if available, shall only be viewed by appointment at the Division.
 
17:4-1.7   Appeal from Board decisions
 
(a) The following statement shall be incorporated in every written notice setting forth the Board's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative:
 
"If the member disagrees with the determination of the Board, the member may appeal by submitting a written statement to the Board within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for the member's disagreement with the Board's determination and shall include any relevant documentation supporting the claim. If no such written statement is received within the 45-day period, the determination by the Board shall be final."
 
(b)-(d) (No change.)
 
(e) If the granted appeal involves solely a question of law, the Board may retain the matter and issue a final administrative determination which shall include detailed findings of fact and conclusions of law based upon the documents, submissions and legal arguments of the parties. The Board's final determination may be appealed to the Superior Court, Appellate Division.
 
17:4-1.8    (Reserved)
 
17:4-1.13   Election of retired member-trustee
 
(a) The election procedures as required by N.J.S.A. 43:16A-13 for the election of a retired member-trustee to the PFRS Board are set forth within this section. For purposes of this section, the election cycle begins upon distribution of the notice of election and ends with the certification of the results by the PFRS Board.
 
(b) Eligible candidates shall include all retired members of the PFRS. A retired member is one who meets the criteria set forth in N.J.A.C. 17:4-6.3(a). All candidates shall comply with any and all requirements as provided by law and this chapter. Any candidate who fails to comply with the law and this chapter is automatically disqualified as a candidate.
 
(c) The following shall apply to the notice of election:
 
1. At least six months prior to the expiration of a term of office of a retired member-trustee or immediately upon a vacancy on the Board, a notice shall be prepared and posted to the Division's website and printed in the retiree newsletter. The notice will be sent to the member's last known mailing address and shall inform the members that the instructions for the nominating process are available from the Board Secretary at the Division;
 
2. The notice of election shall:
 
i.-ii. (No change.)
 
iii. State that the instruction for the nominating process are available from the Board Secretary at the Division;
 
iv. State the date of the election;
 
v. (No change.)
 
vi. Include any other information regarding a particular election as specified by the Board; and
 
3. The notice of election shall be provided to each retired member, together with instructions.
 
(d) The following shall apply to the nominating process:
 
1. The instructions for the nominating process shall be available at the Office of the Board Secretary of the PFRS;
 
2. A member who is seeking the nomination to be a candidate for an elected position shall prepare a written letter of interest and submit it to the Board Secretary. The Board Secretary will verify the eligibility of a member to be a candidate. If the member qualifies as a candidate, the Office of the Board Secretary shall then forward instructions regarding the nominating process;
 
3. The nominating instructions for retired member-trustees shall explain that at least 100 retired members who are eligible to vote for the positions are required to register their nominations for the candidate through a designated website or, if necessary, a signed paper petition;
 
4. The form shall explain that a retired member shall nominate only one candidate seeking the retired-member trustee position;
 
5. The last date for nominating a candidate shall be identified, as well as the approximate date the election packets shall be sent to the retired members;
 
6. If only one candidate is nominated for the position, the candidate shall be deemed elected to the position without balloting. A notice on the Division's website shall be posted indicating no contest since only one candidate was nominated; and
 
7. If no candidates qualify for the position, the position will remain vacant until the next election cycle and will be vacant for the remainder of the unexpired term.
 
(e) The following shall apply to the distribution of the election packets:
 
1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All eligible retired members shall have an opportunity to cast a ballot through one of the following:
 
i.-ii. (No change.)
 
iii. Paper ballot (postage-paid, self seal return mailer);
 
2. For each eligible retired voter as defined within N.J.A.C. 17:4-6.3(a) there shall be forwarded to him or her an election packet, which shall include the following information and instructions:
 
i. The name of the eligible voter, pension retirement number, ballot number and personal identification number (PIN);
 
ii. (No change.)
 
iii. The name of each candidate nominated, including a biographical sketch listing the candidate's background and former employer;
 
iv. Instructions on how to properly cast a vote, including notification that shall advise the member that mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined for whom the member intended to vote shall be declared invalid and not considered in the final election count;
 
v. Instruction on how to properly cast an electronic vote;
 
vi. Instruction on proper use of the PIN number;
 
vii. Notification that the candidate receiving a plurality of the legal votes cast shall be declared elected to the position;
 
viii. Notification that the first vote cast shall be counted as the official vote and subsequent votes shall be rejected; and
 
ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting;
 
3. The positions listed on the ballot shall be determined by a drawing conducted at a time and place determined appropriate by the Board Secretary. All candidates may attend such drawing by contacting the Board Secretary;
 
4. The candidate receiving the highest number of legal votes shall be deemed to be elected to that position;
 
5. The Secretary of the Board shall oversee the election procedure to ensure that the vendor complies with all of the requirements and assures the validity of the final election count;
 
6. (No change in text.)
 
(f) The following shall apply to biographical information:
 
1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Board Secretary;
 
2. The Board Secretary shall inform each candidate that the biographical information shall be included with the election packet;
 
3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet; and
 
4. (No change.)
 
(g) The following apply to vote tabulation:
 
1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count;
 
2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be deemed to be elected to the position;
 
3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count; and
 
4. (No change.)
 
(h) The following shall apply to recount procedures:
 
1. Any candidate or member who shall have reason to believe that an error has been made in counting or declaring the vote may request in writing, within 20 days of the certification of the results of the election, that the Board at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support their beliefs;
 
2. If a candidate or other interested party requests a recount within the prescribed time, this request shall be reviewed and granted by the Board if a recount could possibly affect the results of the election. All ballots received shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board. If a recount is not requested within 20 days, the ballots may be destroyed; and
 
3. Upon election and the taking of an oath of office, a retired police and fire member-trustee shall serve for a term of four years. In the event that no member is certified as the winner of an election, the incumbent trustee shall serve until a successor is certified by the Board.
 
(i) In the event the victorious candidate dies or is unable or unwilling to serve as such retired member-trustee prior to the beginning of the candidate's term as trustee, the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a retired member-trustee's term begins upon the taking of the oath of office.
 
SUBCHAPTER 1A.     DEFINITIONS
 
17:4-1A.1    Definitions
 
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:
 
"Authorized to carry a firearm while engaged in the performance of his or her official duties" means so authorized by a statute. It is not required that an employee actually carries a firearm while engaged in official duties, but the employee shall be legally authorized and qualified to do so.
 
"Board of Trustees" or "Board" means the Board of Trustees of the PFRS established pursuant to N.J.S.A. 43:16A-13.
 
"Direct supervision" and "general supervision" includes conducting performance evaluations, disciplining, adjusting grievances, rewarding and assigning and directing the work of other employees.
 
"Director" means the Director of the Division of Pensions and Benefits in the Department of the Treasury.
 
"Division" means the Division of Pensions and Benefits, Department of the Treasury, in the State of New Jersey.
 
"Employer" means the State of New Jersey or the county, municipality or political subdivision thereof that pays the particular police officer or firefighter.
 
"Final compensation" means the base salary received for the 12 months immediately preceding retirement. For employees enrolled into the PFRS on or after May 21, 2010 "final compensation" means the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary. Final compensation does not include extra compensation or money given in anticipation of retirement.
 
"Firefighter" shall have the meaning ascribed to that term by P.L. 1989, c. 204 (N.J.S.A. 43:16A-1).
 
"Firefighting unit" means a municipal fire department, a fire district or an agency of a county or the State that is responsible for control and extinguishment of fires.
 
"Law enforcement unit" means any police force or organization in a municipality, county or the State, which has by statute or ordinance the responsibility of detecting crime and enforcing the criminal laws of this State.
 
"Permanent firefighter" under a civil service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and receives a regular appointment in a civil service location pursuant to N.J.A.C. 4A:4-5.1(a). "Permanent firefighter" under a non-civil service jurisdiction means a full-time firefighter applicant who successfully completes the Firefighting 1 certification pursuant to N.J.A.C. 5:73-4.2, 4.3 and 4.4 and is employed in a regular budgeted position.
 
"Permanent police officer" under a civil service jurisdiction means a full-time police applicant who receives a certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and receives a regular appointment pursuant to N.J.A.C. 4A:4-5.1(a). For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal police officer approved by the New Jersey PTC. "Permanent police officer" under a non-civil service jurisdiction means a full-time police applicant who receives certification of successful completion of the basic training course approved by the Police Training Commission (PTC) pursuant to N.J.S.A. 52:17B-66 et seq., and is employed in a regular budgeted position. For those positions that do not fall under the statutory authority of the PTC, an applicant must successfully complete comparable training that is conducted by a Federal, State or county agency and is substantially equivalent to the requirements of a basic training course of a municipal officer approved by the New Jersey PTC.
 
"PERS" means the Public Employees' Retirement System created pursuant to N.J.S.A. 43:15A-1 et seq.
 
"Police officer" shall have the meaning ascribed to that term by P.L. 1989, c. 204 (N.J.S.A. 43:16A-1).
 
"Police powers" means the statutory authority, under the appropriate circumstances in accordance with law, to arrest and detain and to control the actions of the public, or those individuals who come under the jurisdiction of the public employer's jurisdiction.
 
"Police Training Commission," which is established pursuant to N.J.S.A. 52:17B-70, shall mean an agency authorized to establish physical and mental fitness requirements applicable to the position of municipal police officer.
 
"Position" means a job title.
 
"Retirement System," "System" or "PFRS" means the Police and Firemen's Retirement System of New Jersey as defined in N.J.S.A. 43:16A-2.
 
"Years of service" means the amount of membership service credited to the member's PFRS account.
 
SUBCHAPTER 2.    ENROLLMENT
 
17:4-2.1   Eligible positions
 
(a) All public employees actively employed in positions meeting the statutory definition "police officer" or "firefighter" found at N.J.S.A. 43:16A-1(2)(a) and (b) shall be members of the PFRS of New Jersey.
 
(b) Determinations by the Director and the Board whether an employee of a law enforcement unit or firefighting unit is an administrative employee with the meaning of the definitions of "police officer" or "firefighter" under the law and this chapter shall be on a case-by-case basis. An employee may perform some administrative functions without being an administrative employee. In determining whether an employee is an administrative employee, the Director and the Board shall consider the following factors:
 
1.-3. (No change.)
 
(c) Determinations by the Director and the Board whether an employee of a law enforcement unit or firefighting unit is a supervisory employee within the meaning of the definitions of "police officer" or "firefighter" under the law and this chapter shall be on a case-by-case basis. An employee may perform some supervisory functions without being a supervisor. In determining whether an employee is a supervisory employee, the Director and the Board shall consider the following factors:
 
1.-4. (No change.)
 
(d) (No change in text.)
 
(e) If an employee of a "law enforcement" or "firefighting unit" holds a position that has not been deemed eligible for inclusion in the PFRS pursuant to P.L. 1989, c. 204 (N.J.S.A. 43:16A-1.2), and the employee or employer contends the duties of the position meet the definitions of police officer or firefighter as found in N.J.S.A. 43:16A-1 et seq., the employee or employer may submit a written request indicating why the position meets the above definitions. The appropriate documentation must accompany the request.
 
Recodify existing (g)-(m) as (f)-(l) (No change in text.)
 
17:4-2.2   Compulsory enrollment
 
Pursuant to N.J.A.C. 17:4-2.3, 2.4 and 2.5, membership in the PFRS of New Jersey is mandatory, and a condition of employment for every "police officer" or "firefighter" under the provisions of N.J.S.A. 43:16A-1 et seq.
 
17:4-2.3   Medical requirements
 
The employer must certify evidence of good health sufficient to satisfy the Board. If the Division or the Board has a question regarding the evidence of good health provided, the Division or Board may request that the applicant be examined by an independent physician designated to conduct such an examination for the Retirement System.
 
17:4-2.4   Training requirements
 
(a) As required under N.J.S.A. 43:16A-1(2)(a)(iii), permanent, full-time police officers are required to successfully complete the training requirement prescribed under N.J.S.A. 52:17B-66 et seq., (Police Training Commission (PTC)) or proof of comparable training requirements as determined by the Board of Trustees.
 
1. (No change.)
 
2. For positions that are not under the statutory authority of the PTC, all police applicants are required to complete comparable training to that prescribed by the PTC for municipal police officers, which includes the physical conditioning program and the medical certification for participation in the training. The employer must certify to the Division of the completion of the aforementioned training.
 
3. An applicant may be exempt from some parts of the basic training course if the applicant has successfully completed police training conducted by a Federal, State or county agency if the requirements are substantially equivalent to the requirements of a municipal police officer and approved by the PTC.
 
i. (No change.)
 
ii. For those positions not under the statutory authority of the PTC, in order for the Division to consider whether the applicant qualifies under the comparable police training rule, the applicant must submit the following documents to the Division for review of the authorized training credit:
 
(1)-(3) (No change.)
 
4.-5. (No change.)
 
6. The applicant must successfully complete the remaining course work at either an approved PTC school in New Jersey or a school that offers comparable training to that prescribed by the PTC as set forth in (a)2 above. The employer must certify to the Division that such basic training course was satisfactorily completed.
 
(b) As required under N.J.S.A. 43:16A-1(2b), permanent, full-time firefighters are required to successfully complete the Firefighter I certification prescribed under N.J.A.C. 5:73-4.2, 4.3 and 4.4, or as determined by the Board.
 
1. (No change.)
 
17:4-2.5   Age requirements
 
(a) (No change.)
 
(b) The age of candidates for positions covered by the PFRS with employers who have adopted the provisions of Title 11A of the New Jersey Statutes (Civil Service) is determined at the announced closing date of the examination offered by the Civil Service Commission for those positions. Candidates must not be one day past the date of their 35th birthday on the announced closing date of the examination. Those candidates meeting the age requirements at that time will be considered as having met the age maximum requirement for the duration of the list promulgated as a result of such examination.
 
(c)-(g) (No change.)
 
(h) Municipal statutes provide that in some situations volunteer and exempt firefighters in municipalities may be appointed to full-time firefighter positions if they are not over 40 years of age at the time of their appointments. This proper appointment of someone who is past their 35th birthday to a municipal fire department does not negate the eligibility requirement that someone not be past their 35th birthday to be enrolled in the PFRS. Therefore, any appointees under this provision are required to enroll in the PERS.
 
17:4-2.7    Enrollment following deferred retirement
 
(a) For a member who has enrolled in the retirement system prior to May 21, 2010, the membership account under which a member elected deferred retirement who resumes regular service prior to age 55 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:16A-3(3), or the longer period provided by N.J.S.A. 43:16A-3(5).
 
(b) Should a member who has enrolled in the retirement system prior to May 21, 2010, who elected a deferred retirement, resume regular service prior to age 55 after the period for continued membership stipulated by N.J.S.A. 43:16A-3(3) or 43:16A-3(5) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment, except that such member shall not be required to again satisfy the age requirements for enrollment in the System.
 
(c) In the event that (b) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all PFRS eligible employment.
 
SUBCHAPTER 4.    MEMBERSHIP
 
17:4-4.5   Deductions
 
(a) A full deduction shall be taken for the PFRS in any payroll period in which the member is paid a sufficient amount to make a full normal deduction. If wages are sufficient, deductions should also be made for any arrears or loan deductions then in effect.
 
(b) No deductions shall be taken in any pay period in which the employee's salary is not sufficient to cover the required deductions for the PFRS.
 
17:4-4.6   Minimum adjustment
 
In order to facilitate the reconciliation of a member's account upon death, no refunds or additional contributions shall be made to a member's loan and arrearages balances, if such adjustments involve an amount of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.
 
17:4-4.8   Maximum compensation limit
 
(a) Employees who are enrolled on or after May 21, 2010 are subject to a maximum compensation limit for pension contributions. The maximum compensation limit is based on the annual maximum wage contribution base for Social Security, which is subject to change each calendar year. Compensation above the maximum will be subject to Defined Contribution Retirement Program (DCRP) rules.
 
(b) Members enrolled in the PFRS, who also participate in the DCRP pursuant to (a) above will receive service credit in their corresponding PFRS account, and will be eligible to retire under the rules of the PFRS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.
 
17:4-4.9    Loans
 
(a) Only active contributing members of the system may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000. The loan is subject to I.R.C. §72(p) of the Internal Revenue Code.
 
(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1 of each calendar year. An administrative fee in an amount set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 43:16A-16.1.
 
SUBCHAPTER 5.    PURCHASES AND ELIGIBLE SERVICE
 
17:4-5.1   Eligibility for purchase
 
(a) (No change.)
 
(b) In order to be eligible to purchase service, a member must submit a request to purchase such service and such purchase must be authorized by the member before the expiration date indicated on the purchase cost quotation 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 purchase request.
 
(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.
 
(d) 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 shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3c.
 
17:4-5.3   Optional purchases of eligible service
 
(a) (No change.)
 
(b) The types of purchases indicated in (b)1 through 5 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 actual base salary or highest fiscal year base salary. The computed lump sum purchase cost shall then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 43:16A-11.9, 11.11 and 11.12 provide 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 full-time duty in the active military service of the United States. 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. It does not include 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 midshipmen at one of the service academies. Military service before enrollment cannot be used to qualify for an ordinary disability retirement;
 
2.-5. (No change.)
 
(c) (No change.)
 
17:4-5.4   Methods of payment for purchase of service credit
 
(a) Methods of payment include:
 
1. (No change.)
 
2. Partial lump sum; balance by additional payroll deductions; or
 
3. Additional payroll deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years.
 
(b) 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 or transfer of tax-deferred contributions from financial plans that qualify under terms specified under I.R.C. §401(a)(31). All payments remitted to the Division must be accompanied by properly completed Direct Rollover Transfer Request for the Purchase of 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.
 
17:4-5.5   Reinstatement of membership credit
 
(a) A member, whose account has been terminated by the withdrawal of contributions from the Annuity Savings Fund or whose account has been terminated because of a two-year lapse in contribution, may be reinstated to the System under the provisions of P.L. 1967, c. 199 (N.J.S.A. 11A:4-9), P.L. 1969, c. 303 (N.J.S.A. 40:47-11.1 and 11.2) or P.L. 1981, c. 439 (N.J.S.A. 11A:4-9), provided that the member meets the requirements of the System other than the age maximum.
 
1. A member reinstated under P.L. 1969, c. 303 (N.J.S.A. 40:47-11.1 and 11.2), shall purchase the previous credit the member had established in the PFRS at enrollment. The cost of purchasing the previous credit will be determined using the formula for calculating shared-cost purchases found at N.J.A.C. 17:4-5.3(a).
 
17:4-5.6     Elected officials
 
Any member accepting an elective position may continue PFRS membership and contribute on the salary being received as an elected official, as long as the member holds elective office and remains a member of the retirement system.
 
SUBCHAPTER 6.    RETIREMENT
 
17:4-6.1   Applications
 
(a) Applications for retirement must be made on forms required by the System. Such forms must be completed in all respects and filed with the Division 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. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's PFRS eligible employment has ended.
 
(b) Except for a disability retirement application, in the event a member files an incomplete application, all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to refile. This section shall not apply to information provided by the employer.
 
(c) (No change.)
 
(d) As to an application for disability retirement, the following shall apply:
 
1. An application for a physical disability retirement must be supported by at least two medical reports, one by 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. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be *[canceled]* *cancelled* and the member must complete a new disability application for a future retirement date;
 
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. The required documentation must be received within six months of the date of filing the disability application. If it is not received, the retirement will be *[canceled]* *cancelled* and the member must complete a new disability application for a future retirement date;
 
3. 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; and
 
4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.
 
(e) If a member's previous retirement allowance has been cancelled due to the member's return to employment and reenrollment in the Retirement System pursuant to the provisions of N.J.S.A. 43:16A-15.3, a new retirement application must be filed with the Division in accordance with (a) through (c) above. The previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. Except in the case of disability, the previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.
 
17:4-6.3   Effective dates; changes
 
(a) (No change.)
 
(b) If a member requests a change in the retirement application before the retirement allowance becomes due and payable, said change will require approval of the Board and the revised retirement allowance shall not become due and payable until one month has elapsed following the effective date or 30 days after the date the Board met and approved the change in the member's retirement application, whichever is later.
 
(c) (No change.)
 
(d) Should the member continue to receive a salary beyond the effective date of retirement after approval of the retirement by the Board, 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 approved, 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.
 
17:4-6.9   Final compensation
 
(a)-(b) (No change.)
 
(c) An employee who is enrolled on or after May 21, 2010 will have final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.
 
17:4-6.14   Compulsory retirement
 
(a)-(i) (No change.)
 
(j) Any member in service who attains 65 years of age shall be retired on a service retirement allowance on the first day of the next calendar month, except that a member hired prior to January 1, 1987 may remain a member of the System until the member attains age 68 years or 25 years of creditable service, whichever comes first pursuant to N.J.S.A. 43:16A-5.
 
SUBCHAPTER 7.    TRANSFERS
 
17:4-7.3    Transfer of PFRS membership and return to employment from retirement
 
(a) Employees enrolled in the PFRS on or before May 21, 2010, who transfers employment within the PFRS, will retain his or her original membership status provided that there has not been a break in membership, two years or more without a pension contribution and/or the member has not withdrawn his or her PFRS account.
 
(b) If there has been a break in membership, the member has withdrawn his or her account or the member is a PFRS retiree who is returning to PFRS covered employment (except for disability retirees approved for return to active employment), upon meeting the eligibility requirements, the member will be regarded as a new enrollee; whereupon, the provisions N.J.S.A. 43:16A-1 will apply.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

43 N.J.R. 2672(a)

Adopted Amendment: N.J.A.C. 17:1-1.9

General Administration
 
Bankruptcy; Subsequent Loans
 
Proposed:
July 5, 2011 at 43 N.J.R. 1509(a).
 
Adopted: September 19, 2011 by Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.
 
Filed: September 21, 2011 as R.2011 d.257, without change.
 
Authority:
N.J.S.A. 52:18A-96 et seq. and 52:14-15.1a (P.L. 1996, c. 8).
 
Effective Date: October 17, 2011.
 
Expiration Date: December 10, 2015.
 
Summary of Public Comment and Agency Response:

No comments were received.
 
Federal Standards Statement

The amendments to the rule are necessary so as to be in compliance with the Federal statutes. Specifically, 11 U.S.C. §§ 362(b)(19), 1322(f) and 1325 do not authorize the Division to suspend loan payments during the pendency of a bankruptcy action. As such, the Division is not offering the opportunity to suspend a pension loan to the members of the State-administered retirement systems.
 
Full text of the adoption follows:
 
17:1-1.9   Bankruptcy; subsequent loans
 
(a) Any member of a State-administered retirement system, which permits loans to its members, who has payroll deductions for an outstanding loan balance in suspense as a result of bankruptcy proceedings prior to October 31, 2008, will not be permitted to obtain another loan from that retirement system during the pendency of the suspended original loan.
 
(b) (No change.)
 
(c) A review of all existing suspended loans will be conducted by the Division and those members with a suspended loan balance will have their loan recalculated with accrued interest. For those members whose loans were suspended prior to October 31, 2008, pursuant to a bankruptcy filing, a written notice of the continued pendency of the bankruptcy action shall be submitted to the Division. The loan deductions will resume unless the member whose loan was suspended prior to October 31, 2008 informs the Division of the continued pendency of the bankruptcy action by providing an official document from the courts. Until the member's loan deductions are reinstated, no additional pension loans are permitted.
 
(d) No loans will be suspended due to bankruptcy.


 
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