ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 5160

STATE OF NEW JERSEY

DATED:  JANUARY 8, 2026

      The Assembly Appropriations Committee reports favorably an Assembly Committee Substitute for Assembly Bill No. 5160.

      This substitute bill requires the transfer of certain participants of the Defined Contribution Retirement Program (DCRP) to the Public Employees’ Retirement System (PERS).

      Under the bill, employees of school districts or boards of education who are hired on or after the effective date of this bill and earn more than the minimum salary requirement for members eligible to enroll on or after November 2, 2008, and on or before May 21, 2010, and would otherwise be eligible for enrollment in the Public Employees’ Retirement System but for the fact that such employees do not meet the minimum work hours eligibility requirements, but who work more than 20 hours per week, will be enrolled as members of the PERS.  Those employees will be entitled to and will receive the same benefits received by members of the retirement system who enrolled in the system after July 1, 2011.

      Any affected employees who are currently enrolled as participants of the DCRP will be transferred to the PERS within 180 days of the bill’s effective date.  

      Upon the transfer, each employee will be given service credit in the PERS for service starting on the employee’s date of enrollment in the DCRP.

      Any years of service credit transferred to the PERS from the DCRP will be used to qualify members for retirement and health benefits associated with the PERS, but will not be used to calculate the amount of pension benefit.

      Under the bill, the actuary for the PERS is required to determine the unfunded accrued liability resulting from the transfer and coverage of employees in the same manner provided under current law.   The State will be responsible for the one-time payment to fund the unfunded liability resulting from the provisions of this bill.

      Additionally, the value of the account of a transferred employee is required to be transferred from the DCRP to the PERS in accordance with the relevant provisions of the federal Internal Revenue Code and Internal Revenue Service guidance as a direct trustee-to-trustee transfer. 

      If it is determined that the funds currently in the DCRP held by those employees moving to the PERS can be moved to the PERS fund, then the employees moving to the PERS will receive full service credit upon enrollment in the PERS for the time they accrued in the DCRP.  If, however, it is determined that the DCRP funds cannot be moved to the PERS in order to provide the employees with full service credit, then those employees moving to the PERS will not receive full service credit for the purposes of the base pension credit.

FISCAL IMPACT:

      Fiscal information for this bill is currently unavailable.