S495

An Act concerning cost-of-living adjustments for retirement benefits of certain members of the State Police Retirement System, amending and supplementing P.L.1965, c.89, and amending P.L.1958, c.143.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 30 of P.L.1965, c.89 (C.53:5A-30) is amended to read as follows:

30. a. Subject to the provisions of P.L.1955, c.70 (C.52:18A-95 et seq.), the general responsibility for the proper operation of the retirement system is hereby vested in the board of trustees, and, as specified, the committee established pursuant to subsection o. of this section.

b. The board shall consist of five trustees as follows:

(1) Two active or retired members of the system who shall be appointed by the Superintendent of State Police, who shall serve at the pleasure of the superintendent and until their successors are appointed and one of whom shall be or shall have been a commissioned officer of the Division of State Police.

(2) Two members to be appointed by the Governor, with the advice and consent of the Senate, who shall serve for a term of office of three years and until their successors are appointed and who may be private citizens of the State of New Jersey. Of the two members initially appointed by the Governor pursuant to P.L.1992, c.125 (C.43:4B-1 et al.), one shall be appointed for a term of two years and one for a term of three years.

(3) The State Treasurer ex officio. The Deputy State Treasurer, when designated for that purpose by the State Treasurer, may sit as a member of the board of trustees and when so sitting shall have all the powers and shall perform all the duties vested by this act in the State Treasurer.

c. Each trustee shall, after his appointment, take an oath of office that, so far as it devolves upon him, he will diligently and honestly fulfill his duties as a board member, and that he will not knowingly violate or permit to be violated any of the provisions of the law applicable to the retirement system. Such oath shall be subscribed by the member taking it, and certified by the official before whom it is taken, and immediately filed in the office of the Secretary of State.

d. If a vacancy occurs in the office of a trustee, the vacancy shall be filled in the same manner as the office was previously filled.

e. The trustees shall serve without compensation, but they shall be reimbursed by the State for all necessary expenses that they may incur through service on the board. No employee member shall suffer loss of salary through the serving on the board.

f. Except as otherwise herein provided, no member of the board of trustees shall have any direct interest in the gains or profits of any investments of the retirement system; nor shall any member of the board of trustees directly or indirectly, for himself or as an agent in any manner use the moneys of the retirement system, except to make such current and necessary payments as are authorized by the board of trustees; nor shall any member of the board of trustees become an endorser or surety, or in any manner an obligor for moneys loaned to or borrowed from the retirement system.

g. Each trustee shall be entitled to one vote in the board. A majority vote of all trustees shall be necessary for any decision by the trustees at any meeting of said board.

h. Subject to the limitations of this act, the board of trustees shall annually establish rules and regulations for the administration of the funds created by this act and for the transactions of the board's and committee's business. Such rules and regulations shall be consistent with those adopted by the other pension funds within the Division of Pensions and Benefits in order to permit the most economical and uniform administration of all such retirement systems. The committee shall adopt such regulations as provided in subsection o. of this section.

i. The actuary of the fund shall be selected by the Retirement Systems Actuary Selection Committee established by P.L.1992, c.125. He shall be the technical adviser of the board and the committee on matters regarding the operation of the funds created by the provisions of this act and shall perform such other duties as are required in connection herewith.

j. The Attorney General shall be the legal adviser of the retirement system, except that if the Attorney General determines that a conflict of interest would affect the ability of the Attorney General to represent the board or the committee on a matter affecting the retirement system, the board may select and employ legal counsel to advise and represent the board or the committee on that matter.

k. The Director of the Division of Pensions and Benefits of the State Department of the Treasury shall appoint a qualified member of the division who shall be the secretary of the board.

l. The board of trustees shall keep a record of all of its proceedings which shall be open to public inspection. The retirement system shall publish annually a report showing the fiscal transactions of the retirement system for the preceding year, the amount of the accumulated cash and securities of the system and the last balance sheet showing the financial condition of the system by means of an actuarial valuation of the assets and liabilities of the retirement system.

m. The State Treasurer shall designate a medical board after consultation with the Director of the Division of Pensions and Benefits, subject to veto by the board of trustees for valid reason. It shall be composed of three physicians. The medical board shall pass on all medical examinations required under the provisions of this act, and shall report in writing to the retirement system its conclusions and recommendations upon all matters referred to it.

n. (Deleted by amendment, P.L.1987, c.330).

o. There is established a committee to be composed of eight members, four of whom shall be appointed by the Governor as representatives of the public employer whose employees are enrolled in the retirement system, three of whom shall be appointed by the head of the State Troopers Fraternal Association, and one of whom shall be appointed by the head of the union representing the greatest number of members of the retirement system who are supervisory officers having union membership. The members of the committee shall not be appointed until the system attains the target funded ratio.

The members of the committee shall serve for a term of three years and until a successor is appointed and qualified. Of the initial appointments by the Governor, two members shall serve for two years and until a successor is appointed and qualified, and one shall serve for one year and until a successor is appointed and qualified. Of the initial appointments by the State Troopers Fraternal Association, one member shall serve for two years and until a successor is appointed and qualified, and one shall serve for one year and until a successor is appointed and qualified.

The members of the committee shall select a chairperson from among the members, who shall serve for a term of one year, with no member serving more than one term until all the members of the committee have served a term in a manner alternating among the employer representatives and employee representatives, unless the committee determines otherwise with regard to this process.

The provisions of subsections c. through g., inclusive, of this section shall apply to the committee and its members, as appropriate. The committee shall keep a record of all of its proceedings which shall be open to public inspection.

Upon the convening of any meeting of the committee, the members shall consider a motion to assume the authority provided in this subsection and shall proceed only if a majority of the members of the committee vote in the affirmative on that motion.

The committee may contract with such actuaries or consultants, or both, in accordance with the provisions of P.L.1954, c.48 (C.52:34-6 et seq.), as the committee may deem necessary to perform its duties, when the system has attained the target funded ratio.

[When] Except as provided in section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), when the retirement system has attained the target funded ratio as defined in section 27 of P.L.2011, c.78 (C.43:3C-16), the committee shall have the discretionary authority for the system to (1) modify the: member contribution rate; formula for calculation of final compensation or final salary; age at which a member may be eligible for and the benefits for service or special retirement; and benefits provided for disability retirement; and (2) activate the application of the "Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.) for retirees for the period that the system is at or above the target funded ratio and modify the basis for the calculation of the adjustment and set the duration and extent of the activation. The committee shall give priority consideration to subparagraph (2) of this paragraph. The committee shall not have the authority to change the years of creditable service required for vesting.

The committee may consider a matter described above and render a decision notwithstanding that the provisions of the statutory law may set forth a specific requirement on that matter.

The committee may consider a matter described above and render a decision notwithstanding that the provisions of the statutory law do not set forth a specific requirement on the considered aspect of that matter or address that matter at all.

The members of the committee shall have the same duty and responsibility to the retirement system as do the members of the board of trustees. No decision of the committee shall be implemented if the direct or indirect result of the decision will be that the system's funded ratio falls below the target funded ratio in any valuation period during the 30 years following the implementation of the decision. The actuary of the fund shall make a determination of the result in that regard and submit that determination in a written report to the committee and the board prior to the implementation of the decision.

If any matter before the committee receives at least five votes in the affirmative, the board of trustees shall approve and implement the committee's decision.

If any matter regarding benefits before the committee receives four votes in the affirmative and four votes in the negative or the committee otherwise reaches an impasse on a decision, the provisions of section 33 of P.L.2011, c.78 (C.43:3C-17) shall be followed.

A final action of the committee shall be made by the adoption of a regulation that shall identify the modifications to the system by reference to statutory section. The regulations shall also specify the effective date of the modification and the system members, including beneficiaries and retirees, to whom the modification applies. Regulations of the committee are considered to be part of the plan document for the system. A regulation adopted by the committee may be modified by regulation in order to comply with the requirements of this section.

p. No member of the board, committee, employee of the board, or employee of the Division of Pensions and Benefits in the Department of the Treasury shall accept from any person, whether directly or indirectly and whether by himself or through his spouse or any member of his family, or through any partner or associate, any gift, favor, service, employment or offer of employment, or any other thing of value, including contributions to the campaign of a member or employee as a candidate for elective public office, which he knows or has reason to believe is offered to him with intent to influence him in the performance of his public duties and responsibilities. As used in this subsection, "person" means an (1) individual or business entity, or officer or employee of such an entity, who is seeking, or who holds, or who held within the prior three years, a contract with the board; (2) an active or retired member, or beneficiary, of the retirement system; or (3) an entity, or officer or employee of such an entity, in which the assets of the retirement system have been invested. A board or committee member or employee violating this prohibition shall be guilty of a crime of the third degree.

(cf: P.L.2024, c.70, s.1)

2. Section 2 of P.L.1958, c.143 (C.43:3B-2) is amended to read as follows:

2. The monthly retirement allowance or pension originally granted to any retirant and the pension or survivorship benefit originally granted to any beneficiary shall be adjusted in accordance with the provisions of this act provided, however, that:

a. The maximum retirement allowance, without option, shall be considered the retirement allowance originally granted to any retirant who, at retirement, elected an Option I allowance pursuant to the provisions of the statutes stipulated in subsection b. of section 1 of this act (C.43:3B-1); and

b. the minimum pension granted to any beneficiary stipulated in subsection d. (4) of section 1 of this act (C.43:3B-1), shall be considered the pension originally granted to such beneficiary.

Pension adjustments shall not be paid to retirants or beneficiaries who are not receiving their regular, full, monthly retirement allowances, pensions or survivorship benefits. The adjustment granted under the provisions of this act shall be effective only on the first day of a month, shall be paid in monthly installments, and shall not be decreased, increased, revoked or repealed except as otherwise provided in this act. No adjustment shall be due to a retirant or a beneficiary unless it constitutes a payment for an entire month; provided, however, that an adjustment shall be payable for the entire month in which the retirant or beneficiary dies.

[Commencing] Except as provided in section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), commencing with the effective date of P.L.2011, c.78 and thereafter, no further adjustments to the monthly retirement allowance or pension originally granted to any retirant and the pension or survivorship benefit granted to any beneficiary shall be made in accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.), unless the adjustment is reactivated as permitted by law. This provision shall not reduce the monthly retirement benefit that a retirant or a beneficiary is receiving on the effective date of P.L.2011, c.78 when the benefit includes an adjustment granted prior to that effective date. The Board of Trustees of the Police and Firemen's Retirement System may adjust the monthly retirement allowance or pension of its retired members in accordance with subsection b. of section 13 of P.L.1944, c.255 (C.43:16A-13).

(cf: P.L.2018, c.55, s.1)

3. (New Section) a. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, the Board of Trustees of the State Police Retirement System, in consultation with the actuary of the retirement system and the State Treasurer, shall implement automatic cost-of-living adjustments subject to the provisions of this section for annual pension, ordinary disability pension, and accidental disability pension benefits for members of the State Police Retirement System.

Members of the State Police Retirement System who have been retired and receiving retirement benefits for a minimum of ten years shall be considered eligible to receive cost-of-living adjustments under this section. Members of the State Police Retirement System who are hired more than 30 days following the effective date of this act, P.L. , c. (pending before the Legislature as this bill), shall not be considered eligible to receive cost-of-living adjustments under this section.

Members of the State Police Retirement System who have been retired and receiving ordinary disability or accidental disability retirement benefits for a minimum of ten years shall be considered eligible to receive cost-of-living adjustments under this section and no minimum years of service requirement shall apply to such members.

b. The adjustment in members’ annual pension, ordinary disability pension, and accidental disability pension benefits pursuant to this section shall be calculated based on an amount up to $75,000 of a retiree’s annual pension benefit for the first calendar year following the enactment of this act, P.L. , c. (pending before the Legislature as this bill). For every calendar year thereafter, the member’s annual pension benefits shall be adjusted annually according to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, All Items Series A (1967=100), as published by the Bureau of Labor Statistics in the United States Department of Labor. The base calendar year utilized in calculating the adjustment in members’ benefits shall be the calendar year prior to the calendar year of the effective date of this act, P.L. , c. (pending before the Legislature as this bill). Any adjustment in a member’s annual pension, ordinary disability pension, and accidental disability pension benefits pursuant to this section shall be cumulative, meaning the adjustment shall be applied to the benefit amount the member received in the previous calendar year, including previous cost-of-living adjustments granted under this section.

c. The adjustment in a member’s annual pension, ordinary disability pension, and accidental disability pension benefits pursuant to this section shall not exceed one percent if the member’s annual pension benefit exceeds $75,000 in the first calendar year following the enactment of this act, P.L. , c. (pending before the Legislature as this bill). For every calendar year thereafter, the member’s annual pension benefits shall be adjusted annually according to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, All Items Series A (1967=100), as published by the Bureau of Labor Statistics in the United States Department of Labor, except that the adjustment shall be calculated at a rate not to exceed one percent. The base calendar year utilized in calculating the adjustment in members’ benefits shall be the calendar year prior to the calendar year of the effective date of this act, P.L. , c. (pending before the Legislature as this bill). Any adjustment in a member’s annual pension, ordinary disability pension, and accidental disability pension benefits pursuant to this section shall be cumulative, meaning the adjustment shall be applied to the benefit amount the member received in the previous calendar year, including previous cost-of-living adjustments granted under this section.

d. After the first calendar year following the enactment of this act, P.L. c., (pending before the Legislature as this bill), in every calendar year thereafter, the $75,000 threshold established in subsections b. and c. of this section shall be adjusted annually according to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, All Items Series A (1967=100), as published by the Bureau of Labor Statistics in the United States Department of Labor, except that the adjustment shall be calculated at a rate not to exceed three percent. Any adjustment in the $75,000 threshold established in subsections b. and c. of this section shall be cumulative, meaning the adjustment shall be applied to the threshold calculated in the previous calendar year, including previous adjustments granted under this section.

e. The adjustment in members’ pension benefits as provided pursuant to this section shall apply to such benefit entitlements granted prior to and in effect on the effective date of this act, but only for benefit payments made after that effective date. No member of the retirement system shall be granted a retroactive payment based upon the difference between the benefit the member would have received if the adjustment had been applicable at the date of entitlement and the benefit that the member has received from the date of entitlement to that effective date.

f. The cost-of-living adjustments shall apply, in accordance with the provisions of this section, to the monthly retirement allowance or pension of a retired member, and the monthly pension or survivorship benefit of a surviving spouse, child, or beneficiary, that is provided by the State Police Retirement System established pursuant to P.L.1965, c.89 (C.53:5A-1 et seq.)

g. Notwithstanding the provisions of this section, or any other law, rule, or regulation to the contrary, if the Board of Trustees of the State Police Retirement System fails to comply with the provisions of this section within six months following the effective date of this act, P.L. , c. (pending before the Legislature as this bill), the State Treasurer shall be responsible for implementing the cost-of-living adjustments required by this section.

h. The Legislature shall appropriate such monies from the General Fund as necessary to effectuate the provisions of this section. The funding for the cost-of-living adjustments outlined in this section shall take precedence over any additional funding added to the annual State appropriations act by the Legislature through resolutions or through changes to the Governor’s budget message.

4. This act shall take effect immediately.

STATEMENT

This bill reinstates automatic cost-of-living adjustments (COLAs) for annual pension, ordinary disability pension, or accidental disability pension retirement benefits for certain members of the State Police Retirement System (SPRS). Provisions contained in P.L.2011, c.78 (C.43:3C-16 et al.), signed into law on June 28, 2011, had suspended the automatic annual adjustment for current and future retirees and beneficiaries of the SPRS and other State-administered retirement systems until those systems reach a target funded ratio. Decades of underfunding those systems by the State had placed the systems in precarious financial conditions.

Although this bill does not reinstate COLAs for other retirees, this bill serves as an initial step in reinstating COLAs for all retirees of the State-administered retirement systems. Through the prioritization of the SPRS, the State will begin this process with retired State police to provide them greater financial security and stability at a time when inflation has significantly eroded the value of their retirement benefit payments, which are already based on the lower salaries of years ago. To that end, the bill includes restrictions intended to limit costs and focus on segments among retirees of the SPRS expected to be most in need of an immediate benefit.

Under the bill, members of the SPRS will receive automatic COLAs for annual pension, ordinary disability pension, and accidental disability pension benefits if the member has been retired and receiving retirement benefits for a minimum of ten years. Longer-term retirees generally will have lower pension benefits and be less able to obtain employment to offset the erosion of their benefits. Members of the SPRS who are hired more than 30 days following the effective date of this act will not be considered eligible to receive these automatic COLAs. The COLAs will only apply to future pension benefit payments.

The adjustment in eligible members’ pension benefits will be calculated based on an amount up to $75,000 of a retiree’s benefit for the first year following the enactment of this bill. Eligible members receiving up to $75,000 of pension benefits will receive a COLA tied to the CPI for Urban Wage Earners and Clerical Workers. This will ensure that greater initial benefits will be provided to those likely to be most in need.

The adjustment in eligible member’s pension benefits will be limited to one percent if the member receives more than $75,000 in benefits for the first year following the enactment of the bill.

After the first calendar year following the enactment of the bill, the $75,000 threshold will be adjusted annually according to the CPI for Urban Wage Earners and Clerical Workers, except that the adjustment will be calculated at a rate not to exceed three percent.

The bill also grants the cost-of-living adjustment to the monthly pension or survivorship benefit of a surviving spouse, child, or beneficiary that is provided by SPRS.

Under the bill, if the Board of Trustees of SPRS fails to comply with the provisions of this bill within six months following the effective date, then the State Treasurer will be responsible for implementing the cost-of-living adjustments.

The bill requires the Legislature to appropriate monies from the General Fund as necessary to effectuate the cost-of-living adjustments established under the bill. The bill further provides that this appropriation will take precedence over any additional funding added to the annual State budget by the Legislature through resolutions or through changes to the Governor’s budget message.