New Jersey Public Safety Employee Lawyer & Attorney : Arpaia & Crivelli Law Firm : Police, Firefighters, Workers Compensation, Discipline Representation : New Jersey

 

Following up on our previous entry, this article will help our readers understand the criteria that must be met in order for a public employee to qualify for an ordinary or accidental disability pension within one of the following State pension systems, the Public Employees Retirement System, the Teachers Pension and Annuity Fund, the State Police Retirement System, and the Judicial Retirement System. While these pension plans are similar in defined benefits and criteria for eligibility, each has their own specific nuances that are particular to the membership they serve. 

Accidental v. Ordinary Disability Benefits

Public Employees Retirement System and Teachers Pension and Annuity Fund

In accordance with the Public Employees Retirement System (“PERS”) and Teachers Pension and Annuity Fund (“TPAF”) handbooks, in order to qualify for an ordinary disability retirement, an employee must:

·         Have an active pension account;

·         Have 10 or more years of New Jersey service credit;

·         Be considered totally and permanently disabled; and

·         Submit medical reports certifying the disability.

In order to qualify for an accidental disability retirement, a member must:

·         Be an active member of PERS or TPAF on the date of the “traumatic event”;

·         Be considered totally and permanently disabled as a result of a “traumatic event” that happened during and as a direct result of carrying out the member’s regular or assigned job duties;

·         File an application for disability retirement within five (5) years of the date of the “traumatic event”; and

·         Be examined by physicians selected by the retirement system.

If an employee claiming membership to either one of these retirement funds qualified for accidental disability, his/her annual retirement allowance will be 72.7% of their salary at the time of the “traumatic event.”

Should the public employee be receiving periodic workers’ compensation benefits, the accidental disability retirement benefits will be reduced dollar for dollar by the periodic benefits paid after the retirement date. However, the retirement benefit is not reduced by any Social Security or private insurance benefits that may be payable.

The New Jersey Division of Pensions and Benefits reports accidental disability retirement benefits as exempt from federal income tax. The benefits are also

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Recently, it has come to our attention that many individuals aside from Public Safety Officers utilize this website as a reference guide for the various pension systems available to individuals employed by municipalities, counties, and the New Jersey state government. As such, this entry will focus upon a few of these pension systems and help our readers understand their background, membrship, and administration.

Overview of the Various Pension Systems

Public Employees Retirement System

The State of New Jersey established the Public Employees Retirement System (“PERS”) in 1955 after repeal of the laws that created the former State Employees Retirement System. Like the Police and Firemen’s Retirement System (“PFRS”), the New Jersey Division of Pensions and Benefits is assigned all administrative functions of the retirement system except for investment of the assets.

The PERS Board of Trustees has the responsibility for the proper operation of the retirement system. The Board consists of six (6) employee representatives, the State Treasurer, and two (2) individuals appointed by the Governor with advice and consent of the Senate. The Board meets monthly to conduct its business. 

Membership in the retirement system is generally required as a condition of employment for most employees of the State or any county, municipality, school district, or public agency. Generally, an employee is required to enroll in PERS if:

·         They are employed on a regular basis in a position covered by Social Security;

·         Their annual salary is $1,500.00 or more; and

·         They are not required to be a member of any other State or local government retirement system on the basis of the same position which gives them membership in PERS.

Teachers Pension and Annuity Fund

The Teachers Pension and Annuity Fund (“TPAF”) was established in 1919 and completely reorganized in 1955. The New Jersey Division of Pensions and Benefits is assigned all administrative function of the retirement system except for investment of the assets.

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In the case of In re Carry Permit of Andros, A-4077-06T4, the Appellate Division held that the State of New Jersey’s authority to revoke a retired police officer’s permit to carry a handgun is not preempted by federal law.

James Andros was an Atlantic City police officer from 1968 to 2003. Prior to his retirement in good standing, Andros applied for and obtained a permit to carry a handgun. This action concerns Andros’ appeal from a judgment granting the State’s application, under N.J.S.A. 2C:39-6L(6), to revoke his permit to carry a firearm.

Andros challenged denial of his motion to dismiss the State’s application because of federal preemption under 18 U.S.C.A. § 926C, enacted as part of the Law Enforcement Officers’ Safety Act of 2004, which amended 18 U.S.C.A. § 921, et. seq., relating to firearms. Andros contended: (1) that the revocation was preempted; and (2) the Law Division erred in finding that the State had presented “good cause” for the revocation.

The Law Division Judge denied Andros’ motion to dismiss on the grounds that the State was not preempted from revoking the license under N.J.S.A. 2C:39-6L(6). The Judge found that N.J.S.A. 2C:39-6L(6) did not bar a retired New Jersey law enforcement officer, or officers from other states who are qualified in those states, from carrying a concealed weapon as long as he meets New Jersey’s qualification standards. Consequently, the Judge concluded that N.J.S.A. 2C:39-6L remained valid.

On appeal, the Appellate Division, in affirming the revocation, held that the federal Law Enforcement Officers’ Safety Act of 2004, 18 U.S.C.A. §926C, does not pre-empt a state from revoking a retired police officer’s permit to carry a handgun under N.J.S.A. 2C:39-6L. In conceding Andros satisfied the requirements of federal act, the Court indicated a retired officer’s conduct permits the licensing state to revoke the permit, as evidenced by the requirements for qualification and testing every year in U.S.C.A. § 926C(c)(5). In other words, the federal act expressly permits states to set standards for training and qualification consistent with those of “active law enforcement officers.”  

The Court agreed with the Law Division Judge that the federal act merely preempts a state’s ability to preclude, or change the requirements for, carrying the firearm interstate, if the state permits licensing of the retired officer. As a result, New Jersey retains jurisdiction to hear the state’s contention that it can establish good cause justifying the revocation. With these principles in mind, the Court found no congressional intent to preclude the action taken by the State here and no basis for concluding that a state cannot revoke a handgun permit because Congress authorizes a carrier when licensed in one state to possess it in another. 

This case illustrates the State’s ability to limit a retired public safety officer’s ability to carry a firearm. Recently, this topic has become an important issue for retired officers throughout the State of New Jersey. This case is significant in that shows the State of New Jersey is not precluded under federal law from seeking and ultimately obtaining revocation of an officer’s permit to carry a firearm. The evolving case law regarding retired officers and their ability to carry a firearm should be followed closely so as to ensure the officers’ rights are protected.   

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In Communication Workers of America v. State of New Jersey, the appellants challenged an amendment made by the State Health Benefits Commission to the retiree prescription drug card pilot plan. In support, appellants argued that the rule is invalid and unenforceable because it reduces post-retirement health care benefits. 

The Appellate Division affirmed the amendment to N.J.A.C. 17:9-6.10(h) as well as a concurrent resolution. The Court held that the rule allowing adjustment of the cap on out-of-pocket expenditures is consistent with statutory authority governing the prescription drug benefit plan. The Court also noted that the pilot plan, as adopted, is reasonable and necessary to preserve the financial integrity of the plan.

This entry serves as follow up to the one regarding the State Health Benefits Program. As you can see, proposed changes or changes actually made to the State Health Benefits Program have become an increasingly important topic for all public employees. Recently, the State of New Jersey has become especially active in seeking to amend or alter the benefits packages offered to its employees through contract negotiations. Undoubtedly, as more collective bargaining units negotiate their contracts, this topic, which involves the potential for premium sharing by the employees, will come to the forefront.

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 After much concern regarding the new Treasury Regulations promulgated by the Internal Revenue Service (“IRS”) and their potential impact on members of government pension plans, the IRS and the Treasury intend to extend the date by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age. Under the extension, the new Treasury Regulations will be effective for a governmental plan for plan years beginning on or after January 1, 2011.     

As described in two previous blog entries, the IRS modified Treasury Regulation §1.401(a)-1 to provide an exception to the rule that pension benefits be paid only after retirement by permitting a pension plan to commence payment of retirement benefits to a participant after the participant has attained normal retirement age even if the participant has not yet had a severance from employment with the employer maintaining the plan. 

 

The new regulations also require a pension plan’s normal retirement age to be an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.  In the case of a retirement plan where substantially all of the participants are qualified public safety officers, a normal retirement age of age 50 or later is deemed not be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. 

 

Notice 2007-69, which provided temporary relief for certain plans that may have to change their definitions of normal retirement age to satisfy the new regulations, indicated that the new regulations do not contain a safe harbor or other guidance with respect to a normal retirement age conditioned on the completion of a stated number of years of service.  The notice requested comments on whether and how a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the requirement in §1.401(a)-1 that a pension plan be maintained primarily to provide for the payment of definitely determinable benefits after retirement or attainment of normal retirement age and how such a plan satisfies the pre-ERISA vesting rules. 

 

Based upon this, in Notice 2008-98, the IRS indicated its intention to amend the new regulations to change the effective date for governmental plan to plan years beginning on or after January 1, 2011.  Moreover, the notice provided that government plan sponsors may rely on this notice with respect to extension until such time as the new regulations are so amended. 

 

Although the implementation of the new regulations has been delayed, it is critical to keep apprised of the comments regarding whether a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the new regulations. Clearly, the resolution of this issue could drastically impact many public safety officers not only in New Jersey, but across the country. Periodic updates to this website regarding these regulations will be posted as more information becomes available.    

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              Recently, there has been much concern over new Department of Treasury regulations promulgated by the Internal Revenue Service (“IRS”) and their effect upon State legislated pension systems for public employees. This entry summarizes the new regulations and their potential impact on the members of the Police and Firemen’s Retirement System (“PFRS”). After conducting research and for the reasons set forth in detail below, it our belief the new Treasury Regulations will not alter the ability of a PFRS member to retire under any existing PFRS law, including the special retirement provision allowing retirement prior to attaining the age of 50. 

 

By way of background, the New Jersey State PBA reported that the IRS adopted regulations that would prohibit any public safety officer in a state legislated pension system from retiring before the age of 50. As most public safety officers are aware, there is currently no minimum retirement age for a member of PFRS to qualify for a pension. In fact, all that is needed to qualify for a PFRS pension is twenty-five (25) years of service and retirement credits paid into the system. Specifically, N.J.S.A. 43:16A-11.1, entitled “Special Retirement; resignation with 25 years of creditable service; allowance; death benefit”, provides in pertinent part:

 

Should a member resign after having established 25 years of creditable service, he may elect “special retirement,” provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent

to the execution and filing thereof he desires to be retired…

 

[N.J.S.A. 43:16A-11.1(a).]   

   

Treasury Regulation §1.401(a)-1 was recently modified. The modifications require qualified pension plans to revise the definition of normal retirement age to an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. In addition, the regulations provide that a normal retirement age of at least 62 is deemed to be not earlier than the typical retirement age for the industry in which the covered workforce is employed. Thus, a plan satisfies this provision if its normal retirement age is age 62, or if its normal retirement age is the later than age 62 or another specified date, such as the later of age 62 or the fifth anniversary of plan participation. This is known as the “safe harbor” provision. 

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Most recently New Jersey GovernorJon S. Corzine signed the Public Employee Pension and Benefits Reform Act of 2008. While this bill does not affect the members of the Police and Firemen’s retirement System (PFRS), it does affect members of the Public Employees Retirement System (PERS) and the Teachers Pension and Annuity Fund (TPAF). Certain Public Safety Officers in the State of New Jersey hold membership in PERS. The legislation, S-1962/A-2818, is touted to save New Jersey tax payers $150 million dollars by 2022 through new changes to the pension systems to include instituting a higher retirement age and new income eligibility requirements for enrollment in the major pension systems.

The significant changes signed into law today include:

•  Increasing the annual salary required for new workers to qualify for the state pension system to $7,500. Previously, workers required an annual compensation of only $500 to qualify for the Teachers Pension and Annuity Fund, and a minimum salary of $1,500 a year for the Public Employees Retirement System.

• Raising the retirement age from 60 to 62 for new employees to qualify for a pension without a reduction.

• The number of paid holidays for state employees is reduced to 12. It eliminates the Lincoln's Birthday holiday and combines it with Washington's Birthday, to be observed as President's Day.

The new law also makes reforms to the State Health Benefits Program (SHBP), allowing the state to offer an incentive to employees to opt out of the program and accept health coverage from other sources such as a spouse's plan. The state has the power and authority to determine whether to offer the incentive and the amount, which could not exceed half of the amount saved because of the employee's waiver of coverage.

The bill was sponsored in the Senate by Senators Barbara Buono (D-Middlesex), Stephen Sweeney (D-Salem, Cumberland, Gloucester), Nicholas Scutari (D-Middlesex, Cumberland, Union), and Tom Kean (R-Essex, Morris, Somerset, Union), and in the Assembly by Speaker Joseph Roberts (D-Camden).

While the members of PFRS have been spared by this legislation, close watch must be kept on our elected officials as it appears they are prepared to enact any cost savings measures available due to the poor financial position of the state.

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 On its website, www.njspba.com, The New Jersey State PBA has reported that the Internal Revenue Service (IRS) has adopted regulations that would prohibit any public safety officer in a state legislated pension system from retiring before the age of 50. The regulation in its current form is slated to go into effect on January 1, 2009.

As all public safety officers throughout the State of New Jersey are aware, there is currently no minimum retirement age for a member of the Police and Firemen’s Retirement System to qualify for a pension. All that is needed to qualify for a PFRS pension is twenty five (25) years of service and retirement credits paid into the system. Based on the new regulations the State of New Jersey would be required to amend its pension laws or face the potential of being non compliant with the Federal tax code and regulations. The State PBA reports that this particular regulation has caught New Jersey politicians and the New Jersey Division of Pensions off guard and the State is not prepared to address the IRS regulations should they be enacted in 2009.

The New Jersey State PBA appears to have engaged in an extensive lobbying effort and has requested that the regulation be delayed indefinitely in order to seek a change in language impacting public safety employees. A formal request to delay the rule has already been made but the IRS has not yet acted upon it. 

The PBA goes on to further state that if the IRS rejects its request to delay the enactment of the regulation they will be seeking either federal legislation to overrule the IRS Regulation or a legal remedy challenging the regulations as a violation of PFRS member’s constitutional rights.

The Publishers of the New Jersey Public Safety Officers Law Blog are currently looking into this regulation and the legalities of the same. We will report more on this topic in the immediate future.

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In the case of Grasso v. Fraternal Order of Police, Glassboro Lodge No. 108, 33-2-1617, the Superior Court of New Jersey, Appellate Division, held that under the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et.seq, the Defendants owed no duty to the Plaintiff to represent him in a dispute with the Borough of Glassboro due to his status of not being an "employee" as defined under the act.

Grasso initially filed suit against the Borough of Glassboro for their failure to reimburse him for Medicare Part B. premiums pursuant to a collective bargaining agreement.  Some time during the suit Grasso called on the FOP for representation as the matter dealt with an issue related to the collective bargaining agreement.  The FOP declined representation of Grasso, and following his success in the underlying action against the Borough, Grasso then moved against the FOP for their failure to represent him.

The Appellate Panel affirmed the Trial Court's decision to grant Summary Judgment in favor of the FOP due to the fact that Grasso can not be considered an employee under the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et.seq. 

This case is important to both collective bargaining units and retired Public Safety Officers alike as it clearly defines the roles and responsibilities of each party under the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et.seq

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