As reported by nj.com, a divided state employee benefits commission today backed a Republican proposal to rein in rising accidental disability claims but said lawmakers should remove a provision that unfairly punishes workers who are permanently injured on the job.
The GOP bill would reduce accidental disability pensions across all retirement systems to 40 percent of final salaries. Currently, police and firefighters on accidental disability, for example, receive two-thirds of their final salaries. The pension reduction would bring accidental disability benefits on par with those offered under the ordinary disability plan and take away a major financial incentive that is helping drive up applications, supporters argue.
But a majority of members on the Pension and Health Benefits Commission said merging the two benefits ignores an important distinction: accidental disability pensions are supposed to compensate workers permanently injured by traumatic events. Others argue there are still important distinctions between the two, such as accidental pensions are tax free and workers qualify for them from their first day on the job while it takes 10 years for workers to qualify for an ordinary pension.
The proposed changes come on the heels of multiple media reports on how accidental disability pension applications and awards have spiked since two separate Supreme Court decisions in 2007 and 2008 broadened eligibility requirements. The rulings forced the state’s pension boards to consider slip and fall injuries as eligible, along with mental illness.
Overall, applications for accidental disability pensions were up 34 percent and awards were up 87 percent over the five years, according to the Treasury Department. The rate of approval also rose to 53 percent in 2011 from 38 percent in 2007. Payouts for accidental disability pensions also increased during this time by 33 percent from $98.8 million to $131.5 million compared to a 20 percent increase in ordinary pension payouts from $270.6 million to $323.1 million.
The bill, sponsored by Assemblymen Declan O’Scanlon and Gary Chiusano, would stiffen requirements by requiring applicants to also qualify for the more stringent federal workman’s compensation benefits. It would also penalize accidental disability pension beneficiaries if they get another job by reducing their pensions.