TRENTON – Legislation, sponsored by Senator Nicholas P. Scutari, co-chair of the Joint Legislative Committee on Public Employee Benefits Reform, to reform the State’s pension system by addressing pension abuse and ensuring sustainability, became law today.
“Last Summer, we held a special session of the State Legislature to address New Jersey’s property tax crisis,” said Senator Scutari, D-Middlesex, Somerset and Union. “We were asked to look at the State employee benefits and produce a plan to create a system that cut expenses and eliminated the potential for abuse. At the same time, we needed to be certain that any changes to the benison and benefits system would not penalize our dedicated workforce.”
Senator Scutari added that there were over 40 recommendations in the Committee’s final report that focused on restoring the public’s trust and protecting the financial integrity of the system.
The enacted bill, know as the “Public Employee Pension and Benefits Reform Act of 2008,” is a compilation of six bills that were initially introduced individually. The enacted bill, S-1962, will:
• Raises the minimum retirement age for new hires to receive full benefits from 60 to 62.
• Changes the eligibility criteria for new members of the TPAF and PERS from $500 and $1500 in annual salary, respectively, to $7,500 for both retirement plans. The $7,500 will be increased each year by the increase in the Consumer Price Index (CPI).
• Prohibits out-of-state pension credit purchases from counting toward New Jersey post retirement medical benefits.
• Allows the State to provide employees with an incentive to waive State health benefits if eligible for outside coverage.
• Lowers the number of paid holidays for State government employees from 13 to 12, by removing Lincoln’s Birthday from the list of State holidays. This provision would take effect after the collective bargaining agreements or contracts which currently cover many Executive Branch employees expire.
• Requires that local government employees work at least 20 hours per week to qualify for State health benefits.
“The process of reforming our pension system was not easy and tough choices needed to be made,” said Senator Scutari. “These changes are both important and necessary. It is gratifying to see the hard work of the Committee be implemented to ensure a healthy, sustainable pension system for current employees.
“This measure will be good for the taxpayers of New Jersey as well as the hard-working State employees who have contributed to and rely on the State’s pension system,” added Senator Scutari. “Through this legislation, we will ensure stability, sustainability and predictability in our retirement benefits and guarantee that taxpayers will not have to bail out a failing, unwieldy retirement program.”
The enacted bill passed both houses on June 23.