Weinberg Bill To Crack Down On State Pension Fraud Advances In Committee

Senator Loretta Weinberg, D-Bergen, reviews the vote count for legislation on the floor of the State Senate.

Bill Would Make Sure Only Eligible Employees are Enrolled in Public Employee Retirement System (PERS)

TRENTON – A bill sponsored by Senator Loretta Weinberg which would make various changes to New Jersey State pension certification in order to cut down on pension fraud and make sure that only people who are truly eligible may receive credit in the pension system was unanimously approved by the Senate State Government, Wagering, Tourism and Historic Preservation Committee today.

“While I support appropriate retirement benefits and credit for our hard-working, full-time State employees, we have to do a better job of educating the public workforce about pension eligibility and cracking down on those who would abuse the system,” said Senator Weinberg, D-Bergen. “We cannot create a sustainable pension system while people are getting credit for non-qualifying work. This bill would clarify eligibility requirements and create a better certification and investigation process to root out fraud.”

The bill, S-1392, would require public employers to certify the eligibility of their employees to be enrolled in the Public Employee Retirement System (PERS), at the time of enrollment as well as annually for each member of the pension system. The bill would require the Division of Pension and Benefits and the board of trustees of PERS to establish a training program for certifying officers in order to educate them on the eligibility requirements for members of the pension system. The bill would also clarify that it is a crime of the fourth degree – punishable by a fine of up to $10,000 and a term of imprisonment of up to 18 months – to knowingly and willfully make a false statement, or falsify or permit to be falsified any record, application, form or report to the retirement system. The information regarding penalties for submitting false information to the retirement system would also be posted on certification forms to be filed each year for each member.

Finally, the bill would require the Division of Pension and Benefits to assign at least one full-time investigator to review and analyze information submitted to the Division and the pension board. The investigator would be responsible for reviewing enrollments, reports, applications and any other matters regarding the retirement system to ensure compliance with eligibility rules. The pension board may be able to enter into an agreement with another State agency, such as the Inspector General or the State Comptroller, to perform investigative duties of the pension system.

“By expanding the investigation of pension enrollments, and informing employers about eligibility criteria and the penalties for pension fraud, hopefully we will reserve State pensions for those workers who have legitimately earned them,” said Senator Weinberg. “I believe we also have to look with a critical eye towards reforming just who is eligible for retirement benefits under the current system, but first we have to tackle fraud within the current parameters of the system.”

The bill is based on recommendations made in the Inspector General’s December 2009 report, “Professional Services Provider Enrollment in PERS.” The report documented the case of an individual who was retained by multiple government entities to provide legal services, and was determined to be an employee eligible for pension credits, rather than an independent contractor, as he should have been classified under current law.

“The cost of pensions to local, county and State government are one of the biggest cost drivers in taxpayer-funded budgets,” said Senator Weinberg. “In the last two decades, debt in the pension system has soared under both Republican and Democratic governors, and it’s time that we interject a little bit of rationality into the system. We have to do a far better job policing public pensions, and ensure that only eligible employees are able to receive retirement benefits after a long career of serving the public.”

The bill now heads to the full Senate for consideration.

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