Weinberg Bill To Crack Down On State Pension Fraud Approved In Assembly

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

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 approved by the Assembly today by a vote of 77-0.

“Honest public employees who’ve devoted a lifetime to public service deserve decent retirement benefits at the end of their public career,” said Senator Weinberg, D-Bergen. “However, as we struggle to make the pension system sustainable and affordable for taxpayers and enrollees alike, we have to do a better job at making sure only those who actually qualify for a pension receive that benefit. This bill would ensure greater policing of our pension system in order to root out fraud and abuse, and would provide for better outreach and education, so public employees know just who is eligible for retirement benefits.”

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.

“There’s no question that our public employee pension system is on the verge of catastrophe, and years of abuse, misuse and outright fraud have helped to push us to the brink,” said Senator Weinberg. “We need stronger safeguards and stricter eligibility reporting in order to go after the low-hanging fruit of pension abuse and prohibit people from using public service to stack pension credits. This alone won’t fix our pension woes, but it’s an easy place to start.”

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.

“For far too long, individuals have engaged in deceitful practices to boost their pensions, to obtain unearned pension credit, or to generally take advantage of the State pension system and the taxpayers’ trust,” said Senator Weinberg. “We can no longer sit idly by while some would defraud the pension system for personal enrichment, while our pension debt grows larger and larger, jeopardizing benefits for hard-working, honest public employees. This bill would go a long way to protect taxpayers’ funds and create sustainable retirement benefits for worthy public servants.”

The bill was unanimously by the Senate in August, and now heads back to the Senate for consideration of amendments made in Assembly Committee.

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