New Jersey lawmakers are currently considering legislation that would transfer the management of the Police and Fire Retirement System (PFRS) to a Board of Trustees. Under Senate Bill 3040, the Board of Trustees of the Police and Firemen's Retirement System would be tasked with overseeing the operation of the retirement system, including the investment or reinvestment of PFRS funds.
The proposed legislation would create a 12-member Board of Trustees with seven employee representatives (three active policemen, three active firemen, and one retiree elected by retirees from the system) and five employer representatives (four municipal or county government leaders and one current or former member of the executive branch). Seven trustees must be present at any meeting of the board for the transaction of its business.
The proposed bill also outlines the powers and duties of the Board of Trustees of PFRS. As described in the statement accompanying SB 3040, the board of trustees is authorized to perform “all the functions, powers, and duties for, or relating to, investment or reinvestment of moneys, and the purchase, sale or exchange of any investments or securities, of or for any funds or accounts under the control and management of the board.” It is also expressly authorized to:
- Make and execute agreements with private enterprises that are necessary or convenient for the management of the investments of the retirement system.
- Establish a process for the review, approval, and appeal of applications for retirement.
- Modify the system’s member contribution rate; cap on creditable compensation; formula for calculation of final compensation; age at which a member may be eligible for and the benefits for service or special retirement; and standards for approval, medical review policies, and benefits provided for disability retirement.
- Reinstate cost of living adjustments for retirees and apply an adjustment to the monthly retirement allowance or pension originally granted to any member.
- In its discretion and at such time and in such manner as the board determines, enhance any benefit set forth in statute for the PFRS as the board determines to be reasonable and appropriate, or modify any benefit.
With regard to management and oversight, the bill requires the board to hire an executive director, actuary, chief investment officer, and ombudsman. It also establishes an Audit Committee and Actuary Committee to assist in the selection and oversight of the auditors and actuary appointed by the board, as well as an Investment Committee to assist in the oversight of the investments selected by the board and the management of the investments of the retirement system.
Notably, the PFRS bill also includes a provision that imposes penalties for late contributions into the retirement system. S.B. 3040 provides that if local governments fail to make payments within 30 days of the due dates, the board of trustees must notify the Director of the Division of Local Government Services (DLGS) in the Department of Community Affairs. The director would then be authorized to withhold any state aid payments that are disbursed by the DLGS from the employer in an amount equal to the amount of the employer contribution due to the board.
For more information about the PFRS bill or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.