The New Jersey state legislature has passed a bill that would allow police and firefighters to manage their own pension plan, transferring control from the state.
The proposed legislation, which now goes to Gov. Chris Christie, would transfer management of the Police and Firemen’s 24 Retirement System from the state’s department of the treasury to the plan’s board of trustees.
The employee representatives to the board will be made up of three active policemen and three active firemen. Of those six members, one policeman and one fireman will be active members of the retirement system and elected by the active members of the system. Among the remaining active policemen and firemen, one policeman will be appointed by the president of the New Jersey State Policemen’s Benevolent Association, and another will be chosen by the president of the New Jersey State Fraternal Order of Police. One fireman will be named by the president of the New Jersey State Firemen’s Mutual Benevolent Association; and the other will be appointed by the president of the Professional Firefighters Association of New Jersey.
In addition, the board will contain one retiree from the system elected by the system’s retirees.
Among the employer representatives to the board, the governor will appoint four trustees, who either hold, or have held, an elective public office as a mayor, member of a municipal council, or member of a board of chosen freeholders, or is employed, or has been employed, by a municipal or county government as an administrator, manager, or chief financial officer to represent the interests of local government employers.
The governor will also appoint one trustee who holds, or has held, a management or supervisory position in the executive branch of state government at the level of division director or above to represent the interests of the state government.
According to the bill, the board of trustees would have all the functions, powers, and duties for investment or reinvestment of money, and the purchase, sale or exchange of any investments or securities under the control and management of the board. The division of investment in the New Jersey Department of the Treasury currently performs those functions and duties.
The board of trustees would also have the authority to establish a process for the review, approval, and appeal of applications for retirement, and modify the system’s member contribution rate. It can also set a cap on creditable compensation, create a formula for calculation of final compensation; and establish an age at which a member may be eligible for the benefits for service or special retirement. It also allows the board to reinstate cost-of-living adjustments for retirees.
Additionally, the bill requires the board of trustees, at the end of six years following the bill’s enactment, to conduct a review of the performance and funding levels of the retirement system.
By Michael Katz