N.J. Admin. Code § 17:1-8.5

Current through Register Vol. 56, No. 23, December 2, 2024

Section 17:1-8.5 - Calculation of cost-of-living adjustment (COLA)

(a) Cost-of-Living Adjustments were temporarily suspended for retirees and benefit recipients of all retirement systems as of June 28, 2011, but with no reductions to any COLA increases that were added to retiree benefits prior to June 28, 2011.

(b) Pension committees were formed for the State Police Retirement System, the Police and Firemen's Retirement System, the Teachers' Pension and Annuity Fund, and the Public Employees' Retirement System, to monitor the "funded ratio" for each plan, where "funded ratio" means the ratio of the value of a plan's assets to the value of a plan's accrued liabilities (times 100 to express as a percentage). The State House Commission was granted the authority to monitor the funded ratio for the Judicial Retirement System. Monitoring of the funded ratio is to continue until a "target funded ratio" of 75 percent is reached, with an annual increase in the funded ratio over seven fiscal years, to a value of 80 percent.

(c) When the "target funded ratio" for a plan is reached, the pension committee for that fund/system will have the authority to reactivate the cost of living adjustment on pensions, modify the basis for the calculation of the cost of living adjustment, and/or set the duration and extent of the activation, as long as the resulting impact does not cause the funded ratio to drop below the target funded ratio in any one year of a 30-year projection period.

(d) Until June 28, 2011, when COLA increases were suspended, the calculation for the increased benefit under P.L. 2002, c. 109 for all employees who retired prior to January 1, 2001, was done by the Division using the calendar year 2001 average Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items.

(e) The calculation for the increased benefit under P.L. 2002, c. 109 for all employees who retired on or after January 1, 2001, but before June 28, 2011, was done using the average CPI for the calendar year in which the employee retired.

(f) Prior to June 28, 2011, the calendar year used to calculate the above increases for beneficiaries was based upon the year in which the employee retired. If the employee retired prior to January 1, 2001, the provisions of (a) above would apply. If the employee retired between January 1, 2001 and June 28, 2011, the provisions of (b) above would apply.

(g) Prior to June 28, 2011, the Division provided employers participating under the provisions of P.L. 2002, c. 109 with a rate chart to be used to calculate the above increases, on or before November 15th of each year.

N.J. Admin. Code § 17:1-8.5

Amended by 48 N.J.R. 1306(a), effective 6/20/2016