N.J. Admin. Code § 17:2-4.1

Current through Register Vol. 56, No. 8, April 15, 2024

Section 17:2-4.1 - Creditable compensation

(a) The compensation of a member subject to pension and group life insurance contributions and creditable for retirement and death benefits in the System shall mean the base or contractual salary, for services as an employee, which is in accordance with established salary policies of the State for all employees in the same position, but shall not include extra compensation. Forms of compensation that have been identified as extra compensation include, but are not limited to:

1. Overtime;

2. Pay for extra work, duty or service beyond the normal workday, work year (for 10 month employees) or normal duty assignment;

3. Bonuses;

4. Lump-sum payments for longevity, holiday pay, vacation, compensatory time, accumulated sick leave, or any other purpose;

5. Any compensation which the employee or employer has the option of including in base salary;

6. Sell-backs, trade-ins, waivers or voluntary returns of accumulated sick leave, holiday pay, vacation, overtime, compensatory time or any other payment or benefit in return for an increase in base salary. An example of a trade-in is compensation added to base salary or to salary in a new contract that correlates with compensation on an excluded item in an old contract (for example, clothing allowance);

7. Individual retroactive salary adjustments where no sufficient justification is provided that the adjustment was granted primarily for a reason other than retirement;

8. Individual adjustments to place a member at the maximum of his or her salary range in the final year of service where no sufficient justification is provided that the adjustment was granted primarily for a reason other than retirement;

9. Compensation in the absence of services;

10. Increments or adjustments in recognition of the member's forthcoming retirement;

11. Any form of compensation that is not included in the base salary of all employees in the same position or covered by the same collective bargaining agreement who are members of the PERS and who receive the compensation;

12. Retroactive increments or adjustments made at or near the end of a member's service, unless the adjustment was the result of an across-the-board adjustment for all similarly situated personnel;

13. Any form of compensation which is not included in a member's base salary during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service; and

14. Compensation for performing temporary duties beyond the regular work day or shift.

(b) The Board may question the compensation of any member or retiree to determine its creditability where there is evidence that compensation reported as base salary may include extra compensation.

(c) Extra compensation shall not be considered creditable for benefits and all contributions made thereon shall be returned without interest.

(d) With respect to all claims for benefits, the Division shall investigate increases in compensation reported for credit that exceed the reasonably anticipated annual compensation increases for members of the PERS based upon either the increase in the Consumer Price Index for the time period of the increases and the table of assumed salary increases recommended by the actuary and adopted by the Board. The Division may also consider the averages of the regular increases in the employees' compensation preceding the periods in which the extra compensation was received or the average increases granted to employees in different bargaining units of the same employer. In those cases where a justification of an increase in salary is not substantiated, the Division may adjust the compensation accordingly.

(e) In connection with an investigation of an increase in compensation, the Division may:

1. Require that a notarized statement under oath be obtained from the member's employer that the reported compensation was not granted primarily in anticipation of retirement and conforms with the statutes and rules governing the PERS;

2. Require an employer to provide any record or information it deems necessary for the investigation, including, but not limited to, collective bargaining agreements, employment contracts, ordinances, resolutions, minutes of public meetings (closed or open), job descriptions, salary histories, promotional lists or notices, or any other record or information related to the increase in compensation; and

3. Refer any suspected submission of false information in violation of 43:15A-55, this chapter or other laws of the State of New Jersey to the Attorney General for review and initiation of criminal proceedings, if warranted.

(f) Failure to satisfactorily respond to a request by the Division for documents or information related to an increase in compensation may result in the denial of credit for the increase in compensation.

(g) A determination by the Division that a member's compensation for pension purposes includes extra compensation may result in:

1. A denial of credit for the extra compensation;

2. An audit of the retirees and the active employees of the employer to identify any additional cases of such extra compensation;

3. A return of pension contributions to the active members and retirees on the extra compensation without interest;

4. A recalculation of the retirement benefits of retirees to eliminate benefits based upon the extra compensation; and

5. Repayment to the PERS by the retiree of any benefits received based upon the extra compensation.

(h) Employer contributions shall not be revised or refunded because of a determination by the Division that a denial of credit for increases in compensation is warranted under this section.

N.J. Admin. Code § 17:2-4.1

Amended by 50 N.J.R. 646(a), effective 1/16/2018

Amended by 55 N.J.R. 749(a), effective 4/17/2023