Reinstates automatic COLA for retirement benefits of members of the State-administered retirement systems.

A1685

ASSEMBLY, No. 1685

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

Assemblywoman SHANIQUE SPEIGHT

District 29 (Essex and Hudson)

Co-Sponsored by:

Assemblymen Clifton, S.Kean, McGuckin, Rumpf, Guardian,
Assemblywoman Dunn, Assemblyman Tully, Assemblywomen Swain, Quijano,
Assemblymen McClellan, Simonsen, G.Rodriguez, Moen, Assemblywoman Bagolie,
Assemblyman Kanitra, Assemblywoman Morales, Assemblymen Venezia,
Scharfenberger, Assemblywoman Flynn, Assemblyman Azzariti Jr., Assemblywoman
Drulis and Assemblyman Angelozzi

SYNOPSIS

���� Reinstates automatic COLA for retirement benefits of
members of the State-administered retirement systems.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning cost-of-living adjustments for
retirement benefits of members of the State-administered retirement systems,
and amending various parts of the statutory law.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� N.J.S.18A:66-56 is
amended to read as follows:

���� 18A:66-56.� a.� (1)� Subject
to the provisions of chapter 70 of the laws of 1955, the general responsibility
for the proper operation of the teachers' pension and annuity fund shall be
vested in the board of trustees, and, as specified, in the committee established
pursuant to subsection b. of this section. Subject to the limitations of the
law, the board shall annually establish rules and regulations for the administration
and transaction of the board�s and committee�s business and for the control of
the funds created by this article.� Such rules and regulations shall be
consistent with those adopted by the other pension funds within the Division of
Pensions and Benefits in order to permit the most economical and uniform
administration of all such retirement systems.� The committee shall adopt such
regulations as provided in subsection b. of this section.

���� (2)�� The membership of the
board shall consist of the following:

���� (a)�� The State Treasurer or
the deputy State Treasurer, when designated for that purpose by the State
Treasurer;

���� (b)�� Two trustees appointed
by the Governor, with the advice and consent of the Senate, who shall serve for
a term of office of three years and until their successors are appointed, and
who shall be private citizens of the State of New Jersey and who are neither an
officer thereof nor active or retired members of the system, except that of the
two trustees initially appointed by the Governor pursuant to P.L.1992, c.41
(C.43:6A-33.1 et al.), one shall be appointed for a term of two years and one
for a term of three years;

���� (c)�� Three trustees from
among the active or retired members of the retirement system, elected by the
membership or by the delegates elected for this purpose by the membership, one
of whom shall be elected each year for a three-year term commencing on January
1, following such election in such manner as the board of trustees may
prescribe.� If the board of trustees determines that the election of trustees
under this subsection is to be made by delegates elected by the membership, it
shall prescribe that those delegates shall be chosen from among active and
retired members of the retirement system;

���� (d)�� One trustee not an
active or retired teacher nor an officer of the State, elected by the other
trustees, other than the State Treasurer, for a term of three years.

���� (3)�� A vacancy occurring in
the board of trustees shall be filled in the same manner as provided in this
section for regular appointment or election to the position where the vacancy
exists, except that a vacancy occurring in the trustees elected from among the
active or retired members of the retirement system shall be filled for the
unexpired term.

���� Each member of the board
shall, upon appointment or election, take an oath of office that, so far as it
devolves upon him, he will diligently and honestly administer the board's
affairs, and that he will not knowingly violate or willfully permit to be violated
any provision of law applicable to this article.� The oath shall be subscribed
to by the member making it, certified by the officer before whom it is taken
and filed immediately in the office of the Secretary of State.

���� Each trustee shall be entitled
to one vote in the board and a majority of all the votes of the entire board
shall be necessary for a decision by the board of trustees at a meeting of the
board or committee.� The board shall keep a record of all its proceedings,
which shall be open to public inspection.

���� The members of the board shall
serve without compensation but shall be reimbursed for any necessary
expenditures.� No employee shall suffer loss of salary or wages through serving
on the board.

���� (4)�� The State Treasurer
shall designate a medical board after consultation with the Director of the
Division of Pensions and Benefits, subject to veto by the board for valid
reason.� It shall be composed of three physicians who are not eligible to
participate in the retirement system.� The medical board shall pass upon all
medical examinations required under the provisions of this article, shall
investigate all essential statements and certificates by or on behalf of a
member in connection with an application for disability retirement, and shall
report in writing to the retirement system its conclusions and recommendations
upon all matters referred to it.

���� b.��� There is established a
committee to be composed of eight members, four of whom shall be appointed by
the Governor as representatives of public employers whose employees are
enrolled in the retirement system, three of whom shall be appointed by the head
of the union representing the greatest number of members of the retirement
system having union membership, and one of whom shall be appointed by the head
of the union representing the second greatest number of members of the
retirement system having union membership.� The members of the committee shall
not be appointed until the system, or part of the system, attains the target
funded ratio.�

���� The members of the committee
shall serve for a term of three years and until a successor is appointed and
qualified.� Of the initial appointments by the Governor, two members shall
serve for two years and until a successor is appointed and qualified, and one
shall serve for one year and until a successor is appointed and qualified.� Of
the initial appointments by the head of the union representing the greatest
number of members of the retirement system, one member shall serve for two
years and until a successor is appointed and qualified, and one shall serve for
one year and until a successor is appointed and qualified.�

���� The members of the committee
shall select a chairperson from among the members, who shall serve for a term
of one year, with no member serving more than one term, until all the members
of the committee have served a term in a manner alternating among the employer
representatives and employee representatives, unless the committee determines
otherwise with regard to this process.

���� The provisions of paragraph
(3) of subsection a. of this section, and N.J.S.18A:66-60, shall apply to the
committee and its members, as appropriate.

���� Upon the convening of any
meeting of the committee, the members shall consider a motion to assume the
authority provided in this subsection and shall proceed only if a majority of
the members of the committee vote in the affirmative on that motion.

���� The committee may contract
with such actuaries or consultants, or both, in accordance with the provisions
of P.L.1954, c.48 (C.52:34-6 et seq.), as the committee may deem necessary to
perform its duties, when the system or part of the system has attained the
target funded ratio.

���� When the retirement system, or
a part of the system, has attained the target funded ratio as defined in
section 27 of P.L.2011, c.78 (C. ), the committee
shall have the discretionary authority for the system or for that part, as
appropriate, to
[
(1)
]
modify the:
member contribution rate; formula for calculation of final compensation; the
fraction of compensation applied to service credited after the modification;
age at which a member may be eligible for and the benefits for service or early
retirement; and benefits provided for disability retirement
[
; and (2)
activate the application of the �Pension Adjustment Act," P.L.1958, c.143
(C.43:3B-1 et seq.) for retirees for the period that the system or part is at
or above the target funded ratio and modify the basis for the calculation of
the adjustment and set the duration and extent of the activation.� The
committee shall give priority consideration to subparagraph (2) of this
paragraph
]
.�
The committee shall not have the authority to change the years of creditable
service required for vesting.

���� The committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law may set forth a specific requirement on that
matter.�

���� The committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law do not set forth a specific requirement on the
considered aspect of that matter or address that matter at all.

���� The members of the committee
shall have the same duty and responsibility to the retirement system as do the
members of the board of trustees.� No decision of the committee shall be
implemented if the direct or indirect result of the decision will be that the
system�s or part�s funded ratio falls below the target funded ratio in any
valuation period during the 30 years following the implementation of the
decision.� The actuary of the fund shall make a determination of the result in
that regard and submit that determination in a written report to the committee
and the board prior to the implementation of the decision.

���� If any matter before the
committee receives at least five votes in the affirmative, the board of
trustees shall approve and implement the committee�s decision.

���� If any matter regarding
benefits before the committee receives four votes in the affirmative and four
votes in the negative or the committee otherwise reaches an impasse on a
decision, the provisions of section 33 of P.L.2011, c.78 (C.43:3C-17) shall be
followed.

���� A final action of the
committee shall be made by the adoption of a regulation that shall identify the
modifications to the system by reference to statutory section.� The regulations
shall also specify the effective date of the modification and the system
members, including beneficiaries and retirees, to whom the modification
applies.� Regulations of the committee are considered to be part of the plan
document for the system.� A regulation adopted by the committee may be modified
by regulation in order to comply with the requirements of this section.

���� c.���� No member of the board,
committee, employee of the board, or employee of the Division of Pensions and
Benefits in the Department of the Treasury shall accept from any person,
whether directly or indirectly and whether by himself or through his spouse or any
member of his family, or through any partner or associate, any gift, favor,
service, employment or offer of employment, or any other thing of value,
including contributions to the campaign of a member or employee

as a
candidate for elective public office, which he knows or has reason to believe
is offered to him with intent to influence him in the performance of his public
duties and responsibilities.� As used in this paragraph, �person� means an (1)
individual or business entity, or officer or employee of such an entity, who is
seeking, or who holds, or who held within the prior three years, a contract
with the board; (2) an active or retired member, or beneficiary, of the
retirement system; or (3) an entity, or officer or employee of such an entity, in
which the assets of the retirement system have been invested.� A board or
committee member or employee violating this prohibition shall be guilty of a
crime of the third degree.

(cf: P.L.2011, c.78, s.1)�

���� 2.��� Section 29 of P.L.1973,
c.140 (C.43:6A-29) is amended to read as follows:

���� 29.� a.� Subject to the
provisions of P.L.1955, c.70 (C.52:18A-95 to 52:18A-104), the general
responsibility for the proper operation of the retirement system is hereby
vested in the State House Commission.

���� b.��� Except as otherwise
herein provided, no member of the State House Commission shall have any direct
interest in the gains or profits of any investments of the retirement system,
nor shall any member of the State House Commission directly or indirectly, for
himself or as an agent in any manner use the moneys of the retirement system,
except to make such current and necessary payments as are authorized by the
commission; nor shall any member of the State House Commission become an
endorser or surety, or in any manner an obligor for moneys loaned to or
borrowed from the retirement system.�

���� c.���� For purposes of this
act, each member of the State House Commission shall be entitled to one vote
and a majority vote of all members shall be necessary for any decision by the
commission at any meeting of said commission.�

���� d.��� Subject to the
limitations of this act, the State House Commission shall annually establish
rules and regulations for the administration of the funds created by this act
and for the transaction of its business. Such rules and regulations shall be
consistent with those adopted by the other pension funds within the Division of
Pensions and Benefits in order to permit the most economical and uniform
administration of all such retirement systems.�

���� e.���� The actuary of the
system shall be selected by the Retirement Systems Actuary Selection Committee
established by P.L.1992, c.125. He shall be the technical adviser of the
commission on matters regarding the operation of the funds created by the
provisions of this act and shall perform such other duties as are required in
connection herewith.�

���� f.���� The Attorney General
shall be the legal adviser of the retirement system, except that if the
Attorney General determines that a conflict of interest would affect the
ability of the Attorney General to represent the commission on a matter
affecting the retirement system, the commission may select and employ legal
counsel to advise and represent the commission on that matter.�

���� g.��� The Director of the
Division of Pensions and Benefits of the State Department of the Treasury shall
be the secretary of the commission for purposes pertaining to the provisions of
this act.�

���� h.��� For purposes of this
act, the State House Commission shall keep a record of all of its proceedings
which shall be open to public inspection. �The retirement system shall publish
annually a report showing the fiscal transactions of the retirement system for
the preceding year, the amount of the accumulated cash and securities of the
system and the last balance sheet showing the financial condition of the system
by means of any actuarial valuation of the assets and liabilities of the
retirement system.�

���� i.���� The State Treasurer
shall designate a medical board after consultation with the Director of the
Division of Pensions and Benefits.� It shall be composed of three physicians.�
The medical board shall pass on all medical examinations required under the provisions
of this act, and shall report in writing to the retirement system its
conclusions and recommendations upon all matters referred to it.�

���� j.���� When the retirement
system has attained the target funded ratio as defined in section 27 of P.L.2011,
c.78 (C.43:3C-16), the commission shall have the discretionary authority for
the system to
[
(1)
]
modify the:
member contribution rate; formula for calculation of final salary; age at which
a member may be eligible for and the benefits for service or early retirement;
and benefits provided for disability retirement
[
; and (2) activate the
application of the �Pension Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et
seq.) for retirees for the period that the system is at or above the target
funded ratio and modify the basis for the calculation of the adjustment and set
the duration and extent of the activation. The commission shall give priority
consideration to subparagraph (2) of this paragraph
]
.� The commission shall not have
the authority to change the years of creditable service required for vesting.

���� The commission may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law may set forth a specific requirement on that
matter.�

���� The commission may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law do not set forth a specific requirement on the
considered aspect of that matter or address that matter at all.

���� No decision of the commission
shall be implemented if the direct or indirect result of the decision will be
that the system�s funded ratio falls below the target funded ratio in any
valuation period during the 30 years following the implementation of the
decision.� The actuary of the system shall make a determination of the result
in that regard and submit that determination in a written report to the
commission prior to the implementation of the decision.

���� If any matter before the
commission receives a majority vote, the commission shall implement the
decision.

���� A final action of the
commission shall be made by the adoption of a regulation that shall identify
the modifications to the system by reference to statutory section.� The
regulations shall also specify the effective date of the modification and the
system members, including beneficiaries and retirees, to whom the modification
applies.� Regulations of the commission are considered to be part of the plan
document for the system.� A regulation adopted by the commission may be
modified by regulation in order to comply with the requirements of this
section.

���� k.��� No member of the
commission, employee of the commission, or employee of the Division of Pensions
and Benefits in the Department of the Treasury shall accept from any person,
whether directly or indirectly and whether by himself or through his spouse or
any member of his family, or through any partner or associate, any gift, favor,
service, employment or offer of employment, or any other thing of value,
including contributions to the campaign of a member or employee as a candidate
for elective public office, which he knows or has reason to believe is offered
to him with intent to influence him in the performance of his public duties and
responsibilities.� As used in this subsection, �person� means an (1) individual
or business entity, or officer or employee of such an entity, who is seeking,
or who holds, or who held within the prior three years, a contract with the
commission; or (2) an active or retired member, or beneficiary, of the
retirement system.� A member or employee violating this prohibition shall be
guilty of a crime of the third degree.

(cf: P.L.2011, c.78, s.2)�

���� 3.��� Section 17 of P.L.1954,
c.84 (C.43:15A-17) is amended to read as follows:

���� 17.� a. �(1)� Subject to the
provisions of P.L.1955, c.70 the general responsibility for the proper
operation of the Public Employees' Retirement System shall be vested in the
board of trustees, and, as specified, the committees established pursuant to
subsection b. of this section.� Subject to the limitations of the law, the
board shall annually establish rules and regulations for the administration and
transaction of the board�s and committees� business and for the control of the
funds created by this subtitle. �Such rules and regulations shall be consistent
with those adopted by the other pension funds within the Division of Pensions
and Benefits in order to permit the most economical and uniform administration
of all such retirement systems.� The committees shall adopt such regulations as
provided in subsection b. of this section.

���� (2)�� The membership of the
board shall consist of the following:

���� (a)�� Two trustees appointed
by the Governor, with the advice and consent of the Senate, who shall serve for
a term of office of three years and until their successors are appointed, who
shall be private citizens of the State of New Jersey and who are neither an
officer thereof nor active or retired members of the system.� Of the two
trustees initially appointed by the Governor pursuant to P.L.1992, c.41
(C.43:6A-33.1 et al.), one shall be appointed for a term of two years and one
for a term of three years.

���� (b)�� The State Treasurer or
the Deputy State Treasurer, when designated for that purpose by the State
Treasurer.�

���� (c)�� Three trustees elected
for a term of three years by the member employees of the State from among the
active or retired State members of the retirement system in a manner prescribed
by the board of trustees.�

���� (d)�� One trustee elected for
a term of three years by the member employees of counties from among the active
or retired county members of the retirement system and the same method of
holding an election from time to time used for the State employees' representatives
shall be followed in elections held for county representatives.�

���� (e)�� Two trustees elected for
a term of three years by the member employees of municipalities from among the
active or retired municipal members of the retirement system and the same
method of holding an election from time to time used for the State employees'
representatives shall be followed in elections held for municipal
representatives.

���� (3)�� A vacancy occurring in
the board of trustees shall be filled by the appointment or election of a
successor in the same manner as his predecessor.

���� Each member of the board
shall, upon appointment or election, take an oath of office that, so far as it
devolves upon him, he will diligently and honestly administer the board's
affairs, and that he will not knowingly violate or willfully permit to be violated
any provision of law applicable to this act.� The oath shall be subscribed to
by the member making it, certified by the officer before whom it is taken and
filed immediately in the office of the Secretary of State.�

���� Each trustee shall be entitled
to one vote in the board and a majority of all the votes of the entire board
shall be necessary for a decision by the board of trustees at a meeting of the
board.� The board shall keep a record of all its proceedings, which shall be
open to public inspection.�

���� The members of the board shall
serve without compensation but shall be reimbursed for any necessary
expenditures.� No employee shall suffer loss of salary or wages through the
serving on the board.

���� (4)�� The State Treasurer
shall designate a medical board after consultation with the Director of the
Division of Pensions and Benefits, subject to veto by the board of trustees for
valid reason.� It shall be composed of three physicians who are not eligible to
participate in the retirement system.� The medical board shall pass upon all
medical examinations required under the provisions of this act, shall
investigate all essential statements and certificates by or on behalf of a
member in connection with an application for disability retirement, and shall
report in writing to the retirement system its conclusions and recommendations
upon all matters referred to it.

���� b.��� There are established
two committees, to be composed of eight members each as follows, one for the
State employees part of the retirement system and one for the part of the
retirement system with employees of employers other than the State.

���� Each committee shall have four
members who shall be appointed by the Governor as representatives of public
employers whose employees are enrolled in the retirement system, and four
members who shall be appointed by the Public Employee Committee of the AFL-CIO
with the four appointments to be allocated among the unions representing
members of the retirement system having union membership in a manner that
results in the unions representing a greater number of members receiving more
appointments than the unions representing fewer members.� The members of the
committees shall not be appointed until that part of the system attains the
target funded ratio.�

���� The members of each committees
shall serve for a term of three years and until a successor is appointed and
qualified.� For each committee, of the initial appointments by the Governor,
two members shall serve for two years and until a successor is appointed and
qualified, and one shall serve for one year and until a successor is appointed
and qualified.� For each committee, of the initial appointments by the Public
Employee Committee of the AFL-CIO, one member shall serve for two years and
until a successor is appointed and qualified, and one shall serve for one year
and until a successor is appointed and qualified.�

���� For each committee, the
members of the committee shall select a chairperson from among the members, who
shall serve for a term of one year, with no member serving more than one term
until all the members of that committee have served a term in a manner alternating
among the employer representatives and employee representatives, unless the
committee determines otherwise with regard to this process.

���� The provisions of paragraph
(3) of subsection a. of this section, and section 36 of P.L.1954, c.84
(C.43:15A-36), shall apply to each committee and its members, as appropriate.

���� Upon the convening of any
meeting of a committee, the members shall consider a motion to assume the
authority provided in this subsection and shall proceed only if a majority of
the members of the committee vote in the affirmative on that motion.

���� Each committee may contract
with such actuaries or consultants, or both, in accordance with the provisions
of P.L.1954, c.48 (C.52:34-6 et seq.), as the committee may deem necessary to
perform its duties, when that part of the system has met the target funded
ratio.

���� When a part of the system has
attained the target funded ratio as defined in section 27 of P.L.2011, c.78
(C.43:3C-16), the committee for that part shall have the discretionary
authority for that part to
[
(1)
]
modify the:
member contribution rate; formula for calculation of final compensation; the
fraction of compensation applied to service credited after the modification;
age at which a member may be eligible for and the benefits for service or early
retirement; and benefits provided for disability retirement
[
; and (2)
activate the application of the �Pension Adjustment Act," P.L.1958, c.143
(C.43:3B-1 et seq.) for retirees for the period that the part is at or above
the target funded ratio and modify the basis for the calculation of the
adjustment and set the duration and extent of the activation. �A committee
shall give priority consideration to subparagraph (2) of this paragraph
]
.� A committee
shall not have the authority to change the years of creditable service required
for vesting.

���� Each committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law may set forth a specific requirement on that
matter.�

���� Each committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law do not set forth a specific requirement on the
considered aspect of that matter or address that matter at all.

���� The members of each committee
shall have the same duty and responsibility to the retirement system as do the
members of the board of trustees.� No decision of a committee shall be
implemented if the direct or indirect result of the decision will be that the
funded ratio of that part falls below the target funded ratio in any valuation
period during the 30 years following the implementation of the decision.� The
actuary of the fund shall make a determination of the result in that regard and
submit that determination in a written report to the committee and the board
prior to the implementation of the decision.

���� If any matter before a
committee receives at least five votes in the affirmative, the board of
trustees shall approve and implement the committee�s decision.

���� If any matter regarding
benefits before a committee receives four votes in the affirmative and four
votes in the negative or a committee otherwise reaches an impasse on a
decision, the provisions of section 33 of P.L.2011, c.78 (C.43:3C-17) shall be
followed.

���� A final action of the
committee shall be made by the adoption of a regulation that shall identify the
modifications to the system by reference to statutory section.� The regulations
shall also specify the effective date of the modification and the system
members, including beneficiaries and retirees, to whom the modification
applies.� Regulations of the committee are considered to be part of the plan
document for the system.� A regulation adopted by the committee may be modified
by regulation in order to comply with the requirements of this section.

���� c.���� No member of the board,
committee, employee of the board, or employee of the Division of Pensions and
Benefits in the Department of the Treasury shall accept from any person,
whether directly or indirectly and whether by himself or through his spouse or any
member of his family, or through any partner or associate, any gift, favor,
service, employment or offer of employment, or any other thing of value,
including contributions to the campaign of a member or employee as a candidate
for elective public office, which he knows or has reason to believe is offered
to him with intent to influence him in the performance of� his public duties
and responsibilities.� As used in this subsection, �person� means an (1)
individual or business entity, or officer or employee of such an entity, who is
seeking, or who holds, or who held within the prior three years, a contract
with the board; (2) an active or retired member, or beneficiary, of the
retirement system; or (3) an entity, or officer or employee of such an entity,
in which the assets of the retirement system have been invested.� A board or
committee member or employee violating this prohibition shall be guilty of a
crime of the third degree.

(cf: P.L.2011, c.78, s.3)

���� 4.��� Section 13 of P.L.1944,
c.255 (C.43:16A-13) is amended to read as follows:

���� 13.� a.� (1) �Subject to the
provisions of P.L.1955, c.70 (C.52:18A-95 et seq.), the general responsibility
for the proper operation of the retirement system is hereby vested in a board
of trustees, and, as specified, the committees established pursuant to
subsection e. of this section.� The board may with the approval of at least
eight members of the board, in its discretion and at such time and in such
manner as the board determines, enhance any benefit set forth in P.L.1944,
c.255 (C.43:16A-1 et seq.) as the board determines to be reasonable and
appropriate or modify any such benefit as an alternative to an increase in the
member contribution rate, which increase the board determines to be reasonable,
necessary, and appropriate, or reinstate, when appropriate, such reduced
benefit to the statutory level without an additional contribution by the
member, so long as an actuarial certification provided by the actuary
demonstrates that such change will not result in an increased employer
contribution in the current year and that such change will not impact the long
term viability of the fund.� The board shall act exclusively on behalf of the
contributing employers, active members of the retirement system, and retired
members as the fiduciary of the system.� The primary obligation of the board
shall be to direct policies and investments to achieve and maintain the full
funding and continuation of the retirement system for the exclusive benefit of
its members.

���� (2)�� The board shall consist
of 12 trustees as follows:

���� (a)�� (Deleted by amendment,
P.L.2018, c.55)

���� (b)�� (Deleted by amendment,
P.L.2018, c.55)

���� (c)�� Three active policemen
and three active firemen as follows:

���� (i)��� Two policemen and two
firemen who shall be active members of the system and who shall be appointed as
follows:

���� one policeman shall be
appointed by the President of the New Jersey State Policemen's Benevolent
Association;

���� one policeman shall be
appointed by the President of the New Jersey State Fraternal Order of Police;

���� one fireman shall be appointed
by the President of the New Jersey State Firemen's Mutual Benevolent
Association; and

���� one fireman shall be appointed
by the President of the Professional Firefighters Association of New Jersey.

���� (ii)�� One policeman and one
fireman who shall serve staggered terms and shall be active members of the
system and who shall be elected by the active members of the system according
to such rules and regulations as the board of trustees shall adopt to govern such
election.� The elected policeman shall serve for an initial term of two years
and the elected fireman shall serve for an initial term of four years.�
Following their first term, all trustees elected pursuant to this subparagraph
shall serve four-year terms.� An election to select trustees, who are active
members of the system, shall be held no later than the first day of the fifth
month next following the date of enactment of P.L.2018, c.55.

���� (d)�� One retiree from the
system who shall be elected by retirees from the system for a term of four
years according to such rules and regulations as the board of trustees shall
adopt to govern the election.� An election to select a trustee, who is a
retiree from the system, shall be held no later than the first day of the fifth
month next following the date of enactment of P.L.2018, c.55.

���� (e)�� Four trustees, to be
appointed by the Governor, who shall serve staggered terms and 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 shall appoint trustees pursuant to this subparagraph
from among a list of names submitted by the New Jersey League of Municipalities
and the New Jersey Association of Counties.� Two trustees appointed by the
Governor pursuant to this subparagraph shall serve for an initial term of two
years and two trustees shall serve for an initial term of four years.�
Following their first term, all trustees appointed pursuant to this
subparagraph shall serve four-year terms.� The Governor shall appoint trustees
representing the interest of local government employers pursuant to this
subparagraph no later than the first day of the seventh month next following
the date of enactment of P.L.2018, c.55.

���� (f)�� One trustee, to be
appointed by the Governor, 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 State government.� The trustee
appointed by the Governor pursuant to this subparagraph shall serve for an
initial term of two years.� Following the trustee's first term, the trustee
appointed pursuant to this subparagraph shall serve four-year terms.� The
Governor shall appoint a trustee representing the interest of State government
pursuant to this subparagraph no later than the first day of the seventh month
next following the date of enactment of P.L.2018, c.55.

���� (3)�� Each trustee shall,
after his appointment or election, take an oath of office that, so far as it
devolves upon him he will diligently and honestly fulfill his duties as a board
member, and that he will not knowingly violate or willingly permit to be violated
any of the provisions of the law applicable to the retirement system. Such oath
shall be subscribed by the member making it, and certified by the officer
before whom it is taken, and immediately filed in the office of the Secretary
of State.� The board may remove a trustee, upon a majority vote of the
trustees, for violating the trustee's oath of office.� Any trustee who is
absent, without an official excuse approved by a majority vote of the trustees,
for more than three of the board's meetings in any calendar year shall be
removed from the board and the trustee's position shall be filled in the same
manner as the position was previously filled. The board shall adopt standards
to define unexcused absences.�

���� A member shall be permitted to
participate in meetings of the board by teleconference.

���� (4)�� (a)� If a vacancy occurs
in the office of a trustee, the vacancy shall be filled in the same manner as
the office was previously filled.� A vacancy shall not last more than 60 days,
unless the board is awaiting the certification of an election conducted pursuant
to paragraph (2) of this subsection.� If a vacancy lasts for more than 60 days,
then the board shall appoint, upon a majority vote of the trustees then
serving, a person qualified pursuant to subparagraph (e) or (f) of paragraph
(2) of this subsection to fill the vacancy until a new trustee is appointed or
elected in the manner set forth in paragraph (2) of this subsection.

���� (b)�� A trustee serving
pursuant to subparagraph (c) of paragraph (2) of this subsection who retires
from active service as policeman or fireman may remain a trustee until an
election is held to replace the trustee.� An election to replace a trustee
serving pursuant to part (ii) of subparagraph (c) of paragraph (2) of this
subsection who retires from active service shall be held no later than 30 days
following the effective date of the trustee's retirement and the trustee shall
relinquish the position on the board upon certification of the results of the
election.

���� (c)�� Trustees appointed
pursuant to part (i) of subparagraph (c) of paragraph (2) of this subsection
shall serve at the pleasure of the official who appointed the trustee, but may
be removed pursuant to paragraph (3) of this subsection.

���� (5)�� The trustees shall serve
without compensation, but they shall be reimbursed for all necessary expenses
that they may incur through service on the board.

���� (6)�� Each trustee shall be
entitled to one vote in the board.� Seven trustees shall be present at any
meeting of said board for the transaction of its business.

���� (7)�� Subject to the
limitations of this act, the board of trustees shall annually establish rules
and regulations for the administration of the funds created by this act and for
the transaction of the board's business.

���� (8)�� (a) The board of
trustees shall elect from its membership a chair and vice chair.� The chair, or
vice chair in the chair's absence, shall serve as the primary contact with
board staff, coordinate and approve meeting agendas, and shall have the power
to authorize any special staff action necessary to execute any of the board's
duties.� The chair and vice chair shall not have the authority to discipline or
discharge an employee of the board unless authorized to take such action by a
majority of the trustees at a public meeting.� The board shall appoint a
secretary of the board.� The administration of the program shall be performed
by personnel selected by the board in accordance with this section.� The board,
reconstituted pursuant to P.L.2018, c.55, shall hold an initial meeting on the
first business day of the seventh month following the date of enactment of
P.L.2018, c.55.� At the initial meeting of the board on the first business day
of the seventh month next following the date of enactment of P.L.2018, c.55,
the board shall contract with the Division of Pensions and Benefits for the
division to perform the administrative tasks that the division performed prior
to the enactment of P.L.2018, c.55 and such other tasks as the board may
require.� The division shall receive compensation from the board for the
performance of the administrative tasks that the division performed prior to
the enactment of P.L.2018, c.55 in an amount equal to the cost the division
incurred for the performance of those administrative tasks prior to the
enactment of that act.� At the expiration of the term of the contract
negotiated by the board with the division pursuant to this paragraph, the board
may contract with the division or with a private entity, pursuant to the
provisions of P.L.1954, c.48 (C.52:34-6 et seq.), to perform administrative
tasks that the board determines to be necessary or convenient for its
operation.

���� (b)�� A majority of the
authorized membership of the board shall constitute a quorum for the
transaction of business.

���� (9)�� The board of trustees
shall keep a record of all of its proceedings which shall be open to public
inspection.� The retirement system shall publish annually a report showing the
fiscal transactions of the retirement system for the preceding year, the amount
of the accumulated cash and securities of the system, and the last balance
sheet showing the financial condition of the system by means of an actuarial
valuation of the assets and liabilities of the retirement system.

���� (10) The board of trustees
may, in its discretion, select and employ, or contract with, legal counsel with
demonstrated expertise in the law governing retirement systems for public or
private sector employees to advise and represent the board.� If the board does
not select and employ, or contract with, legal counsel, the Attorney General of
the State of New Jersey shall be the legal adviser of the retirement system,
except if the Attorney General determines that a conflict of interest would
affect the ability of the Attorney General to represent the board or the
committees on a matter affecting the retirement system.

���� (11) The board of trustees
shall designate a medical board. It shall be composed of a minimum of three
physicians who are not eligible to participate in the retirement system. The
medical board shall pass upon all medical examinations required under the provisions
of this act, shall investigate all essential statements and certificates by or
on behalf of a member in connection with an application for disability
retirement, and shall report in writing to the retirement system its
conclusions and recommendations upon all matters referred to it.

���� (12) The actuary of the system
shall be selected by the board of trustees.� The actuary shall be the technical
adviser of the board of trustees on matters regarding the operation of the
funds created by the provisions of this act, and shall perform such other
duties as are required in connection therewith.� The actuary shall be an
independent contractor retained by the board.� The actuary shall have
demonstrated experience in providing actuarial services to defined benefit
retirement systems for public employees and be a fellow with the Society of
Actuaries and an active member of the American Academy of Actuaries.

���� (13) The board of trustees, in
consultation with the actuary, shall establish actuarial funding policies for
the system.� At least once in each three-year period the actuary shall make an
actuarial investigation into the mortality, service and compensation experience
of the members and beneficiaries of the retirement system and, with the advice
of the actuary, the board of trustees shall adopt for the retirement system
such mortality, service and other tables as shall be deemed necessary and shall
certify the rates of contribution payable under the provisions of this act.�
The board of trustees shall retain an independent actuary, as selected by the
State Treasurer, with demonstrated experience in providing actuarial services
to retirement systems for public or private sector employees to review prior
investigations into the mortality, service, and compensation experience of the
members and beneficiaries of the retirement system and to review the three
prior actuarial valuations to certify that the actuary of the retirement system
conducted the investigations and valuations in accordance with generally
accepted actuarial standards.

���� (14) (Deleted by amendment,
P.L.1970, c.57.)

���� (15) On the basis of such
tables recommended by the actuary as the board of trustees shall adopt and
regular interest, the actuary shall make an annual valuation of the assets and
liability of the funds of the system created by this act.

���� (16) (Deleted by amendment,
P.L.1987, c.330.)

���� (17) Each policeman or fireman
member of the board of trustees or the committees shall be entitled to time off
from his duty, with pay, during the periods of his attendance upon regular or
special meetings of the board of trustees or the committees, and such time off
shall include reasonable travel time required in connection therewith.

���� (18) The board of trustees
shall have a minimum of one meeting each calendar month.

���� (19) The board of trustees
shall have authority to formulate and establish, amend, modify or repeal such
policies as it may deem necessary or proper, which shall govern the methods,
practices or procedures for investment, reinvestment, purchase, sale or exchange
transactions to be followed by the Division of Investment.� The board may also
review and approve agreements which may be necessary or convenient for the
management of the investments of the retirement system.� The board shall also
have the authority to inspect and audit the respective accounts and funds
administered by the Division of Investment, or a successor entity, and take
appropriate action as necessary to effectuate the long term viability of the
system. Notwithstanding this provision, Common Pension Fund L and the assets
held by Common Pension Fund L as of the effective date of this Act and
thereafter, including the interest of the Police and Firemen's Retirement
System of New Jersey therein, shall remain within the Division of Investment.� The
Director of the Division of Investment and the State Investment Council shall
retain all functions, powers, and duties relating to Common Pension Fund L
assigned to the Division of Investment, the Director of the Division of
Investment, and the State Investment Council by P.L.2017, c.98 (C.5:9-22.5 et
seq.).

���� (20) (a)� The board of
trustees shall select and employ an executive director, who shall be
responsible for recommending and implementing the strategic direction of the
board from an operational perspective.� The executive director shall provide
strategic direction, planning, and leadership to the board; organize, develop,
and supervise a management team to provide optimal results; maintain oversight
of administrative operations conducted by the board; develop an annual budget
and a salary and compensation guide for any managerial positions that are not
subject to Title 11A, Civil Service, of the New Jersey Statutes, arrange board
agendas with the approval of the board's chair; appoint administrative staff;
execute contracts on behalf of the board; and perform any other
responsibilities designated to the executive director by the board.� The person
employed by the board to hold the position of executive director shall have, at
a minimum upon commencement of employment, a bachelor's degree from an accredited
institution of higher education, and at least five years of management
experience in accounting, finance, public administration, government pension
and retirement planning, investment banking, financial consulting, money
management, or a similar field.� The person shall meet all other requirements
for employment as shall be set forth in a standard adopted by the board.� No
member, retiree, or other beneficiary of the system shall be eligible to hold
the position of executive director.

���� The executive director shall
serve without term but may be removed from office, upon notice and opportunity
to be heard at a public hearing, subject to an affirmative vote of the majority
of all authorized members of the board of trustees.� Any vacancy occurring
shall be filled in the same manner as the original appointment.� The executive
director shall devote his entire time and attention to the duties of the office
and shall not be engaged in any other occupation or profession.� The executive
director shall act as a fiduciary to the retirement system and shall be under a
duty to perform the obligations set forth herein according to the interest of
the beneficiaries of the system.

���� (b)�� The board of trustees
shall have the authority to retain other administrative and professional staff
as required to implement the duties and responsibilities required to ensure the
smooth transition of responsibilities and authority from the division to the
board pursuant to P.L.2018, c.55.� The board shall not employ a trustee and may
employ a former trustee only if the former trustee has not held the position of
trustee for more than two years.

���� (c)�� The board of trustees
shall be authorized to access operating funds from the system necessary for the
management of the fund and to employ staff immediately upon their election and
appointment, provided that the qualified status of the retirement system under
federal law is maintained.

���� (21) (a) The board of trustees
shall select and employ a chief investment officer, who shall oversee the
development of the methods, practices and procedures for investment, in
coordination with the Investment Committee.� Notwithstanding this provision, Common
Pension Fund L and the assets held by Common Pension Fund L as of the effective
date of this Act and thereafter, including the interest of the Police and
Firemen's Retirement System of New Jersey therein shall remain within the
Division of Investment.� The Division of Investment and the Director of the
Division of Investment and the State Investment Council shall retain all
functions, powers, and duties relating to Common Pension Fund L assigned to the
Division of Investment, the Director of the Division of Investment, and the
State Investment Council by P.L.2017, c.98 (C.5:9-22.5 et seq.).� The chief
investment officer, in coordination with the Investment Committee, shall
establish and maintain a policy to monitor and evaluate the effectiveness of
investments made on behalf of the board.� The chief investment officer shall
report to the executive director.

���� The person employed by the
board to hold the position of chief investment officer shall have, at a minimum
upon commencement of employment, a bachelor's degree from an accredited
institution of higher education, and at least five years of management experience,
in addition to accounting, finance, public administration, government pension
and retirement planning, investment banking, financial consulting, money
management, or a similar field.� The person shall also have experience in the
direct management, analysis, supervision or investment of assets.� The person
shall meet all other requirements for employment as shall be set forth in a
standard adopted by the board.� No member, retiree, or other beneficiary of the
system shall be eligible to hold the position of chief investment officer.� The
chief investment officer shall be precluded from outside employment or other
occupation.

���� (b)�� The board of trustees
may make and execute agreements pursuant to the provisions of P.L.1954, c.48
(C.52:34-6 et seq.), which may be necessary or convenient for the management of
the investments of the retirement system.� The board shall also have the authority
to inspect and audit the respective accounts and funds administered by the
Division of Investment, or a successor entity, and take appropriate action as
necessary to effectuate the long term viability of the system.

���� (22) The board of trustees
shall select and employ an ombudsman, who shall provide individual death and
disability consultation and information to plan members and their dependents;
answer questions from, and provide information to, members related to the
process of applying for retirement and retirement benefits; coordinate with
other State and local agencies on behalf of members; maintain federal, State,
and local death and disability benefit resources; recommend policy changes to
the board; conduct educational presentations for employers on death and
disability benefit options for members; and publish information about the
organization of the board for members, employers, and the public.

���� (23) All members of the board
of trustees and of the Investment Committee shall participate in annual
investment training as directed by the board's executive director.� In addition
to the ethics training required by paragraph (2) of subsection c. of this
section, the board shall adopt a policy requiring annually not less than 16
hours of continuing education in matters relating to the administration of
defined benefit retirement systems for public employees and the fiduciary duty
the board and its employees have to the beneficiaries of the retirement system.

���� b.��� The board of trustees
shall have the discretionary authority to
[
:
(1)
]

modify the: 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
[
;
and

���� (2)�� subject to the
provisions of P.L.2015, c.55, activate the application of the "Pension
Adjustment Act," P.L.1958, c.143 (C.43:3B-1 et seq.) for retirees and
modify the basis for the calculation of the adjustment and set the duration and
extent of the activation
]
.�
The board of trustees, after consultation with the actuary, may apply an
adjustment to the monthly retirement allowance or pension originally granted to
any member.

���� The board of trustees shall
have the discretionary authority to modify the conditions and standards for the
purchase of service credit for death benefits.� The board of trustees shall not
have the authority to change the years of creditable service required for
vesting.

���� At least eight votes of the
authorized membership of the board shall be required to approve any enhancement
or reduction of a member benefit
[
,
including the activation of the application of the "Pension Adjustment
Act," P.L.1958, c.143 (C.43:3B-1 et seq.),
]
for retirees, or to approve any
increase or decrease in the employer contribution that is more than what is
recommended by the actuary for the system for the purpose of the annual funding
requirements of the system.� An actuarial certification must be provided by the
actuary prior to any enhancement or reduction of a member benefit,
[
including the
activation of the application of the "Pension Adjustment Act,"
P.L.1958, c.143 (C.43:3B-1 et seq.)
]
,
showing that such change will not result in an increased employer contribution
in the current year and that such change will not impact the long term
viability of the fund.

���� The board of trustees may
consider a matter described in this subsection and render a decision
notwithstanding that the provisions of the statutory law may set forth a
specific requirement on that matter.�

���� The board of trustees may
consider a matter described in this subsection and render a decision
notwithstanding that the provisions of the statutory law do not set forth a
specific requirement on the considered aspect of that matter or address that
matter at all.

���� A final action of the board of
trustees under this subsection shall be made by the adoption of a regulation
that shall identify the modifications to the system by reference to statutory
section.� The regulations shall also specify the effective date of the
modification and the system members, including beneficiaries and retirees, to
whom the modification applies.� Regulations of the board of trustees are
considered to be part of the plan document for the system.� A regulation
adopted by the board of trustees may be modified by regulation in order to
comply with the requirements of this section.

���� c.���� (1)� No member of the
board or a committee of the board, employee of the board, or employee of the
Division of Pensions and Benefits in the Department of the Treasury shall
accept from any person, whether directly or indirectly and whether by himself
or through his spouse or any member of his family, or through any partner or
associate, any gift, favor, service, employment or offer of employment, or any
other thing of value, including contributions to the campaign of a member or
employee as a candidate for elective public office, which he knows or has
reason to believe is offered to him with intent to influence him in the
performance of his public duties and responsibilities.� As used in this
subsection, "person" means an (1) individual or business entity, or
officer or employee of such an entity, who is seeking, or who holds, or who
held within the prior three years, a contract with the board; (2) an active or
retired member, or beneficiary, of the retirement system; or (3) an entity, or
officer or employee of such an entity, in which the assets of the retirement
system have been invested.� A board or committee member or employee violating
this prohibition shall be guilty of a crime of the third degree.

���� (2)�� The board shall adopt an
ethics policy either identical to the provisions of the "New Jersey
Conflicts of Interest Law," P.L.1971, c.182 (C.52:13D-12 et seq.) or more
restrictive, but not less restrictive.� All trustees, officers, and employees
of the board shall participate in annual ethics training on the board's policy,
the New Jersey Conflicts of Interest Law, and any other applicable law, rule,
or standard of conduct relating to the area of ethics as directed by the
board's executive director.

���� d.��� The board of trustees
shall have the authority to establish a process for the review, approval, and
appeal of applications for retirement.

���� e.���� The board of trustees
shall establish three committees as follows:

���� (1)�� (a)� An Audit Committee
of no less than three members to assist in the oversight of the financial
reporting and audit processes of the board of trustees. At least two of the
members shall be members of the board of trustees.� At least one of the Audit
Committee members shall have accounting, governmental auditing, or related
financial expertise.� If the board of trustees does not have sufficient members
qualified or available to serve on the Audit Committee, or wishes to broaden
the expertise on the Audit Committee, the board of trustees may request that
the State Treasurer recommend one or more qualified individuals to sit on the
committee.

���� (b)�� The Audit Committee
shall assist the board of trustees in retaining an independent auditor to
conduct an audit of the retirement system's financial statements by making a
recommendation to the board of trustees after engaging in an auditor selection
process.� The auditor selection process shall be based upon public, competitive
bidding principles and shall take place no less than once every five years.

���� (c)�� In carrying out its
duties, the Audit Committee shall proactively assist the board of trustees in
overseeing the integrity and quality of the retirement system's finances and
investments.� The Audit Committee shall:

���� (i)��� review and evaluate
audit fees;

���� (ii)�� when the committee
believes that the auditor's performance is not adequate in quality or
independence, recommend such steps as may be necessary to elicit appropriate
performance, including replacement of the auditor;

���� (iii) at least once every
three years, obtain and review a report of the independent auditor describing
for the preceding year: the independent auditor's internal quality control
procedures; any material issues raised by the most recent internal quality control
peer review, or by reviews conducted by governmental or professional
authorities; and steps taken by the auditor to address such issues;

���� (iv) regularly review with the
independent auditor any audit problems, any risks of material statements due to
fraud, and difficulties involving restrictions or attempts to restrict the
auditor's activities and restrictions on access to information;

���� (v)�� review the audited
financial statements and interim statements and discuss them with the board of
trustees.� These discussions shall include a review of particularly sensitive
accounting estimates, reserves and accruals, judgmental areas, audit adjustments,
whether recorded or not, and any other matters the Audit Committee or
independent auditor shall deem appropriate;

���� (vi) review internal control
functions such as the planned scope of internal audit reviews, adequacy of
staffing, actions to be taken as a result of internal audit findings, the
effectiveness of electronic data processing procedures, and controls and related
security programs;

���� (vii) recommend policies with
respect to risk assessment and risk management; and

���� (viii) establish a permanent
position of internal auditor, who shall be supervised by the executive
director, but who may be discharged only by an affirmative vote of the majority
of the board.

���� (2)�� An Actuary Committee of
no less than three members to assist in the selection and oversight of the
actuary appointed by the board of trustees.� The Actuary Committee shall review
the performance of the actuary appointed by the board of trustees.� If the performance
of the actuary is not adequate in quality, the committee shall recommend such
steps as may be necessary to elicit appropriate performance, including
replacement of the actuary.

���� (3)�� An Investment Committee
of no less than three members to assist in the oversight of the investment
policies selected by the board of trustees.� The Investment Committee shall
consist of two members of the board of trustees, and one member who shall be the
chief investment officer of the board, and shall oversee investments and make
recommendations on investments to the board of trustees.� A majority of the
Investment Committee members, one of which may be the Chief Investment Officer,
shall be qualified by training, experience or long-term interest in the direct
management, analysis, supervision or investment of assets and this training,
experience or long-term interest shall have been supplemented by academic
training in the fields of economics, business, law, finance or actuarial
science or by actual employment in those fields.� If the board of trustees does
not have sufficient members qualified or available to serve on the Investment
Committee, or determines to broaden the expertise of the Investment Committee,
the board of trustees may request that the State Treasurer recommend one or
more qualified individuals to sit on the committee.

���� f.���� At the end of six years
following the enactment date of P.L.2018, c.55, the board of trustees shall
conduct a review of the performance and funding levels of the retirement
system, as compared to available market data including but, not limited to, the
performance of the State Investment Council and Division of Investment with
regard to the investment of other State-administered retirement systems or
funds and other appropriate benchmarks, and may, based on a majority vote of
the authorized membership of the board, petition the Legislature to consider
legislation that reverts control of the system from the Board of Trustees to
the State Investment Council and the Division of Investment.

(cf: P.L.2018, c.55, s.15)

���� 5.��� Section 30 of P.L.1965,
c.89 (C.53:5A-30) is amended to read as follows:

���� 30.� a.� Subject to the
provisions of P.L.1955, c.70 (C.52:18A-95 et seq.), the general responsibility
for the proper operation of the retirement system is hereby vested in the board
of trustees, and, as specified, the committee established pursuant to subsection
o. of this section.�

���� b.��� The board shall consist
of five trustees as follows:

���� (1)�� Two active or retired
members of the system who shall be appointed by the Superintendent of State
Police, who shall serve at the pleasure of the superintendent and until their
successors are appointed and one of whom shall be or shall have been a commissioned
officer of the Division of State Police.

���� (2)�� Two members to be
appointed by the Governor, with the advice and consent of the Senate, who shall
serve for a term of office of three years and until their successors are
appointed and who shall be private citizens of the State of New Jersey who are
neither an officer thereof nor active or retired members of the system.� Of the
two members initially appointed by the Governor pursuant to P.L.1992, c.125
(C.43:4B-1 et al.), one shall be appointed for a term of two years and one for
a term of three years.�

���� (3)�� The State Treasurer ex
officio.� The Deputy State Treasurer, when designated for that purpose by the
State Treasurer, may sit as a member of the board of trustees and when so
sitting shall have all the powers and shall perform all the duties vested by this
act in the State Treasurer.�

���� c.���� Each trustee shall,
after his appointment, take an oath of office that, so far as it devolves upon
him, he will diligently and honestly fulfill his duties as a board member, that
he will not knowingly violate or permit to be violated any of the provisions of
the law applicable to the retirement system.� Such oath shall be subscribed by
the member taking it, and certified by the official before whom it is taken,
and immediately filed in the office of the Secretary of State.�

���� d.��� If a vacancy occurs in
the office of a trustee, the vacancy shall be filled in the same manner as the
office was previously filled.�

���� e.���� The trustees shall
serve without compensation, but they shall be reimbursed by the State for all
necessary expenses that they may incur through service on the board.� No
employee member shall suffer loss of salary through the serving on the board.�

���� f.���� Except as otherwise
herein provided, no member of the board of trustees shall have any direct
interest in the gains or profits of any investments of the retirement system;
nor shall any member of the board of trustees directly or indirectly, for
himself or as an agent in any manner use the moneys of the retirement system,
except to make such current and necessary payments as are authorized by the
board of trustees; nor shall any member of the board of trustees become an
endorser or surety, or in any manner an obligor for moneys loaned to or
borrowed from the retirement system.�

���� g.��� Each trustee shall be
entitled to one vote in the board.� A majority vote of all trustees shall be
necessary for any decision by the trustees at any meeting of said board.�

���� h.��� Subject to the
limitations of this act, the board of trustees shall annually establish rules
and regulations for the administration of the funds created by this act and for
the transactions of the board�s and committee�s business. Such rules and
regulations shall be consistent with those adopted by the other pension funds
within the Division of Pensions and Benefits in order to permit the most
economical and uniform administration of all such retirement systems.� The
committee shall adopt such regulations as provided in subsection o. of this
section.

���� i.���� The actuary of the fund
shall be selected by the Retirement Systems Actuary Selection Committee
established by P.L.1992, c.125. �He shall be the technical adviser of the board
and the committee on matters regarding the operation of the funds created by
the provisions of this act and shall perform such other duties as are required
in connection herewith.�

���� j.���� The Attorney General
shall be the legal adviser of the retirement system, except that if the
Attorney General determines that a conflict of interest would affect the
ability of the Attorney General to represent the board or the committee on a
matter affecting the retirement system, the board may select and employ legal
counsel to advise and represent the board or the committee on that matter.�

���� k.��� The Director of the
Division of Pensions and Benefits of the State Department of the Treasury shall
appoint a qualified member of the division who shall be the secretary of the
board.�

���� l.���� The board of trustees
shall keep a record of all of its proceedings which shall be open to public
inspection.� The retirement system shall publish annually a report showing the
fiscal transactions of the retirement system for the preceding year, the amount
of the accumulated cash and securities of the system and the last balance sheet
showing the financial condition of the system by means of an actuarial
valuation of the assets and liabilities of the retirement system.�

���� m.�� The State Treasurer shall
designate a medical board after consultation with the Director of the Division
of Pensions and Benefits, subject to veto by the board of trustees for valid
reason.� It shall be composed of three physicians.� The medical board shall
pass on all medical examinations required under the provisions of this act, and
shall report in writing to the retirement system its conclusions and
recommendations upon all matters referred to it.�

���� n.��� (Deleted by amendment,
P.L.1987, c.330).

���� o.��� There is established a
committee to be composed of eight members, four of whom shall be appointed by
the Governor as representatives of the public employer whose employees are
enrolled in the retirement system, three of whom shall be appointed by the head
of the State Troopers Fraternal Association, and one of whom shall be appointed
by the head of the union representing the greatest number of members of the
retirement system who are supervisory officers having union membership.� The
members of the committee shall not be appointed until the system attains the
target funded ratio.�

���� The members of the committee
shall serve for a term of three years and until a successor is appointed and
qualified.� Of the initial appointments by the Governor, two members shall
serve for two years and until a successor is appointed and qualified, and one
shall serve for one year and until a successor is appointed and qualified.� Of
the initial appointments by the State Troopers Fraternal Association, one
member shall serve for two years and until a successor is appointed and
qualified, and one shall serve for one year and until a successor is appointed
and qualified.�

���� The members of the committee
shall select a chairperson from among the members, who shall serve for a term
of one year, with no member serving more than one term until all the members of
the committee have served a term in an manner alternating among the employer
representatives and employee representatives, unless the committee determines
otherwise with regard to this process.

���� The provisions of subsections
c. through g., inclusive, of this section shall apply to the committee and its
members, as appropriate.� The committee shall keep a record of all of its
proceedings which shall be open to public inspection.

���� Upon the convening of any
meeting of the committee, the members shall consider a motion to assume the
authority provided in this subsection and shall proceed only if a majority of
the members of the committee vote in the affirmative on that motion.

���� The committee may contract
with such actuaries or consultants, or both, in accordance with the provisions
of P.L.1954, c.48 (C.52:34-6 et seq.), as the committee may deem necessary to
perform its duties, when the system has attained the target funded ratio.

���� When the retirement system has
attained the target funded ratio as defined in section 27 of P.L.2011, c.78
(C.43:3C-16), the committee shall have the discretionary authority for the
system to
[
(1)
]
modify the:
member contribution rate; formula for calculation of final compensation or
final salary; age at which a member may be eligible for and the benefits for
service or special retirement; and benefits provided for disability retirement
[
; and (2)
activate the application of the �Pension Adjustment Act," P.L.1958, c.143
(C.43:3B-1 et seq.) for retirees for the period that the system is at or above
the target funded ratio and modify the basis for the calculation of the
adjustment and set the duration and extent of the activation.� The committee
shall give priority consideration to subparagraph (2) of this paragraph
]
.� The
committee shall not have the authority to change the years of creditable
service required for vesting.

���� The committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law may set forth a specific requirement on that
matter.�

���� The committee may consider a
matter described above and render a decision notwithstanding that the
provisions of the statutory law do not set forth a specific requirement on the
considered aspect of that matter or address that matter at all.

���� The members of the committee
shall have the same duty and responsibility to the retirement system as do the
members of the board of trustees.� No decision of the committee shall be
implemented if the direct or indirect result of the decision will be that the
system�s funded ratio falls below the target funded ratio in any valuation
period during the 30 years following the implementation of the decision.� The
actuary of the fund shall make a determination of the result in that regard and
submit that determination in a written report to the committee and the board
prior to the implementation of the decision.

���� If any matter before the
committee receives at least five votes in the affirmative, the board of
trustees shall approve and implement the committee�s decision.

���� If any matter regarding
benefits before the committee receives four votes in the affirmative and four
votes in the negative or the committee otherwise reaches an impasse on a
decision, the provisions of section 33 of P.L.��� , c.78 (C.������� ) shall be
followed.

���� A final action of the
committee shall be made by the adoption of a regulation that shall identify the
modifications to the system by reference to statutory section.� The regulations
shall also specify the effective date of the modification and the system
members, including beneficiaries and retirees, to whom the modification
applies.� Regulations of the committee are considered to be part of the plan
document for the system.� A regulation adopted by the committee may be modified
by regulation in order to comply with the requirements of this section.

���� p.��� No member of the board,
committee, employee of the board, or employee of the Division of Pensions and
Benefits in the Department of the Treasury shall accept from any person,
whether directly or indirectly and whether by himself or through his spouse or any
member of his family, or through any partner or associate, any gift, favor,
service, employment or offer of employment, or any other thing of value,
including contributions to the campaign of a member or employee as a candidate
for elective public office, which he knows or has reason to believe is offered
to him with intent to influence him in the performance of his public duties and
responsibilities.� As used in this subsection, �person� means an (1) individual
or business entity, or officer or employee of such an entity, who is seeking,
or who holds, or who held within the prior three years, a contract with the
board; (2) an active or retired member, or beneficiary, of the retirement
system; or (3) an entity, or officer or employee of such an entity, in which
the assets of the retirement system have been invested.� A board or committee
member or employee violating this prohibition shall be guilty of a crime of the
third degree.

(cf: P.L.2011, c.78, s.5)

���� 6.��� Section 2 of P.L.1958,
c.143 (C.43:3B-2) is amended to read as follows:

���� 2.��� The monthly retirement
allowance or pension originally granted to any retirant and the pension or
survivorship benefit originally granted to any beneficiary shall be adjusted in
accordance with the provisions of this act provided, however, that:

���� a.���� The maximum retirement
allowance, without option, shall be considered the retirement allowance
originally granted to any retirant who, at retirement, elected an Option I
allowance pursuant to the provisions of the statutes stipulated in subsection
b. of section 1 of this act (C.43:3B-1); and

���� b.��� the minimum pension
granted to any beneficiary stipulated in subsection d. (4) of section 1 of this
act (C.43:3B-1), shall be considered the pension originally granted to such
beneficiary.

���� Pension adjustments shall not
be paid to retirants or beneficiaries who are not receiving their regular,
full, monthly retirement allowances, pensions or survivorship benefits.� The
adjustment granted under the provisions of this act shall be effective only on
the first day of a month, shall be paid in monthly installments, and shall not
be decreased, increased, revoked or repealed except as otherwise provided in
this act.� No adjustment shall be due to a retirant or a beneficiary unless it
constitutes a payment for an entire month; provided, however, that an
adjustment shall be payable for the entire month in which the retirant or
beneficiary dies.

����
[
Commencing with the effective
date of P.L.2011, c.78 and thereafter, no further adjustments to the monthly
retirement allowance or pension originally granted to any retirant and the
pension or survivorship benefit granted to any beneficiary shall be made in
accordance with the provisions of P.L.1958, c.143 (C.43:3B-1 et seq.), unless
the adjustment is reactivated as permitted by law.� This provision shall not
reduce the monthly retirement benefit that a retirant or a beneficiary is
receiving on the effective date of P.L.2011, c.78 when the benefit includes an
adjustment granted prior to that effective date.� The Board of Trustees of the
Police and Firemen's Retirement System may adjust the monthly retirement
allowance or pension of its retired members in accordance with subsection b. of
section 13 of P.L.1944, c.255 (C.43:16A-13).
]

(cf: P.L.2018, c.55, s.1)

���� 7.��� This act shall take
effect immediately.

STATEMENT

���� This bill reinstates automatic
cost-of-living adjustments (COLAs) for retirement benefits under the �Pension
Adjustment Act,� P.L.1958, c.143 (C.43:3B-1 et seq.), for members of the
Teachers� Pension and Annuity Fund, the Judicial Retirement System, the Public
Employees� Retirement System, the Police and Firemen�s Retirement System, and
the State Police Retirement System.� Provisions contained in P.L.2011, c.78
(C.43:3C-16 et al), signed into law on June
28, 2011, cancelled the automatic, annual adjustment for current and future
retirees and beneficiaries of these State-administered retirement systems.

���� COLAs protect retirement
benefits against erosion by inflation, the ills of which were addressed by the
Legislature, both for the individual and the State, with the enactment of the
�Pension Adjustment Act� in 1958.�

���� Without the annual adjustment,
retirees and beneficiaries will gradually see significant reductions in their
purchasing power.� The loss of COLAs will impact their everyday lives, and,
over time, make it harder to afford more necessary elements of living, such as
out-of-pocket medical costs, groceries, and utility bills.� Retirees and
beneficiaries will find it more prudent, or perhaps necessary, to leave this
State for other states with a comparably lower cost of living.

���� For the State, such outbound
migration will result in the loss of the economic activity of those retirees
and beneficiaries, and any tax revenues concomitant with such activity.� In
addition, New Jersey�s fiscal outlook may be further strained by the retirees
and beneficiaries who remain.� These persons will continue to slip further
downward on the socioeconomic scale.� In some cases, they will require, or at
the least become eligible and utilize, greater levels of public assistance
under the many taxpayer funded social programs administered by the State,
counties, and municipalities, requiring more revenues to meet this increased
demand.

���� In the interests of the
retirees and beneficiaries of the State-administered retirement systems, and
the State, this bill reinstates the automatic COLAs for retirement benefits
under the �Pension Adjustment Act.���