DISABILITY PENSIONS Senate Bill 3123 (Pennacchio) Assembly Bill 4348 (O’Scanlon)

This bill replaces the accidental disability benefit available to members of the Teachers’ Pension and Annuity Fund (TPAF), the Public Em-ployees’ Retirement System (PERS), the Police and Firemen’s Retirement System (PFRS) and the State Police Retirement System (SPRS) with a new work-related disability benefit that is the same as the TPAF, PERS, PFRS and SPRS ordinary disability benefit of 1½% of compen-sation for each year of service but no less than 40% of compensation.  The bill also (1) reduces the percentage applied to compensation to 1½% from 1.64% for TPAF and PERS to parallel to the benefits of PFRS and SPRS; (2) increases to ten from four the years of service credit required before a PFRS or SPRS member becomes eligible for ordinary disability retirement to parallel the requirements of TPAF and PERS; (3) repeals sections of P.L. 2010, c. 3 providing that new TPAF and PERS members would be eligible for disability insurance instead of a disability pension; and (4) repeals the accidental disability allowance sections of law for TPAF, PERS, PFRS and SPRS.

Under the bill, any TPAF, PERS, PFRS or SPRS member under normal retirement age who has fewer than 10 years of creditable service may be retired on a work-related disability retirement allowance, if the member meets the requirements of a medical examination certifying that the member is mentally or physically incapacitated for the performance of usual duty and of any other available duty, and the incapacity from the performance of duties is the direct result of an accident or occupational exposure occurring during and as a result of regular and as-signed duties and not the result of willful negligence.  In order to qualify for a work-related disability benefit, the member must receive a work-ers’ compensation award of permanent disability.  The requirement for a medical examination may be waived when the Division of Workers’ Compensation in the Department of Labor and Workforce Development has determined that the member is 100% totally and permanently disabled.  The bill defines “normal retirement age” for these systems as the age at which a member is first eligible for a service retirement benefit.

The bill allows SPRS to require any disability retiree who is under normal retirement age to undergo a medical examination by a physician or physicians designated by the system for a period of five years following retirement in order to determine whether or not the disability has vanished or has materially diminished.  TPAF, PERS and PFRS members are already subject to this requirement.  In addition, the bill provides that if the PFRS or SPRS disability retiree is under normal retirement age and engaged in an occupation, then the amount of the disability pension will be reduced to an amount which when added to the amount then earned will not exceed the amount of the salary now attributable to the retiree’s former position. TPAF and PERS disability retirees are already subject to such a reduction.  A work-related disability benefit will be reduced by the amount of workers’ compensation benefits in the same manner as currently provided with regard to an  accidental disability benefit.

The bill also modifies the law governing the Judicial Retirement System to provide disability retirement benefits in an amount comparable to other State employees.  Under current law, a judge of the several courts may be retired for disability if the member has become physically or otherwise incapacitated for full and efficient service to the State in his judicial capacity.  The bill changes the amount of the disability retirement benefit from 75% of final salary to 1½% of salary multiplied by his number of years of aggregate service as a judge, or in office, position, or employment of this State or of a county, municipality, board of education or public agency of this State; and further provides, that in no event shall the allowance be less than 40% of final salary.  If the disability beneficiary is engaged in an occupation, then the amount of his pension shall be reduced to an amount which when added to the amount then earned by him, shall not exceed the amount of the salary now attributa-ble to his former position.  If his earnings have changed since the date of his last adjustment, then the amount of his pension may be further altered, but the new pension shall not exceed the amount of pension originally granted.

The bill also provides that the pension committees established pursuant to sections 1 through 5 of P.L.2011, c.78, shall not modify the amount of a work-related disability retirement established under this act.