Monday, August 23, 2010
WEINBERG BILL TO CRACK DOWN ON STATE PENSION FRAUD APPROVED IN SENATE
Bill Would Make Sure Only Eligible Employees are Enrolled in Public Employee Retirement System
TRENTON – A bill sponsored by Senator Loretta Weinberg which would make various changes to New Jersey State pension certification in order to cut down on pension fraud and make sure that only people who are truly eligible may receive credit in the pension system was approved by the Senate today by a vote of 36-0.
“While it’s only appropriate for public employees to be eligible for decent retirement benefits after a lifetime of public service, we have to do a better job of safeguarding those benefits against abuse and misuse,” said Senator Weinberg, D-Bergen. “Pension payments are among the biggest cost drivers in local, county and State budgets, and we have to make sure that taxpayers are only paying for earned retirement benefits, not for people who’ve defrauded the pension system. This bill would ensure greater policing of our pensions and better outreach and education, so employees know just who is eligible for public employee retirement benefits.”
The bill, S-1392, would require public employers to certify the eligibility of their employees to be enrolled in the Public Employee Retirement System (PERS), at the time of enrollment as well as annually for each member of the pension system. The bill would require the Division of Pension and Benefits and the board of trustees of PERS to establish a training program for certifying officers in order to educate them on the eligibility requirements for members of the pension system. The bill would also clarify that it is a crime of the fourth degree – punishable by a fine of up to $10,000 and a term of imprisonment of up to 18 months – to knowingly and willfully make a false statement, or falsify or permit to be falsified any record, application, form or report to the retirement system. The information regarding penalties for submitting false information to the retirement system would also be posted on certification forms to be filed each year for each member.
Finally, the bill would require the Division of Pension and Benefits to assign at least one full-time investigator to review and analyze information submitted to the Division and the pension board. The investigator would be responsible for reviewing enrollments, reports, applications and any other matters regarding the retirement system to ensure compliance with eligibility rules. The pension board may be able to enter into an agreement with another State agency, such as the Inspector General or the State Comptroller, to perform investigative duties of the pension system.
“Our public employee pension system is on the verge of catastrophe, and it’s because of years of abuse, misuse and outright pension fraud perpetuated by people who view public service as an opportunity for enrichment rather than a chance to serve your neighbors,” said Senator Weinberg. “We need to create tighter eligibility reporting practices and tenaciously pursue fraud wherever it may rear its ugly head. That alone won’t fix our State’s pension problems, but it’s an easy place to start.”
The bill is based on recommendations made in the Inspector General’s December 2009 report, “Professional Services Provider Enrollment in PERS.” The report documented the case of an individual who was retained by multiple government entities to provide legal services, and was determined to be an employee eligible for pension credits, rather than an independent contractor, as he should have been classified under current law.
“For years, individuals have engaged in practices to boost their pensions, to obtain unearned pension credit or to generally take advantage of the pension system and the taxpayers’ trust,” said Senator Weinberg. “As a result, we’re facing a situation in which, someday soon, New Jersey won’t even be able to cover the cost of pensions for honest, hard-working public employees who’ve devoted their lives to public service. We need to do everything we can to safeguard taxpayer dollars and create sustainable retirement benefits for employees who’ve earned the right to a pension.”
The bill was unanimously approved by the Senate State Government, Wagering, Tourism and Historic Preservation Committee in July.