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Starkey v. State

Decided: January 13, 1982.


On appeal from a final determination of the Board of Trustees of the Public Employees' Retirement System.

Milmed, Joelson and Seidman. The opinion of the court was delivered by Milmed, P.J.A.D.


This appeal brings up for review the propriety of the action of the Division of Pensions in the State Department of the Treasury (Division), in reducing appellant's veteran's retirement allowance by a workers' compensation "actuarial reduction." Involved is the proper interpretation and application of N.J.S.A. 43:15A-25.1(b), N.J.S.A. 34:15-29 and N.J.S.A. 34:15-43.

The essential facts may be briefly summarized. Appellant Peter P. Starkey was born on August 19, 1915. He began employment as a welder with the New Jersey Neuropsychiatric Institute on April 16, 1953, was enrolled in the Public Employees' Retirement System of New Jersey (PERS) as of January 1, 1955 and, being a Navy veteran of World War II, became qualified for a veteran's retirement allowance under N.J.S.A. 43:15A-61(a) on his sixtieth birthday, August 19, 1975, after more than 20 years of continuous employment with the State. On August 8, 1976 appellant sustained work-related injuries to his back when sewage gas exploded while he was welding. He received his full salary in the form of sick leave benefits from the date of the explosion until his retirement on July 1, 1977 on a veteran's age-service retirement allowance pursuant to N.J.S.A. 43:15A-61(a). The monthly retirement allowance for which he qualified at the time consisted of a pension of $471.56 and an annuity of $80.67, for a total of $552.23. On November 27, 1979 an order was entered in the Division of Workers' Compensation approving settlement of the claim petition which he had filed because of the injuries he sustained in the August 8, 1976 accident. The settlement provided for payment to appellant of $40 a week for 110 weeks, for a total of $4,400, for the partial permanent disability resulting from the explosion.

By letter of December 27, 1979 the attorney who appeared for appellant in the workers' compensation matter notified the Division of Pensions of the order entered on the settlement of appellant's claim. Appellant was thereafter informed by the

Division of Pensions that since he was receiving periodic worker's compensation benefits subsequent to the date of his retirement, his veteran's pension must be reduced by the actuarial value of those benefits allocated to the weeks subsequent to July 1, 1977, the date of his retirement. Appellant disagreed and through his attorney asked that the PERS Board of Trustees review the matter and remove the reduction. Counsel emphasized that since appellant's retirement was based on age and service, and not on work-connected disability, his pension was not subject to the claimed reduction. The Board, however, denied the request to remove the "actuarial reduction," reasoning that N.J.S.A. 43:15A-25.1 "does not differentiate between a disability pension and a veteran's service or Early retirement." This appeal from that denial followed.

Respondent argues that the denial by the Board of appellant's request for removal of the reduction in his veteran's retirement allowance "was compelled by N.J.S.A. 43:15A-25.1(b)." We disagree. We find nothing in the text of the legislation to warrant the conclusion drawn by the respondent. N.J.S.A. 43:15A-25.1(b), which was last amended by L. 1971, c. 213, ยง 46, effective June 17, 1971, reads as follows:

b. An application for retirement benefits may be approved by the board of trustees while the member, applying for such benefits, is in receipt of periodic benefits under the [Workers'] Compensation Law. In this event the actuarial equivalent of such periodic benefits remaining to be paid shall be computed and will serve to reduce the pension portion of the retirement allowance payable to the retirant, subject to the provisions of section 64 of chapter 84 of the laws of 1954.

It is clear from the record before us that when, on July 20, 1977, the PERS Board of Trustees approved his application for a veteran's age-service retirement allowance pursuant to N.J.S.A. 43:15A-61(a), effective July 1, 1977, Starkey was not receiving any "periodic benefits under the [Workers'] Compensation Law." As noted above, it was not until more than two years later, on November 27, 1979, that an order approving

settlement of his claim petition was entered in the Division of Workers' Compensation. Thus, the Board's reliance upon subsection (b) of N.J.S.A. 43:15A-25.1, as authority for imposition of the "actuarial reduction" in this case, is entirely misplaced. For a clear resolution of the single issue raised on this appeal, we turn to two other statutes, sections of the Workers' Compensation Act, N.J.S.A. 34:15-1 et seq.

N.J.S.A. 34:15-43, a section of the act which extends workers' compensation coverage to public employees, ...

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