On appeal from Board of Trustees, Police and Firemen's Retirement System.
J. H. Coleman, Baime and D'Annunzio. The opinion of the court was delivered by D'Annunzio, J.A.D.
The issue is whether respondent, Board of Trustees, erred in denying appellants cost-free transfers from the Public Employees' Retirement System (PERS) to the more beneficial Police and Firemen's Retirement System (PFRS) under a 1986 regulation intended to remedy prior age-discrimination. This is the third case we decide today involving the regulation's application.*fn1
Appellants, employed at the Clinton Correctional Institution for Women, are long-time members of the Public Employees' Retirement System (PERS). Appellants enrolled in PERS between 1962 and 1971 rather than in the Police and Firemen's Retirement System (PFRS) because their job titles were not covered by PFRS at that time. Only a statutorily defined "policeman or fireman" is eligible for PFRS enrollment. N.J.S.A. 43:16A-1(2). At the time appellants were initially employed, enrollment in PFRS was limited to employees who were 35 years old or younger.
In 1973, the Legislature expanded the list of job titles eligible for PFRS enrollment to include Cottage Officers and Head Cottage Officers, appellants' job titles. L. 1973, c. 156, § 1 (codified at N.J.S.A. 43:16A-1(2)). Employees, like appellants, then enrolled in PERS were offered a one-time opportunity to transfer their retirement fund membership to PFRS without cost and without regard to age. L. 1973, c. 156, § 4 (codified at N.J.S.A. 43:16A-63a). To effect the transfer, employees were required to waive their rights to PERS within 90 days of the statute's effective date. N.J.S.A. 43:16A-63. An eligible employee who failed to make a timely waiver would lose the opportunity to transfer his membership to PFRS and would remain a member of PERS.*fn2
Chapter 156 did not, however, abolish the 35 year entry-age limitation; it was merely suspended. After the 90 day "window of opportunity" elapsed, enrollment in PFRS was again limited to employees 35 years old or younger.
All but one of the appellants were over 35 at the time of the 1973 enactment. Although all were eligible, none waived PERS membership within the 90 day period. Having failed to elect PFRS membership, appellants remained enrolled in PERS. [233 NJSuper Page 213] In 1985, the Legislature again provided all eligible employees (i.e., those with eligible job titles) who had not elected to transfer to PFRS in 1973 an opportunity to waive their membership in PERS and enroll in PFRS. L. 1985, c. 155, § 1. In contrast to the cost-free transfer offered in 1973, the 1985 enactment required a lump sum payment from each transferring employee representing the difference between the contribution paid as a member of PERS and the contribution that would have been paid as a member of PFRS since 1973. In addition, each transferring employee was required to pay that sum the employer would have had to pay since 1973 under PFRS on behalf of the transferring employee. As under the 1973 enactment, eligible employees were required to waive membership in PERS within 90 days of the act's effective date to make a transfer to PFRS. Again, the failure to make a timely waiver would result in no pension membership change.*fn3
The Division of Pensions sent an explanatory memo to all PERS members eligible for a transfer under the 1985 enactment. However, because the average transfer cost per appellant was $20,000, none elected to waive PERS membership and enroll in PFRS.
Thereafter, the present case evolved from the impact of a federal anti-discrimination statute on state employment practices and benefits. In 1967 Congress enacted the Age Discrimination in Employment Act (hereinafter ADEA), 29 U.S.C.A. § 621 et seq., which, among other things, barred discrimination by an employer because of age with respect to the terms, conditions, or privileges of employment, except where age was "a bona fide occupational qualification." 29 U.S.C.A. § 623(a)(1) & (f)(1). It also forbade enforcement of the terms of any pension plan which were "a subterfuge to evade the purposes of the Act." 29 U.S.C.A. § 623(f)(2). The ADEA was amended in 1974 to define "employer" to include states or their political subdivisions and agencies. 29 U.S.C.A. § 630(b)(2). Because of questions under the Tenth Amendment, however, not until 1983 was it settled that the ADEA applied to state governments. EEOC v. Wyoming, 460 U.S. 226, 103 S. Ct. 1054, 75 L. Ed. 2d 18 (1983). See Boylan v. State, 222 N.J. Super. 313, 320 (App.Div.1988), certif. granted 111 N.J. 648 (1988).
On July 11, 1984, New Jersey's Attorney General issued a formal opinion acknowledging ADEA's applicability to the states and declaring unenforceable the entry-age limit of 35 for law enforcement and ...