On appeal from the Superior Court, Appellate Division
For reversal -- Chief Justice, Wilentz and Justices Clifford, Handler and Stein. For Affirmance -- Justices Pollock, O'Hern and Garibaldi. The opinion of the Court was delivered by Stein, Justice. Pollock, O'Hern and Garibaldi, Justices, dissenting.
Although the underlying chronology and regulatory context of this case are somewhat complex, the critical issue is simple: whether appellant has shown good cause to change her disability pension to a more favorable pension benefit based on service rather than disability.
Mrs. Steinmann was entitled to an early retirement pension of $752.93 per month based on over twenty-five years of service as a teacher. Because she sustained a job-related injury in 1981, she was eligible to apply, alternatively, for a disability retirement benefit. She was not adequately informed by the Board of Trustees of the Teachers' Pension and Annuity Fund (Board or TPAF), however, of the possibility that her disability pension benefit, reduced by her ultimate workers' compensation award, could be less than her early-retirement pension. When she eventually learned that her net disability pension would be $193 per month less than her service pension, she requested permission to change her pension selection. This request was denied for the reason that "once a retirement has become effective no change * * * is possible."
On review, an administrative law judge determined that Mrs. Steinmann had shown the requisite "good cause" and "reasonable diligence" to reopen her pension designation. The ALJ found that Mrs. Steinmann had been treated unfairly by the Board and had received inadequate and incomplete information about the effect of a workers' compensation award on her various retirement options. The Board subsequently rejected the ALJ's recommendation, finding that Mrs. Steinmann possessed
sufficient knowledge about the effect of a workers' compensation award on her retirement plan at the time she initially applied for retirement benefits.
The Appellate Division affirmed, finding "substantial credible evidence" on the record to support the Board's conclusions. 235 N.J. Super. 356. Judge O'Brien dissented, agreeing with the ALJ that Mrs. Steinmann should be permitted to convert from ordinary disability to early retirement, and disagreeing with the majority that the Board's findings were supported by substantial credible evidence. We reverse.
Elizabeth R. Steinmann was a schoolteacher for more than twenty-five years in the Newark and Wayne school systems. On April 3, 1981, she fell while teaching a class and suffered injuries that led to her retirement. She had accumulated over twenty-five years of creditable service in the Teachers' Pension and Annuity Fund when she filed an application for accidental-disability retirement on January 31, 1983.
Appellant's claim may be understood only in the context of the retirement options then available to her. On the one hand, public employees may select retirement plans based solely on age and service. "Service" retirement is available to any employee at age sixty regardless of years in service. It is determined by dividing years of service by age and multiplying that number by a retiree's "final average salary" for the last three years of her employment.*fn1 "Early retirement" is available to employees who have established twenty-five years or more of creditable service before age sixty.*fn2 "Deferred retirement,"
like "service" retirement, is related solely to age and years of service and is available to employees under sixty years of age with at least ten years of service. Deferred retirees may discontinue their employment and delay receipt of benefits until reaching sixty years of age.*fn3
Distinct from these retirement plans based on age and service is a system that compensates disabled employees. Disabled retirees receive a certain percentage of their final average salary payable as long as they remain disabled. "Ordinary disability" retirement is available to retirees under sixty years of age with ten or more years of credited service who are considered "totally and permanently disabled."*fn4 "Accidental disability" retirement, by comparison, is available to retirees under sixty-five years old who are considered "totally and permanently disabled" as a direct result of a "traumatic event" that occurred in the course of the performance of regular employment duties.*fn5 Those who qualify for accidental disability receive benefits equal to two-thirds of the salary received on the date of the accident. N.J.S.A. 18A:66-42. At a minimum, ordinary disability retirees receive 40% of their final compensation. N.J.S.A. 18A:66-41(b).
Since 1971 public employees receiving workers' compensation benefits are also entitled to receive retirement benefits.*fn6 However, workers' compensation awards result in a reduction of the
benefits received by disabled retirees. N.J.S.A. 18A:66-32.*fn7 This reduction does not apply, however, to retirement benefits awarded solely on the basis of age and service. See Starkey v. Department of Treasury, 183 N.J. Super. 1 (App.Div.), certif. denied, 91 N.J. 190 (1982) (as a matter of statutory construction, retirement based on age and service, unlike disability retirement, is not subject to workers' compensation offset).
Thus, when Mrs. Steinmann realized in January 1983 that she was permanently disabled, she had certain available options. Without regard to her job-related disability, Mrs. Steinmann was eligible for early or deferred retirement based on her twenty-five years of service as a teacher. Alternatively, she could have applied, as she did, for accidental-disability benefits; if rejected, she could qualify for ordinary-disability benefits. However, as noted above, accidental- or ordinary-disability benefits are reduced by a workers' compensation award, and thus calculation of a disability-retiree's ultimate award must await adjudication of the workers' compensation claim.
In order for Mrs. Steinmann to have made an informed choice concerning her retirement benefits in January 1983, the following information would have been material: the amount of age and service-related benefits to which she was entitled; the amount of accidental- or ordinary-disability benefits to which she was entitled; which, if any, of ...