SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
Argued April 4, 2006 -- Decided May 17, 2006
PER CURIAM
In this appeal, the Court addresses the proper amount of pension benefits a retired policeman should receive under the Police and Firemen’s Retirement System (PFRS).
Anthony F. Puglisi, Jr. (Puglisi) served as a police officer for the Police
Department of the City of New Brunswick (City) from 1965 until his retirement
in 1999. In 1990, Puglisi, a lieutenant, and several other police officers filed
a civil rights lawsuit in federal court against various City Administrators and elected
officials, alleging that those named individuals engaged in political discrimination in violation of
two federal civil rights statutes and the New Jersey Constitution. In 1998, Puglisi
reached a settlement with the City, resulting in his promotion to the rank
of captain, his immediately commencement of a one-year terminal leave period at a
captain’s salary, and his agreement to retire at the end of the terminal
leave period. Puglisi also received $30,000 in compensatory damages. The parties further agreed
that the settlement did not constitute an admission of wrongdoing by the City.
Puglisi retired from the police department as a captain on an age and
service pension under the PFRS. He received credit with the PFRS for the
year of terminal leave at a captain’s salary and thereafter collected retirement checks
reflecting the higher salary. Several months after Puglisi’s retirement, in a matter unrelated
to the 1990 discrimination lawsuit, an arbitrator settled the terms of a new
collective negotiations agreement between the City and the Policemen’s Benevolent Association. That agreement
included a retroactive increase in base salary for all supervisory police and covered
the period that Puglisi was on terminal leave. Although Puglisi was no longer
on active service, he was deemed entitled to the increase because the arbitrator
found that the increase should not be limited to officers on active service.
The City would not make the retroactive payment to Puglisi, forcing him to
seek relief in federal court. The City complied with a federal court order
and informed the PFRS of the additional terminal leave pay that was owed
Puglisi. During the compliance process, the PFRS realized that Puglisi’s pension included an
increase of pensionable base salary reflecting his promotion to captain when, according to
the PFRS, his payments should have been based on his lieutenant’s salary. That
information was presented to the Committee on Creditable Salary, a committee appointed by
the Board of Trustees of the PFRS (Board). After reviewing the matter, the
Committee recommended to the Board that Puglisi could collect the additional salary as
captain but that the additional salary earned is not creditable in the PFRS
since he was on terminal leave from the day he was promoted as
captain through the date of his retirement.
Puglisi appealed the Committee’s recommendation to the Board, contending that he was entitled
to a pension that included the increased captain’s salary because he had settled
his case against the City with the “expectation that his promotion would result
in higher pension payments.” In a letter decision, the Board characterized Puglisi’s promotion
as “severance pay” and informed him that, although he could retain the previous
pension overpayments, the Board would reduce his creditable salary, thereby denying him pension
benefits based on a captain’s salary.
Puglisi appealed the Board’s decision before the Office of Administrative Law. An Administrative
Law Judge (ALJ) found that Puglisi’s promotion was not in anticipation of retirement
and ordered the Board to reinstate the higher pension payments. The Board rejected
the ALJ’s recommended decision, again finding Puglisi’s promotion was in anticipation of retirement,
and concluding that the promotion could not be considered in calculating his pension
payments. Puglisi appealed that decision to the Appellate Division, which affirmed the Board’s
decision.
The Supreme Court granted certification.
HELD: Because Puglisi’s promotion to captain was made primarily in anticipation of his
retirement, it must be disregarded in determining the amount of his pension benefit;
the appropriate amount of his pension should be calculated on the basis of
a lieutenant’s salary.
1. In determining an individual’s pension amount under the PFRS, the Board is
statutorily required to exclude certain types of compensation. One such type - individual
salary adjustments that are granted primarily in anticipation of the member’s retirement, pursuant
to N.J.S.A. 43:16A-1(26). The New Jersey Administrative Code, N.J.A.C. 17:4-4.1(a), also precludes salary
adjustments made in anticipation of retirement. (Pp. 4-6)
2. The Appellate Division correctly analyzed the issue when it noted that the
purpose of N.J.S.A. 43:16A-1(26) and the implementing regulations is to protect the actuarial
soundness of the pension fund by prohibiting the use of ad hoc salary
increases intended to increase the retirement benefit without adequate compensation having been made
to the pension fund. As such, any salary increase made primarily in anticipation
of retirement should be disregarded in determining the amount of the retiree’s pension,
even if that increase also served other objectives. (P. 6)
3. According to the Appellate Division, Puglisi’s promotion to captain and consequent salary
increase was an individual salary adjustment made primarily in anticipation of his retirement
within the meaning of the statute. Under Puglisi’s settlement agreement with the City,
he stopped working as a police officer and began receiving terminal leave payments
at the same time he was promoted. Although his promotion may have served
another objective – settling his cause of action against the City - the promotion
was nonetheless made in anticipation of Puglisi’s retirement. The correct pension calculation should
be based on a lieutenant’s salary. (Pp. 6-7)
4. The Appellate panel’s reasoning accords with the purposes and principles that undergird
the pension system and the panel’s conclusions are supported by the law and
facts presented. Puglisi’s remaining arguments are rejected for the reasons expressed by the
Appellate Division. (P. 7)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE and RIVERA-SOTO join
in this PER CURIAM opinion.
SUPREME COURT OF NEW JERSEY
A-
74 September Term 2005
IN THE MATTER OF
ANTHONY F. PUGLISI, JR.
Argued April 4, 2006 – Decided May 17, 2006
On certification to the Superior Court, Appellate Division.
Fredric J. Gross argued the cause for appellant Anthony F. Puglisi, Jr.
Susanne Culliton, Deputy Attorney General, argued the cause for respondent Board of Trustees,
Police and Firemen's Retirement System (Zulima V. Farber, Attorney General of New Jersey,
attorney; Michael J. Haas, Assistant Attorney General, of counsel; Christine R. Lucarelli, Deputy
Attorney General, on the brief).
PER CURIAM.
Petitioner Anthony F. Puglisi, Jr. served as a police officer for the Police
Department of the City of New Brunswick from 1965 until his retirement in
1999. In 1990, Puglisi, who was a lieutenant at the time, and several
other police officers filed a civil rights lawsuit in federal court against various
City administrators and elected officials alleging that those individuals engaged in political discrimination
in violation of two federal civil rights statutes and the New Jersey Constitution.
In 1998, Puglisi and his co-plaintiffs reached a settlement with the City as
a result of which Puglisi was promoted to the rank of captain and
immediately began a one-year terminal leave period at a captain’s salary. Puglisi also
agreed to retire at the end of the terminal leave period. Finally, Puglisi
received $30,000 in compensatory damages. The parties agree that the settlement did not
constitute an admission of wrongdoing by the City.
Puglisi retired from the police department as a captain on an age and
service pension under the Police and Firemen’s Retirement System (PFRS), N.J.S.A. 43:16A-1 to
-68. He received credit with the PFRS for the year of terminal leave
at a captain’s salary and thereafter collected retirement checks reflecting the higher salary.
Several months after his retirement, in a matter unrelated to Puglisi’s discrimination lawsuit,
an arbitrator settled the terms of a new collective negotiations agreement between the
City and the New Brunswick Policemen’s Benevolent Association. That agreement included a retroactive
increase in base pay for all supervisory police and covered the period that
Puglisi was on terminal leave. Although Puglisi was no longer on active service,
he was deemed entitled to the increase because the arbitrator found that the
increase should not be limited to officers on active service.
The City, however, refused to make the retroactive payment to Puglisi, thereby forcing
him to seek relief in federal court to obtain the retroactive pay. The
City complied with a federal court order and informed the PFRS of the
additional terminal leave pay that was due to Puglisi. During the compliance process,
the PFRS realized that Puglisi’s pension included an increase of pensionable base salary
reflecting his promotion to captain when, according to the PFRS, his payments should
have been based only on his lieutenant’s salary. That information was presented to
the Committee on Creditable Salary, a committee appointed by the Board of Trustees
of the PFRS (Board). After review of the matter, the Committee recommended to
the Board that Puglisi “can collect the additional salary as captain, but the
additional salary earned . . . is not creditable in the PFRS as
he was on terminal leave from the day he was promoted as captain
to the date of his retirement.”
Puglisi appealed the Committee’s recommendation to the Board, arguing that he was entitled
to a pension that included the increased captain’s salary because he had settled
his case against the City with the “expectation that his promotion would result
in higher pension payments.” In a letter decision, the Board characterized Puglisi’s promotion
as “severance pay” and informed him that although he could retain the previous
pension overpayments, the Board would reduce his creditable salary, thereby denying him pension
benefits based on a captain’s salary.
See footnote 1
Puglisi appealed the Board’s decision, and the case was transmitted to the Office
of Administrative Law. An Administrative Law Judge (ALJ) found that Puglisi’s promotion was
not in anticipation of retirement and ordered the Board to reinstate the higher
pension payments. The Board rejected the ALJ’s recommended decision, again found that Puglisi’s
promotion was in anticipation of retirement, and concluded that the promotion could not
be considered in calculating his pension payments. Puglisi appealed, and the Appellate Division
affirmed the Board’s decision. We granted Puglisi’s petition for certification,
185 N.J. 391
(2005), and now affirm.
Employees that meet the statutory definition of a police officer, firefighter, and other specific personnel receive pensions and other benefits under the PFRS. N.J.S.A. 43:16A-1 to -68. In determining an individual’s pension level, the Board is required by N.J.S.A. 43:16A-1(26) to exclude certain types of compensation:
“Compensation” shall mean the base salary, for services as a member as defined in this act, which is in accordance with established salary policies of the member’s employer for all employees in the same position but shall not include individual salary adjustments which are granted primarily in anticipation of the member’s retirement or additional remuneration for performing temporary duties beyond the regular workday.
[Emphasis added.]
N.J.A.C. 17:4-4.1(a) also precludes salary adjustments made in anticipation of retirement:
(a) The compensation of a member subject to pension contributions and creditable for retirement
and death benefits in the system shall be limited to base salary, and
shall not include extra compensation.
1. “Base salary” means the annual compensation of a member, in accordance with established
salary policies of the member’s employer for all employees in the same position,
or all employees covered by the same collective bargaining agreement, which is paid
in regular, periodic installments in accordance with the payroll cycle of the employer.
2. “Extra compensation” means individual salary adjustments which are granted primarily in anticipation of
a member’s retirement or as additional remuneration for performing temporary duties beyond the
regular workday. . . .
[Emphasis added.]
Puglisi argues that the Board improperly excluded his promotion to captain and resultant
salary increase on the basis that they were “primarily in anticipation of [his]
retirement.” N.J.S.A. 43:16A-1(26); N.J.A.C. 17:4-4.1(a).
See footnote 2
We find that the Appellate Division correctly analyzed
the issue when it stated:
The purpose of N.J.S.A. 43:16A-1(26) and the implementing regulations is to protect the
actuarial soundness of the pension fund by prohibiting the use of “ad hoc
salary increases intended to increase retirement allowances without adequate compensation to the [pension]
fund” in calculating pensions. Therefore, any salary increase made primarily in anticipation of
retirement must be disregarded in determining the amount of a retiree’s pension, even
if the increase was also designed to achieve other objectives, such as increasing
the overall amount of the employee’s compensation.
Appellant’s promotion to the position of captain and consequent salary increase was an
“individual salary adjustment” made “primarily in anticipation” of his retirement within the intent
of N.J.S.A. 43:16A-1(26). In fact, pursuant to appellant’s settlement agreement with New Brunswick,
he stopped working as a police officer and started receiving terminal leave payments
at the same time he was promoted. Consequently, appellant’s retirement from active duty
was not simply anticipated when he began receiving a captain’s salary but had
actually occurred. Although appellant’s promotion also may have served other objectives, such as
settling his claims against New Brunswick, conferring him with the status of a
captain and granting him higher terminal leave payments, the promotion was nonetheless made
in anticipation of appellant retiring and beginning to receive a pension after receiving
the one-year terminal leave provided under the settlement agreement. Therefore, the Board correctly
concluded that appellant’s pension should be recalculated on the basis of a lieutenant’s
salary.
[Citations omitted.]
We find that the panel’s reasoning accords with the purposes and principles undergirding
the pension system, and that its conclusion is supported by the law and
facts in this matter. We reject Puglisi’s remaining arguments for the reasons expressed
by the Appellate Division. The judgment of the Appellate Division is therefore affirmed.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE, and RIVERA-SOTO join
in this opinion.
SUPREME COURT OF NEW JERSEY
NO. A-74 SEPTEMBER TERM 2005
ON CERTIFICATION TO Appellate Division, Superior Court
IN THE MATTER OF
ANTHONY F. PUGLISI, JR.
DECIDED May 17, 2006
Chief Justice Poritz PRESIDING
OPINION BY Per Curiam
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
Although the issue was not raised in any of the prior proceedings, after
oral argument Puglisi submitted a letter to the Court claiming that the Board
had reneged on its decision to allow him to retain the previous overpayments
and subsequently garnished Puglisi’s pension payments to recapture those monies. That issue is
not properly before this Court and, in any event, its resolution is unnecessary
to our disposition. However, Puglisi may raise that issue in an appropriate filing
to the Board and, if it is shown that the Board indeed recaptured
those overpayments, then the Board should take appropriate action to honor any commitments
that it may have made.
Footnote: 2
Puglisi also argues that his pension should reflect the higher salary level
granted to supervisory police under the collective negotiations agreement. At oral argument, the
Board conceded that Puglisi’s pension payments should reflect the pay increase granted to
lieutenants. Therefore, that issue is not before the Court.