The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0344-23
MARGARET MCCORMACK,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES,
PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,
Respondent-Respondent.
___________________________
Argued September 11, 2024 – Decided October 3, 2024
Before Judges DeAlmeida and Puglisi.
On appeal from the Board of Trustees of the Public
Employees' Retirement System, Department of the
Treasury, PERS No. xx2444.
Margaret McCormack, appellant, argued the cause pro
se.
Yi Zhu, Deputy Attorney General, argued the cause for
respondent (Matthew J. Platkin, Attorney General,
attorney; Janet Greenberg Cohen, Assistant Attorney
General, of counsel; Yi Zhu, on the brief).
PER CURIAM
Petitioner Margaret McCormack appeals from the August 17, 2023 final
decision of the Board of Trustees (Board) of the Public Employees' Retirement
System (PERS) denying her requests for an administrative hearing and to
purchase service credit. For the reasons that follow, we reverse and remand to
afford petitioner the opportunity for a plenary hearing before the Office of
Administrative Law (OAL).
After being employed as an acting municipal clerk, petitioner was a
judicial secretary for the State of New Jersey in the Essex Vicinage beginning
in 2014. On May 25, 2021, the Division of Pensions and Benefits (Division)
issued two estimates of service retirement benefits to petitioner, at her request.
The first estimate, which contemplated a retirement date of September 1, 2021,
calculated a monthly retirement benefit of $633.72 based on nine years and eight
months of service credit. The second estimate, which contemplated a retirement
date of October 1, 2021, calculated a monthly retirement benefit of $640.39
based on nine years and nine months of service credit. Both estimates indicated
petitioner would not be entitled to life insurance because, as of those retirement
dates, she lacked the requisite ten years of service credit for the benefit. Both
estimates also included the following advisement:
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This Estimate of Retirement Benefits was prepared
based on current information available in our system
and projected information by your employer. Your
benefit may be recalculated in the future due to an audit
based on new information received from your employer
or for a discrepancy in your account.
Beginning September 9, 2021, petitioner went out on medical leave. She
signed a medical leave checklist indicating she would use accrued sick and
vacation time from September 9 through October 19, 2021. After that, she was
on unpaid leave under the Family Leave Act (FLA), N.J.S.A. 34:11B-1 to -16.
During her unpaid leave time, she elected to make premium payments to the
State to continue her health and dental insurance until she retired and obtained
Medicare coverage.
On November 24, 2021, petitioner submitted her application for
retirement allowance with an intended retirement date of February 1, 2022.
Based on that retirement date, on December 28, 2021, the Division quoted a
monthly retirement benefit of $677.02 and life insurance of $9,952.12, based on
ten years and one month of service credit. The quotation also contained the
same above-noted advisement.
On January 19, 2022, the Division issued petitioner a congratulatory letter
informing her the Board approved her application for service retirement
effective February 1, 2022. The letter further advised petitioner had thirty days
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after the effective date of her retirement or the date her retirement was approved
by the Board, whichever was later, to make any changes to her retirement.
Relying on the updated quotation and correspondence from the Division,
petitioner retired as of February 1, 2022. The payroll/benefits officer for the
Essex Vicinage issued to the Division a certification of service and final salary,
which verified petitioner resigned from employment on January 31, 2022 and
made her last pension deduction in pay period four of 2022, which began on
January 29. On February 28, 2022, the Division issued a statement confirming
petitioner's retirement date, monthly benefit of $677.02 and life insurance
benefit of $9,952.12.
On July 19, 2022, the Division issued a letter advising petitioner that a
post-retirement audit of her account revealed her monthly retirement benefit was
overstated and had been adjusted to $652.77. Days later, the Division issued
another letter explaining the reasons for the recalculation. The letter stated the
Essex Vicinage certification of service and final salary, upon which petitioner's
benefits had been calculated, was incorrect. The certification stated her
termination date was pay period three of 2022, which ended on January 28,
2022; however, her actual termination date was pay period twenty-two of 2021,1
1
The letter incorrectly stated pay period twenty-two of 2022.
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4
which ended on October 22, 2021, because petitioner did not make any pension
contributions after that date. Consequently, petitioner's total service credit
decreased from ten years and one month to nine years and ten months, which
resulted in a reduction of her salary and concomitant monthly retirement
allowance. In addition, because petitioner had only nine years and ten months
of service credit, she was not entitled to the life insurance benefit.
After months of exchanging correspondence about the recalculation, the
Division sent an October 27, 2022 letter advising petitioner was ineligible to
purchase any service credit because she did not submit a purchase application
within thirty days of her retirement.
The Board considered and denied petitioner's subsequent request to
purchase service credit, which she appealed to the Board. On August 17, 2023,
the Board issued its final administrative determination, which set forth the
procedural history, found no genuine issue of material fact, and denied her
requests for an administrative hearing and to purchase service credit.
The Board reiterated petitioner's benefits were recalculated because the
certification of service and final salary stated she had worked through pay period
three of 2022, but that information was incorrect because petitioner did not earn
a salary or make any pension contributions after pay period twenty-three of
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2021. Thus, petitioner's service credit was reduced to 118 months, which also
precluded her from receiving the life insurance benefit.
The Board considered petitioner's claim that she had relied on the
December 28, 2021 quotation of retirement benefits, but noted the quote
contained an advisement that it was based on the information then available and
was subject to recalculation. The Board also referenced the two retirement
estimates contemplating the earlier retirement dates of September 1 and October
1, 2021, which advised petitioner she had nine years and eight months and nine
years ten and months service as of those dates, respectively. The Board found,
based on that information, it would have been evident to petitioner she lacked
ten years of service credit when she went out on unpaid FLA leave after October
22, 2021.
Finally, the Board found petitioner was not entitled to purchase service
credit. Pursuant to N.J.A.C. 17:2-5.1(a), only active members of PERS are
eligible to submit an application to purchase service credit. Because petitioner
did not have an application on file at the time her retirement became due and
payable, she was ineligible to do so at a later date. Petitioner appeals from the
Board's final agency decision.
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Our review of decisions by administrative agencies is limited. In re
Stallworth, 208 N.J. 182, 194 (2011). An agency's determination must be
sustained "unless there is a clear showing that it is arbitrary, capricious, or
unreasonable, or that it lacks fair support in the record." Russo v. Bd. of Trs.,
Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011) (quoting In re Herrmann,
192 N.J. 19, 27-28, (2007)). "[I]f substantial evidence supports the agency's
decision, 'a court may not substitute its own judgment for the agency's even
though the court might have reached a different result . . . .'" In re Carter, 191
N.J. 474, 483 (2007) (quoting Greenwood v. State Police Training Ctr., 127 N.J.
500, 513 (1992)).
While we are not bound by an agency's interpretation of legal issues,
which we review de novo, Russo, 206 N.J. at 27, "[w]e must give great deference
to an agency's interpretation and implementation of its rules enforcing the
statutes for which it is responsible." Piatt v. Police & Firemen's Ret. Sys., 443
N.J. Super. 80, 99 (App. Div. 2015) (quoting St. Peter's Univ. Hosp. v. Lacy,
185 N.J. 1, 13 (2005)). "Such deference has been specifically extended to state
agencies that administer pension statutes." Ibid.
Petitioner urges us to reverse the Board's decision on several grounds.
First, she notes she relied on a third-party's representation to the Board, the
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incorrect certification of service and final salary, to her detriment. Because her
contemplation of retirement occurred during the COVID-19 pandemic, she did
not have immediate access to the human resources staff in the Essex Vicinage.
When she inquired about her length of service and pension eligibility, she was
advised the Division's system was updated quarterly and therefore did not
contain up-to-date information. Although she knew she lacked ten years of
service as of September 1 and October 1, 2021, she believed she remained in
active service status by making insurance payments while out on FLA; and
because the Division's information was only updated quarterly, she did not have
the ability to timely track her service credit.
Petitioner argues she also relied in good faith on the Division's December
28, 2021 calculation and the congratulatory letter upon her retirement, both of
which indicated she had more than ten years of service credit. Finally, she
argues that the fiscal health of the pension system would not be impacted if she
were permitted to purchase two months of service credit, because she was
eligible to do so at the time of her retirement.
The Division argues petitioner should have known that during her unpaid
FLA status she did not accrue service credit, and points to the notices in the
calculations advising petitioner the figures were subject to recalculation. We
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are unpersuaded that petitioner, upon receiving the December 2021
correspondence, was required to take additional steps to question the Division's
calculation.
In addition, petitioner took action in reliance on the Vicinage's
misrepresentations, to her detriment. She was advised of the error, which was
not her own, months after the deadline for her to purchase service credit had
passed. We have no reason to doubt petitioner's representations that, had she
known of the shortfall, she would have purchased the two months credit in order
to obtain the higher monthly pension benefit and, more importantly, the almost
$10,000 life insurance benefit.
We recognize the Board's "fiduciary duty to its members to protect the
financial integrity of the fund." Francois v. Bd. of Trs., Pub. Emps.' Ret. Sys.,
415 N.J. Super. 335, 357 (App. Div. 2010) (citing Mount v. Trs. of Pub. Emps.'
Ret. Sys., 133 N.J. Super. 72, 86 (App. Div. 1975)). However, the time
proscriptions contained in N.J.A.C. 17:2-5.1 are not embodied in statute. The
Board, in its discretion, could have relaxed the time bar and permitted petitioner
to purchase service credit after her retirement. See Handelson v. Bd. of Trs.,
Pub. Emps.' Ret. Sys., 193 N.J. Super. 223, 226-27 (App. Div. 1984).
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We are persuaded petitioner's arguments merit a hearing before the OAL.
At that hearing, the administrative law judge may consider testimony and
evidence from both parties to determine whether the equities here should permit
petitioner to purchase prior service credit. We take no position on the outcome
of that matter.
Reversed and remanded. We do not retain jurisdiction.
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