Public Employee Pension Applications May be Reopened by Beneficiaries, Even if Those Applications Have Not Been Approved

Minsavage v. Board of Trustees, Teachers’ Pension & Annuity Fund, ___ N.J. ___ (2019). This per curiam opinion addressed the question “whether a widow can modify the retirement application of her recently deceased husband, who was a member of the Teachers’ Pension and Annuity Fund (Pension Fund), even though his application was never approved because he selected a retirement option for which he was ultimately ineligible.” The Board had ruled against the widow (“Christine”), the plaintiff here, and the Appellate Division affirmed. The Supreme Court, however, unanimously reversed.

The decedent (“David”) had been a high school math teacher. He had taught for 24 years and nine months when he died of pancreatic cancer, which had been diagnosed eight months earlier. Two months after the diagnosis, he selected the “early retirement” option on his retirement application. But that option required 25 years of service, and his death from cancer deprived him of those last few months that he needed.

David’s family would have been entitled to more benefits if he had opted for “ordinary disability” rather than “early retirement.” His widow thus tried to modify his election after his death. As noted, the Board and the Appellate Division ruled against her.

The Supreme Court began by noting that a key objective of the pension system is “to induce able persons to enter and remain in public employment, and to render faithful and efficient service.” Thus, pension statutes are to be liberally construed “in favor of the persons intended to benefited thereby.”

Citing prior Supreme Court and Appellate Division cases, the Court stated that “the Board may honor a pensioner’s request to reopen her retirement selection upon a showing of good cause, reasonable grounds, and reasonable diligence even after it is due and payable.” There was also authority under which “beneficiaries have been allowed to change the retirement application of a deceased member of the public pension systems.”

Nor had any past case limited the right to modify or reopen a pension application to cases in which that application had been approved. “To the contrary, a retirement application, whether approved or not, may be reopened and modified upon a showing of good cause, reasonable grounds, and reasonable diligence.”

Christine argued that David had mistakenly selected “early retirement” and was prevented by his subsequent incapacity from changing his election. The Board’s rejection of her position was unreasonable.

The Court held that “the interests of justice and a liberal reading of the applicable pension laws require that Christine be given an opportunity to present evidence and prove at a hearing that she exercised reasonable diligence and seeks to modify David’s retirement selection for good cause upon reasonable grounds. Such proof must include evidence that David qualified for ordinary disability retirement and that, but for his incapacity, he would have changed his retirement selection to ordinary disability.” The matter was remanded to the Board for further proceedings.

The particular facts were no doubt important to the result. The Court observed that “the Board would have the Minsavages receive only a nominal benefit from the Pension Fund to which David contributed for 297 months,” an inequitable result apparently occasioned only by his death from an aggressive cancer. Rule 2:12-4 allows the Court to grant certification “if the interest of justice requires.” This may have been an instance in which the Court took up an appeal for that reason.