Eyers v. PUBLIC EMPLOYEES'RETIREM. SYS.

The judgment of the Court was delivered by

HANDLER, J.

Roger F. Eyers was the plumbing inspector for the Township of Parsippany-Troy Hills for 38 years, first on a part-time basis and, beginning about 1965, on a full-time basis. He was enrolled in the Public Employees’ Retirement System (PERS) effective January 1, 1955. At the end of 1975, he applied for regular service retirement at the age of 69. His application was granted by PERS, and he began receiving about $442 per month beginning in February 1976.

Eyers was indicted in 1978 on one count of misconduct in office and three counts of taking money unlawfully. The indictment alleged that between April 1974 and June 1975 he had accepted money in return for concealing plumbing violations. In May 1978, a jury convicted him of all four counts. The trial court merged the misconduct count into the three counts for taking money unlawfully and sentenced Eyers to a one-year suspended jail term, two years’ probation, and a $3,000 fine.

Even before his actual conviction, PERS notified Eyers that it was considering the suspension of his pension payments and that he had the right to a hearing on that issue. A hearing scheduled for October 1978 was postponed because Eyers was ill with cancer. He died on May 9, 1979, before the hearing ever took place.

*54Blanche T. Eyers, the petitioner in this case, is the 75-year-old widow of Roger Eyers. They had been married since 1950 and she still lives in the same five-room house that she and her husband had owned throughout their,, marriage. They had no children. She has not worked since her marriage and was, during its entirety, dependent on her husband. In January 1980, she was receiving Social Security benefits of about $432 per month. She was also receiving dividends from several bank investments, but the record does not indicate the amount of these dividends. Her husband’s estate had not yet been settled, but she had received life insurance payments of $2,500. She owns her house free of any mortgage and also owns a 1970 automobile in good condition. She stated that she had managed to pay all her bills and was not experiencing financial problems. She is covered by Medicare and additional health insurance and was not under the care of a doctor for any illnesses. The most important need Mrs. Eyers expressed was for financial security against serious illness in her old age.

Under the Option 2 type of retirement plan selected by her husband, see N.J.S.A. 43:15A-50, Mrs. Eyers, as the designated beneficiary, would receive a one-time insurance benefit of about $2,362 and an annual survivorship benefit of about $5,300. At its meeting in June 1979, the Board of Trustees of PERS determined that no benefits were due Mrs. Eyers because of her husband’s dishonorable service.

A hearing was held in January 1980 before an Administrative Law Judge. The judge concluded that although Roger Eyers’ service had been dishonorable because of his conviction, his widow should not be deprived of the survivor benefits. The Board of Trustees of PERS rejected the ALJ’s recommendation. It ruled that since Roger Eyers had not met the prerequisite of honorable service, his designated beneficiary, Blanche Eyers, had no survivorship rights.

On appeal, the Appellate Division affirmed, holding that the implicit requirement of honorable service continues for the *55duration of public employment. Because of his conviction for job-related crimes committed while still a public employee, Roger Eyers would not have been entitled to a pension. Therefore, his designated beneficiary could not claim survivorship benefits from nonexistent rights of the public employee. We granted the widow’s petition for certification. 87 N.J. 363 (1981).

We held in Uricoli v. The Board of Trustees, Police and Firemen’s Retirement Systems, 91 N.J. 62 (1982), also decided today, that where an employee commits a wrongful act while in public service, even if related to his public employment, forfeiture of all pension benefits is not automatically mandated unless the governing statute so provides. Rather, a balancing approach is necessary to determine whether there should be a forfeiture. We further explained the appropriate guidelines and standards to-be used in making the requisite determination. 91 N.J. at 77-78.

If we were required to address only the question of whether Eyers’ pension benefits payable directly to him were subject to forfeiture for his misconduct, it is arguable that his conduct was dishonorable to a degree that justifies the loss of his pension. Applying the Uricoli balancing test, the mitigating factors are that Eyers had compiled almost 35 years of seemingly unblemished public service and that his misconduct occurred at the end of his career. He was fully retired on service grounds and was receiving full service retirement benefits. The misconduct consisted of a series of offenses which, if considered separately, were not substantial. Furthermore, although subsequently convicted of a crime, he died before he could obtain a hearing before the pension board to address his right to continue to receive pension benefits. Countervailing considerations are that he was convicted of several offenses that were directly related to the performance of his official duties. These are indicative of a pattern of corruption in office. Moreover, Eyers’ offenses involved venality of motive, which is highly relevant as to the nature of the employee’s guilt. Uricoli, 91 N.J. at 77-78; Makwinski v. State, 76 N.J. 87, 92 (1978).

*56This case, however, presents factors which extend our inquiry as to the reasonableness of pension forfeiture beyond the circumstances addressed in Uricoli. The forfeiture doctrine sought to be applied does not involve the pension benefits that are being claimed or received by the errant employee. Rather, what is at stake are pension survivor benefits payable to the designated beneficiary, who was also the dependent spouse of the retired public employee. Consistent with the adoption of a flexible approach to forfeiture, we refuse to adopt a strict rule that automatically mandates that the survivor’s benefits are directly derivative from and dependent upon the pensioner’s and are, therefore, no greater than his pension rights. In the factual context of this case, as in all such cases involving the question of when forfeiture of benefits is appropriate, the proper approach is to balance and weigh all relevant considerations, with none being determinative. We therefore hold that, in this situation, several additional salient factors must be brought into the balancing equation.

As we noted in Uricoli, the pension forfeiture policy is penal in nature and has as its objectives the same considerations underlying all such schemes: punishment of the individual and deterrence, both as to the offending individual and other employees. 91 N.J. at 70. In the posture of this case, where the employee has died subsequent to both his retirement and the initiation of proceedings to cancel his pension, the goal of individual punishment and deterrence is simply not present. Admittedly, the goal of general deterrence remains. This, however, must be weighed against other concerns. Since the beneficiary who would otherwise benefit from the pension benefits is a dependent widow, other public policy considerations, present throughout the pension scheme, are clearly implicated.

Several statutes provide survivor benefits specifically for the surviving spouse, children, or parents of a public employee. See N.J.S.A. 43:15A-49 (allowance to spouse or other depend*57ents of a public employee who suffers an accidental death during the actual performance of his duties); N.J.S.A. 43:16-4 (pension benefits to dependents of public employee who loses life while on duty); N.J.S.A. 43-.16A-12.1 (widows’ and dependents’ pension; increased benefits); N.J.S.A. 43:16A-9, and 16A-10 (allowance to beneficiaries of pensioner who dies during the performance of his duties or while in service, whether accidental or not). The Legislature has thus made specific provisions for the financial protection of family members of public employees under certain circumstances. This evinces a strong legislative policy in favor of those most likely to be dependent upon a public employee. Other provisions demonstrate a particular solicitude to the needs of dependents of an employee. For example, while N.J.S.A. 43:1-2 expressly provides that pension payments to public employees convicted of crimes involving moral turpitude shall be suspended during the period of confinement, it also nevertheless permits payments to continue where necessary for the maintenance of the individual’s spouse, minor children or parents. See also N.J.S.A. 43:16-3 (pension benefits payable to dependent surviving spouse of employee who did not lose his life while on duty).

Although, as the State argues, the survivor benefits in dispute here could have been available under N.J.S.A. 43:15A-50 to whomever Roger Eyers had designated formally as his beneficiary, regardless of that person’s dependency upon the pensioner, the balancing test calls for an application of the relevant criteria to each case in light of the surrounding circumstances. Rarely will situations be identical. Here, we are presented with a designated beneficiary who is also a dependent widow of advanced years. It would be inequitable to disregard such a circumstance in the application of a remedy, forfeiture, which we believe must be flexible in order fully to effectuate the competing objectives that the Legislature seeks through its public pension program.

We acknowledge that the quality of dishonorable conduct of the deceased pensioner militates strongly toward forfeiture. *58Uricoli, 91 N.J. at 77-78. We are satisfied in this case, however, that this misconduct does not overcome the absence of a present need for individual punishment and deterrence. Nor does it, in our estimation, compel forfeiture in order to serve the need for general deterrence. The strong public policy in favor of providing for the dependents of public employees, who have been designated as beneficiaries, is fully applicable in this case. The total forfeiture of these pension benefits would be harsh and inequitable as to an innocent person and would not materially advance the purposes otherwise to be achieved by its application in other settings. Where total forfeiture is not required, however, pension benefits acquired subsequent to the acts of misconduct in office would not ordinarily be allowed. Uricoli, 91 N.J. at 79.

Accordingly, we reverse the judgment of the court below, and remand this matter to the pension board in order that it may recalculate the pension benefits due to Mrs. Eyers. Those benefits are to be adjusted to reflect the fact that Eyers was not entitled to receive pension benefits subsequent to the year during which he committed his misconduct in office.