N.J. Stat. § 43:13-35
There shall be established in all municipalities in which this article takes effect a pension commission of five members consisting of the mayor or other chief executive of the municipality, the chief financial officer of the municipality and two employees of the water department. These employees shall be nominated at a meeting or meetings held by the employees of the department in November and elected by them for a term of two years at a meeting held about the middle of December of each year at a date to be fixed by each body. The fifth member of the commission shall be a citizen who is not holding office under the municipality and shall be selected by the other four members of the pension commission. He shall hold office for the term of one year. In case of a vacancy for any cause, the commission may fill it until the next election.
The commission shall hold its first and annual meeting on January first, in each year, and elect its president from its members and a secretary from the employees of the department or anyone from outside of the department, as the commission sees fit. The commission may fix the secretary's compensation.
All retirements and pensions provided for by this article shall be made and allowed by the commission.
N.J.S. § 43:13-35