Having a record number of teachers, police officers and other public employees retire would historically be good news for the funding of a public pension plan as older higher-paid workers leave the system to be replaced by younger, lower-paid ones. Not in New Jersey.
That’s because New Jersey is not running a pension plan where a retiree would have had money set aside to draw upon but a ponzi scheme where decades of understated, missed, and pilfered contributions have left the plan severely underfunded and on the brink of defaulting unless the Chinese fancy our Turnpike.
16,400 retirees over eight months getting annual benefits of $638 million projects to an extra billion dollars each year in payouts on top of $7 billion+ already being paid out. With $68.1 billion left in the fund (including approximately $30 billion of the employees’ own contributions) it’s only a matter of time – about four years.
Posted by Tough Love on October 19, 2010 at 1:51 am
So What happens when the money runs out (or as we get real close) ?
Posted by burypensions on October 22, 2010 at 8:05 pm
They’ll figure out new ways to justify their thievery for, on average 5 years, and then go Prichard:
http://www.wkrg.com/financial/article/no_pension_checks_for_6th_straight_month/768374/Mar-03-2010_1-23-pm/
Posted by meep on October 25, 2010 at 5:47 pm
I agree. If the cashflow is too dire, the benefits will not be paid.
So – John – are you not at nj.com any more?
Posted by Muni-man on October 30, 2010 at 1:04 pm
John, good to see you blogging again. Didn’t realize you had a problem on the other site.
Nov. should be interesting. The Dems appear to be in disarray and it looks like Oliver may get replaced. They’re gagging over CC’s 2% hard cap and they’re probably totally apoplectic over his pension reform measures. After next week’s GOP gains though, the Dems might start fearing for their own political lives next Nov. if they don’t play ball with CC since all of ‘em are up for re-election. Should be interesting theater.
Dec. should kick off the official beginning of the Federal ‘Entitlement Wars’ when BO’s Fiscal
Responsibility Commission delivers its recs. to Congress on 12/1. Some of the rumored recs. I’ve been reading about say full SS benefits will be pushed back to age 70, the home mortgage deduction will be greatly reduced and possibly eliminated, and means-testing may start to be used for a lot benefits. Can’t wait to see how Congress handles this bomb.
Posted by burypensions on October 30, 2010 at 1:39 pm
Thanks, muni-man and, outside of the commenters back there, I think I’m in a better place.
I’ll be following all that but for now I’ve got this project where I’m studying the real situation with state
pension plans by pulling off data from all their actuarial reports (about 120) and getting a real
funded ratio instead of the phony ones that have been floating around.
Should be done by this weekend and next week I’ll get my email lists together and launch this thing properly.
It’s good to hear from you.
Posted by Muni-man on October 30, 2010 at 2:56 pm
JB, I look forward to your analysis. IMHO, you do this better than anyone else out there. There’s so much pure garbage being published about this pension funding crisis that it’s really refreshing to come across figures based on reality instead of ether.
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