Tradition of New Jersey governors padding their own pensions


Pity the actuary who has to value the true cost of New Jersey’s defined benefit pension promises when these three spiking games are considered:
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Here is the back-story on the first example presented in the video:

Jim McGreevey, our gay-American former governor, was as of 2011 on the payroll of Kean University with a salary of $8,100* which apparently qualified him for accruing service credits in the Public Employees Retirement System (PERS).  As governor he would have been pulling down larger salaries upon which his eventual benefit will be based.  Looking at the retiree benefits for former governors we find:

These were the people charged with overseeing and, lately, fixing the state pension system though their talents and predilections seem to lie more in leeching off of it.

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* Per my reading of the PERS handbook (page 10 of 60) for Tier 3 he would need to make $7,800 to maintain membership.

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4 responses to this post.

  1. Posted by Tough Love on December 11, 2012 at 6:31 pm

    In Private Sector Plans, ERISA allows corporations to refuse to grant one year of service credit to a participant who hasn’t accumulated 1000 hours of paid service in that Plan year. That’s a substantive amount of service and would eliminate the Public Sector gaming-of-the-system such as meeting the very minor requirement of $7500/yr.

    Part time Public Sector workers should not earn service credit. This game is played by town councilmen and similar political ilk throughout NJ … the same people would have to vote to change it. Slim chance.

    Unfortunately, many politicians are more interested in what they can get FROM the system, than what they GIVE.

    Reply

  2. Posted by eatingdogfood on December 12, 2012 at 8:32 pm

    Democrats + Unions = BANKRUPTCY !!!

    Reply

    • Posted by Larry Littlefield on December 12, 2012 at 9:44 pm

      The example in this case is not unions. It is management.

      In the debated over lower pension benefits for future workers in New York, one of the Governor’s proposals was to eliminate pension spiking and basing benefits based on salaries only. Well the unions won that one, and pension spiking will still be allowed for future workers.

      But was the win good for the workers? Who has the most control over their own schedules? And is thus in a position to take more out, leaving less to be divided up later?

      Reply

      • Posted by Tough Love on December 13, 2012 at 5:45 am

        NY is in a rather unique situation pension-wise, with near fully funded Plans and with pension contributions getting first dibs on tax collections.

        That’s sure going to strangle NY’s budgets in a few years. And with enough money in the current post for at least 20 years of payment, the workers have little reason to compromise (unlike many other states/cities that are significantly underfunded and at a larger risk of more near-term pension haircuts).

        Doesn’t bode well for NY, it’s taxpayers, or citizens expecting services for their tax dollars.

        Reply

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