No Stomach for Real Pension Reform in New Jersey


In June, 2011 New Jersey made some modest reforms to the state’s pension system and also took away cost-of-living-adjustments (COLAs) on payouts.  At the time:

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COLAs will come back if the judicial system in this state works in any responsible manner (translation: 50/50 chance) essentially gutting those 2011 reforms and yet, as we found out earlier this afternoon, more needs to be done:

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For those who could not make it through the full video:

  • Nothing about what the new pension reforms will be
  • $52 billion in unfunded pension liabilities admitted to even after the 2011 reforms in New Jersey
  • Detroit is irresponsible
  • California politicians: “unacceptable conduct by people who like to call themselves leaders.”

The state of New Jersey is responsible (so to speak) for about 60% of the liabilities of the plans (their own employees plus teachers and judges) while localities make their mini-contributions for their own employees including local police and fire representing the other 40%.  Since the state has consistently under-contributed more than the localities the assets break down about 50/50 between state and local.

The New Jersey plans are being bankrupted yet a governor making 50% of an already understated ARC for plans that are actually 30% funded struts it as an accomplishment and, as to the pension payment, a Wall Street Journal story claims:

The pension payment was slated to be $2.4 billion under a state law Mr. Christie passed after tough negotiations with Democrats in 2011. The law required the state’s obligation to increase annually for seven years as a giveback to state workers, who would pay more into their benefits.

The administration’s revised amount of $2.25 billion reflected the recommendation of state actuaries, according to Mr. Christie’s advisers.

If so, shame on them all: the advisers, the actuaries, and the Chrisites.

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15 responses to this post.

  1. Posted by Tough Love on February 25, 2014 at 7:22 pm

    Quoting …”The revised amount reflected the recommended contribution made by state actuaries, according to Mr. Christie’s advisors. ”

    That is so absurd. How could the Plan actuaries actually “recommend” ANY contribution than is such a small percentage of the appropriately calculated FULL payment.

    I normally don’t blame the actuaries for this mess (as much as you do), but blame the Politicians (and the Unions), but any actuary that actually “recommended” a $2.25 Billion contribution has some explaining to do, and if it isn’t real convincing, be subject to the AAA’s disciplinary process.

    Reply

  2. Yawn, old wine in a new bottle or new wine in an old bottle however you want to look at it. He still didn’t lay out where the money will come from.

    Reply

  3. Posted by Anonymous on February 25, 2014 at 8:53 pm

    Well, dont forget the state does have many assets. Remember when Corzine was going to sell the NJ turnpike!? The state owns an awful lot of expensive property. Maybe they arent in as bad a shape as everyone professes.

    Reply

    • Posted by Anonymous on February 25, 2014 at 9:32 pm

      Exactly….stop making idiotic decisions like Xanadu, the ARC tunnel mess (NJ still paid $95 MILLION for NOTHING!), etc. and waste can be greatly reduced.

      Privatize it all…..Turnpike, Parkway, etc……but then the scumbag politicians couldn’t keep control of it rewarding their pals and family members or keep skimming from it

      Reply

      • Posted by Tough Love on February 25, 2014 at 10:12 pm

        Better yet, Privatize (i.e., OUTSOURCE) all CURRENT workers … no more employment relationship, and therefore ZERO future growth in pensions & benefits.

        Doing so would at least stop digging the financial hole we are in even deeper (as we now do EVERY DAY) via the crediting of FUTURE Service accruals for CURRENT workers.

        Reply

  4. Posted by Anonymous on February 25, 2014 at 9:52 pm

    John, why do you ignore all of the states assets?

    Reply

    • Posted by Tough Love on February 25, 2014 at 10:17 pm

      Because those assets (at least theoretically) belong to ALL of NJ citizens, not just to the 15% of NJ workers who are PUBLIC Sector workers.

      You deserve OUR assets no more than you deserve MORE of our cash … and you don’t. You want it to fund your grossly excessive pensions … not gonna happen.

      Reply

    • We’re not anywhere near the fix-it stage. We’re still trying to get politicians to acknowledge the full extent of the underfunding and decide whether to pay up or welch. Once we get there (if we ever do) and the decision is made to pay up then we get to the how part.

      Reply

  5. Posted by Anonymous on February 25, 2014 at 10:54 pm

    Is your name John? I didnt think so

    Reply

    • Posted by Tough Love on February 25, 2014 at 11:16 pm

      Why not at least choose Anonymous #1 or #2, etc, so the readers can distinguish between the various Anonymouses.

      Reply

  6. Posted by Anonymous on February 26, 2014 at 12:16 am

    If you are married which I highly doubt it, your husband for intents and purposes has been figuratively castrated.

    Reply

  7. Posted by Javagold on February 26, 2014 at 10:44 am

    The public takers throughout NJ have hit the many blogs everywhere this morning…..if I didn’t know better. I would say they are very very scared and are doing their best to control the narrative. Unfortunately for them, math does not care about narratives. This pension ponzi is unsustainable !!#

    Reply

    • Posted by Jomama on February 26, 2014 at 1:15 pm

      As a near retiree, I will tell you–yes I’m very scared. First the COLA (actually only 60% COLA) means that if I live 30 years after I retire, I could really be in trouble. I have $110,000 in contributions to my pension over 20+ years. At 8%, that would double every 9 years. That’s a lot of money the state owes me. And because I’m concerned, I’m going to leave earlier that I normally would and try and find another job, in another state. Because I will need to do that.

      Reply

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