An Assurance for New Jersey Public Workers on their Pensions

The Christie administration warned potential investors earlier this month that future pension payments — estimated to grow from $1.7 billion next year to about $5.5 billion by 2018 — will drain resources and “create a significant burden on all aspects of the State’s finances.”

“No assurances can be given as to the level of the State’s pension contributions in future fiscal years,” the prospectus reads.

Yet when pension ‘reform’ was passed in 2011 assurances were made and are still being made.

Pushing Public Employees to Retire

School superintendents are by far the highest paid government employees in New Jersey, making even more than heads of some Utilities Authorities, though they do need to come to work occasionally.

Governor Christie makes $175,000 in salary so in 2010 he imposed that as a prospective cap on superintendent salaries.

In an article today, a purported blowback example is provided in the retirement of Judith Wilson who has 35 years of service with a salary of about $225,000 and is retiring on a pension of $144,000 at age 56 rather than swallow a pay cut.  What that writer is missing…..

Not the Path but the Driver

Yet politicians’ current approach to evading such opposition—that of adopting incremental reforms while repeatedly deferring liabilities—is no longer viable.

The structural defects of defined-benefit plans, as well as their implication in a system of decision making impaired by political considerations, necessitate a wholesale shift from defined-benefit to defined-contribution plans.

Fixing the Public Sector Pension Problem: The (True) Path to Long-Term Reform

The quotes come from a well-reasoned paper by Richard C. Dreyfuss setting out the problem, debunking faux solutions, and offering a five-point plan for comprehensive reform that I too advocate as obvious. The problem is not with the proposed reforms, which are viable, but with those who would be charged with implementing them, like this guy:

Defining Actuarial Soundness (a/k/a Making Shit Up)

The Pew Center released a report comparing the pension and OPEB funded status of 61 of the nation’s largest cities in which they continue to insist that 80% funding is fine regardless of what the American Academy of Actuaries might put in an issue brief.

However, in doing research on the study’s numbers, I came across what may be the most outrageous definition of actuarial soundness extant.

New Jersey Pension Reform – A Model for America?

Keith Brainard of NASRA didn’t think so, saying that “New Jersey would make a terrible place on which to base pension policy”:
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whereas our governor in the 30 seconds he devoted to public pensions in his state of the State address sees what New Jersey is doing as a “Model for America”:
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He might be right, but is that a good thing?
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Which NJ Governor Hurt the Public Pension System Most

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I have my favorite:

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:

Explaining the Public Pension Accrual Freeze Idea

William Baldwin of Forbes wrote of states in a death spiral and, when questioned by Stuart Varney on how states could slow down the spinning, focused on a solution that we at the NJTA had already proposed:

No substitute for ‘whores’

I choose to filter myself here and often thesaurus.com is helpful but when I’m giving a speech I only have about three seconds to decide on my next word before I lose the confidence of the gathering.  So it was last Thursday when I spoke at a New Jersey Taxpayers’ Association meeting and I needed a word to sum up the role of actuaries in the public plan funding fiasco:

Christie punted on real public pension reform in NJ – and so did Sweeney

I moderated a Q&A at the general membership meeting of the New Jersey Taxpayers’ Association last night regarding pension reforms needed in New Jersey focusing on the deceptions to which the current system is susceptible.  It lasted an hour and rather than posting the whole thing (which none of us are going to sit through when it’s only a one-shot of me) I will excerpt points made.

First up is Neil Coleman, NJTA trustee and legislative liaison, speaking about a meeting he and a group of outside pension experts had with Christie administration people when pension reforms were being hatched: