Politicians Cashing In

“I want to be buried in Hudson County so that I can remain active in politics.”
Governor Brendan T. Byrne

Governor Byrne began receiving a pension from the New Jersey Retirement System (NJRS) on April 1, 1984. He died on January 4, 2018 at age 93.

According a listing of retirees in the NJRS who had been New Jersey governor or whose last employer was either the Senate or the General Assembly* there are 302 politicians receiving total annual payouts of $5,479,150. As of June 1, 2018 Brendan Byrne is still one of them.

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NJ Retiree Update – June, 2018

Based on state pension data updated through May, 2018 for new retirees and June, 2018 for all others (and after eliminating those listed with $0 benefits) I get 335,940 retirees getting annualized pensions of $10,928,305,817.

Feel free to look over the spreadsheet as sorted by annual pension but what strikes me:

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Sweeney Pension Path Ends With Hiring an Actuary

New Jersey Senate President Stephen Sweeney visited Tom Moran at the Star Ledger to explain the pension reform recommendations that his Economic and Fiscal Policy Workgroup came up with. First question, how much would it save?
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First off, a 401(k) is not a Cash Balance Plan. Two completely different animals that a lot of lay people are confused about*.

What we have here is another instance of a bunch of bureaucrats proposing ‘solutions’ they ran across on the internet or that are palatable to their campaign-donor constituency and then looking for an ‘expert’ to validate their whims.

Though, when asked to finger a villain, Sweeney did not hesitate.

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Fixing NJ Pensions

Scott Shepard, author of a new study on New Jersey pensions published by the Mercatus Center, had an opinion piece in nj.com where he proposes these “painful fixes”:

Next comes the harder part. The state should then figure out — using theoretically sound rates of expected investment return and without the all-too-common accounting gimmicks — exactly how big the rest of the bill is for work already performed.

If it’s too big to realistically pay, then New Jersey will need — finally — to do the politically ugly but financially necessary thing: start cutting already-earned pension benefits.

There are relatively equitable ways to do this. Set an absolute cap of perhaps $100,000 or $125,000 per year, indexed to inflation, on benefit payments. Cut benefits that pay current or future retirees more than they earned in base salary while working. Reduce “spiked” benefits. Do this while completely safeguarding benefits below a certain comfortable-retirement threshold.

There is precedent for New Jersey cutting benefits arbitrarily and illegally so applying a cap is a logical next step. However, based on updated retiree payout data through June, 2018, Mr. Shepard’s suggested cuts will not be nearly enough.

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Hectoring Works

Occasionally I start a blog intending to impart a specific piece of information but then wind up stumbling upon a larger truth which, in the case of a countywatchers blog I just put up, turned out to be how the machine always wears you down. Nothing to do with New Jersey pensions or multiemployer benefit cuts so feel free not to click in.

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Saving Community Newspapers – From Funding Pensions

Community newspapers pine for the 1990s when classified advertising revenue made them cash cows and they all had fully funded Defined Benefit plans using an 8% funding interest rate and 30-year amortizations of any unfunded liabilities.

Congress can’t bring back the revenue stream but they are trying to bring back the 80’s funding rules according to a story in The Virginian-Pilot:

A bill known as the Save Community Newspaper Act of 2018 was introduced last month by Rep. Erik Paulsen, R-Minn., who said it would help independent newspapers “find their financial footing.”

What it will really do is put these single employer plans on the path that self-imposed funding rules have taken multiemployer plans.
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Breaking News: Two More Multiemployer Plans To Cut Benefits

According to the MPRA website last week there were five multiemployer plans that had received approval letters to cut benefits:

Today two more officially joined the parade:

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