Pledge for fairer pension system in New Jersey

Yesterday the Board of the New Jersey Taxpayers Association voted unanimously to seek the following pledge from New Jersey legislators, our membership, and the general public:



        WHEREAS New Jersey taxpayers cannot afford the exorbitant and nontransparent costs of maintaining benefits promised to public employees under the current Defined Benefit Plan structure sponsored by the state;  and

WHEREAS public employees are not guaranteed these benefits, as witnessed by the recent elimination of promised cost-of-living-adjustments on pensions; and

WHEREAS the New Jersey Taxpayers Association deems this action necessary and prudent;

NOW THEREFORE I pledge to support a fairer pension system for all public workers and taxpayers, beginning with the termination of the New Jersey State Defined Benefit Plans.

___________________          ____________

Signature                                 Date

___________________          ________________________

Print Name                              Office/Position

Please return to NJTA via:

Fax: (973)-783-0858 Or Mail: PO Box 78, Landing, NJ 07850

Our one-page proposal and rationale that will accompany this pledge (which I would invite you to sign onto) follows:

Terminate the New Jersey Defined Benefit Plans

  1. Freeze all benefit accruals immediately
  2. Employee contributions would go into a 401(k)-style plan
  3. Current shortfalls could be made up with taxes over some amortization period (as is being done now) or borrowing.

We Must Stop Digging.  The Hole Is Too Big

  • Politicians cannot be trusted to fund Defined Benefit plans properly
  • Taxpayers cannot afford to fund the current level of benefits as well as make up prior deficiencies
  • Employees need to know their contributions are not going into a Ponzi scheme
  • Retirees need assurance that their benefits will not be cut off without notice (Prichard, AL; Central Falls, RI)
  • Other states are moving toward the Defined Contribution concept (Alaska, District of Columbia,  Michigan, Minnesota,  Nebraska,  Utah, West Virginia)

Rationale for Change

  • Public workers need to get paid what their work is worth.
  • Taxpayers need to know that amount.
  • The current system encourages dishonesty in all parties when representing deferred-benefit costs

Without this change the over $100 billion in unfunded liabilities already in the pension system will continue to grow.  Terminating the Defined Benefit plan now would force that obligation to be dealt with while we still have viable options.  What we have now is a Ponzi scheme destined to blow up, though likely not in one noticeable mushroom cloud of a Madoff-blast but in stages with portions of promised benefits disintegrating while escalating taxes to pay for both current and past benefit promises force municipalities into bankruptcy.

32 responses to this post.

  1. Posted by skip3house on August 17, 2012 at 1:03 pm

    Great, all except making up the short fall. Mr. Bury had a better thought a time back using present funds best as can be to cover all employee contributions,(credit for pensions already collected) ,then hardships on a sliding scale with any left over dollars – or words like that.


    • Posted by Anonymous on August 17, 2012 at 1:13 pm

      Taxpayers should not be required to make up any shortfall. What’s done is done. Has anyone here who lost money in their investments or real estate have somebody make it up to them? They raped the system for all that they could with the support if their loyal followers. Time to salvage what’s left and move on grim there.


  2. Posted by brooklyn91941 on August 17, 2012 at 1:47 pm

    I have always been in favor of changing the current defined benefit structure. However making into a pure defined contribution structure won’t work either. Creating a retirement program that will give workers a supplemental pension to there own savings is the best approach. Most 401k programs do not provide the necessary training for people to manage their own accounts. Therefore most people will end up with little or no money. The olny thing wrong with todays defined benefit system is the promises made were ludicrous. A more modest program which required adequate funding, no tricky accounting gimmicks would provide workers with a retirement income that should meet their needs. Corporate defined benefit programs, when they existed, did that. The level of contributions would be set up so that both employer and employee must contribute.


    • Posted by Tough Love on August 17, 2012 at 2:14 pm

      While such a “modest” DB program would be fine, the trouble is that Unions/workers are pigs and Politicians can’t be trusted …. and that “modest” Plan will in no doubt morph into a MUCH bigger Plan over time. This cannot happen under a DC Plan.


      • Posted by not pc on August 17, 2012 at 5:45 pm

        Pigs are known as one of the most intelligent animals in nature.

        So if you’re saying public workers are pigs it’s actually a compliment. And they should be complimented for being smart enough and shrewd enough for getting everything they could have during contract bargaining. As for you, again you show your jealous contempt since you apparently did not have the smarts or foresight to obtain a secure public job with a pension & benefits. ENVY Much????

        Apparently you have all day to post and reply to blogs so I’m assuming you are either out of a job (not a surprise) or not a very consientious worker, taking advantage of your employer when you should be tending to tasks.

        From what I’ve seen posted in the past you work for or worked in the Insurance industry……now there’s something to be proud of…..surely the Insurance cos. don’t scam people and are above reproach……..don’t make me laugh!!


        • Some years back, running for NJ Leg, I told interview committeee from NJEA that system was about broke. No concern shown by them and their reply was ‘better to just have a promise than nothing’.
          Shows mentallity of those we are still trying to help.


        • Posted by Tough Love on August 18, 2012 at 9:40 am

          Missed your comment yesterday.

          Oink …. sounds like you are a member. Comeuppance is coming, greed HAS consequences.


  3. Posted by Anonymous on August 17, 2012 at 1:48 pm

    John: I can’t undertand how Trenton NJ allows these cretins to drain the NJ Treasury Pensions of Millions of dollars. State County and Municipalities are to blame for this.
    If you work 10 years you should be vested not three years or five years but 10 years.
    Everything seems to slip through the cracks here in NJ. Politicos are to blame. I hope the 35 year PERS employees have no trouble collecting their pensions if they have problems I hope they have good lawyers.


  4. Posted by Anonymous on August 17, 2012 at 1:52 pm

    John, so what if they sign any pledge, since when do politicians live up to their word even if it is in writing. These lawyers will find a way out. There is always a way out.


  5. Posted by Tough Love on August 17, 2012 at 2:07 pm

    The last sentence is a very good summary of of where we are and what will happen if the current course is not changed.

    As to the Pledge Form, I see some discrepancies/issues:

    (1) Number 3. above says “Current shortfalls could be made up with taxes over some amortization period (as is being done now) or borrowing.”, while the 2-nd bullet say “Taxpayers cannot afford to fund the current level of benefits as well as make up prior deficiencies”. So what is this saying ……. that Taxpayers cannot afford to make-up prior shortfalls, but should anyway ??? Certainly a significant portion of this underfunding should be paid for by the active and retired workers ….. the level of benefits “promised” were never justified and granted in anything but an arms-length negotiation with Taxpayer interests in mind.

    (2) The 1-st bullet under Rationale for Change says “Public workers need to get paid what their work is worth.” While not perfectly clear, this seems to suggest that current Public Sector “cash pay” is now less than their Private Sector counterparts. Not true per the US Gov’t BLS studies. Public and Private Sector cash pay is very near equal and the excessive Public Sector pensions and benefits are simply an unnecessary and unjustifiable extra that must be eliminated.

    Lastly, while a different subject, the retiree healthcare promises to Public Sector workers must end. Private Sector workers do not get such benefits and should not pay for them for Public Sector workers.


    • To me this is a start that seeks to get honest numbers in front of people who can do something about it. As it is now, 99.9% of people don’t have a clue as to the real cost of these benefits because of all the self-serving lies they’ve been told which is why a mechanism like Defined Benefit plans doesn’t work without independent agents – and those aren’t going to come.

      When the real cost is admitted to then we have the debate about how to either pay for it or renege on it.


      • Posted by Anonymous on August 17, 2012 at 2:24 pm

        John, some say the banking system is planning for a collapse right after the election. Do you believe this will happen? If not you may be in denial.


  6. Posted by Anonymous on August 17, 2012 at 2:59 pm

    Oh boy is TL in for a big shock. We all our


    • Posted by Tough Love on August 17, 2012 at 3:13 pm

      I’m not on the receiving end of Public Sector pensions & benefits. No shock for me.

      Likely you are the one in for the big shock … in the form of a well-deserved haircut to your pension and retiree healthcare “promises” (you know, the “promises” made by officials bought with your Union’s money).


  7. Posted by Anonymous on August 17, 2012 at 3:22 pm

    TL you quite a fool if you dont think the banking system is headed for collapse and quite soon indeed. Keep you head buried in the sand. Keep thinking that pensions are your biggest concern. When it comes to the world economy including the US, something wicked this way comes.
    i dont blame you for not believing that the economy is headed for certain collapse, it is way too painful for you to face the truth.


    • Posted by Tough Love on August 17, 2012 at 4:42 pm

      That’s pretty funny, a Civil Servant (of your mentality) who thinks he’s an economist.

      I’m certainly a great deal closer to “the banking system” than you are, and while we indeed got close in 2008, that was completely driven by fear and uncertainly. That is extremely unlikely to happen again. And, we are MUCH better prepared today for something that even approaches that again.

      What will happen will be global stress, economic disruptions, and civil disobediance as the world adjusts from a socialist “give-me give-me, I’m “entitled” structure) to one in which your own earnings and personal efforts pay for a greater share of your life’s expenses (both while working and when retired).

      Downward Public Sector pension and benefit “re-sets” will certainly be part of that adjustment process.


  8. Posted by Javagold on August 17, 2012 at 5:31 pm

    just cap or (tax) all pensions so no one takes more than $40,000 a year home


  9. Posted by Eric on August 17, 2012 at 5:35 pm

    Tough Love:
    I disagree with you that we are “MUCH better prepared today” than what has happened in 2008. We have only piled on enormous amounts of debt to bail out the corrupt and the incompetent bankers and have absolutely nothing positive to show for it. We have devalued and debased the dollar in the process.
    The only real difference between the US and Greece is that we can print money that other people have to use, otherwise, we call for a “regime change” and bomb the hell out of them.
    Remember the gold dinar in Iraq and in Libya?
    Case closed.


    • Posted by Tough Love on August 17, 2012 at 6:49 pm

      Eric, what you say is true, but it really has little to do with “a collapse of the banking system”. What you’re describing is the driver for what I described as …. “global stress, economic disruptions, and civil disobediance as the world adjusts…”

      Even if Europe blows up financially (which may yet happen), the “banking system” will survive ….. likely with even lower interest rate for a time.


  10. Posted by Anonymous on August 17, 2012 at 6:24 pm

    TL is a in denial. she has no choice. Now she claims she is an insider when it comes to the banking system. TL is full of herself but she is gong down with the ship just like we all will


  11. Posted by Anonymous on August 17, 2012 at 7:12 pm

    TL is like a donkey chasing a carrot! I know we are going to lose everything. Yon on the other hand think you are safe. bwahahahahahahahah. fool


    • Posted by Tough Love on August 17, 2012 at 7:18 pm

      Like I said yesterday ….

      Classy guy ….. you must be one of the “best and brightest” the Public Sector always talks about.


  12. Posted by Anonymous on August 17, 2012 at 7:16 pm

    The only good think is that she will be the first rat to jump ship into the water.


  13. Posted by Eric on August 17, 2012 at 10:48 pm

    Beam us up. Quickly. Energize.
    I cannot even comment about these posts.


  14. Posted by gadffa on August 18, 2012 at 3:31 am

    Prichard, AL; Central Falls, RI are too small to be worth mentioning, about 20,000 people each.

    My personal guess is that as more and more people are dropped from the civil service it will get harder and harder to justify putting money into the pension scheme.


  15. Posted by MJ on August 19, 2012 at 7:39 am

    It always starts small, small is the beginning of the end and then it starts to build. Since Central Falls, larger cities have file for bankruptcy–Harrisburg, San Bernardino, Stockton, many larger cities on the verge such as Detroit, LA,—-we are experiencing the beginning of the end. How it will all play is anyone’s guess. Just wait.


    • Posted by Tough Love on August 19, 2012 at 6:31 pm

      If the 2 big Bond insurers win their fight with CalPERS (re the Stockton, CA bankruptcy) that the pensions (of active workers and those already retired) must take a haircut as well as Bondholders, the floodgate of bankruptcy filings will open because it will be clear (everywhere) that Federal Bankruptcy Law trumps State Constitutions and State Contract Law …. and a REAL solution is finally possible.


    • Posted by Tough Love on August 21, 2012 at 1:37 am

      Hard to go against Buffet. Wonder how long till a final resolution of the 2 bond insures fight with CalPERS re Stockton CA bankruptcy ….a HUGE issue re Municipal bonds.


  16. […] address to focus on the proposed reform and here are the key two minutes: . Sounds familiar (from three years ago): . . Much more on this throughout the week including a practical example of how this could cost […]


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