Pension Study Commission Members Announced

I predicted they would be a combination of five patsies and quislings but apparently Governor Christie could not fill out that roster so he settled on some professional people but raised the number to nine so as to assure that his original intention (having this commission rubber-stamp whatever study the Divisions of Pensions is almost done with) will play out though not through blind obeisance as originally intended but through internal bickering which this commission is certain to have plenty of.  The members, per the press release:

  • Thomas J. Healey, CFA, Partner, Healey Development LLC, former Asst. Sec. of the US Treasury for Domestic Finances under President Reagan. Mr. Healey will coordinate the work of the Study Commission.
  • Tom Byrne, managing member and founder of Byrne Asset Management; vice chairman of the New Jersey State Investment Council
  • Raymond Chambers, philanthropist, UN Special Envoy for Financing the Health Millennium Development Goals, founding chairman of the NJ Performing Arts Center
  • Leonard W. Davis, CFO, SCS Commodities Corporation, manager of private equity, technology, and natural resource companies
  • Carl Hess, Managing Director of The Americas for Towers Watson and former Managing Director of Towers Watson Investment business
  • Dr. Ethan Kra, Ph.D., Ethan E. Kra Actuarial Services, specializing in analyzing economic and accounting implications of financing strategies and vehicles for employee and executive benefits
  • Ken Kunzman, Partner, Connell Foley, co-Counsel since 1978 of the Pension and Welfare Funds for Locals 472 and 172 Heavy and General Laborers Fund of New Jersey
  • Larry Sher, October Three Consulting, Partner, consulting actuary and member of the senior leadership team for a full service, actuarial, consulting and technology firm that is a leading force behind the reemergence of defined benefit plans across the country
  • Margaret Berger, Mercer, consulting actuary and Principal for the Retirement Practice of a global consulting leader in talent, health, retirement, and investments, with specific expertise in defined benefit plans, nonqualified plans and retiree medical and life insurance plans

Whether this group is truly non-political is impossible to tell from their bios but what this group of

  • four private-plan actuaries
  • three investment advisers
  • one lawyer; and
  • one philanthropist/accountant

appear to be is devoid of any practical experience in working with public sector pensions.  I doubt any of them have ever developed a DROP plan or signed off on open amortization or gotten a call from a governor two weeks before a budget was due ordering them to revise the valuation they did two years ago since income tax revenue came in lower than expected and the state can’t make its contribution.

I predict:

  • We will get a report released the Friday before Labor Day
  • Outside of the first few title pages it will mirror the report “the Department of the Treasury and its Division of Pensions and Benefits are in the process of completing [about] an exhaustive review of potential public employee entitlement reform proposals for my [Governor Christie’s] review”
  • At least two commission members will disassociate themselves from the report
  • It will make the bridgegate whitewash report look like money well spent

 

 

 

28 responses to this post.

  1. Posted by Anonymous on August 8, 2014 at 8:48 pm

    John, this is utterly ridiculous and a total waste of time. Dont you remember when Dick Codey who took over for McGrevey put together a very similar study commission? That was in 2004 or 2005 I believe. Same old crap, nothing accomplished.

    Reply

  2. Posted by hondo on August 8, 2014 at 11:12 pm

    I would have like to hear that John Bogle from “Vanguard” step up to the plate. All these people going to do is line their pockets with recommendations potential high fees for their company. You are right John Christie pick who he wanted for this committee! Total conflict of interest.

    Reply

  3. Posted by Eric on August 8, 2014 at 11:30 pm

    John:
    I read the report, several times, that Jon Corzine had prepared. It was so long ago, and I believe it is just sitting on a shelf. If my memory serves, one member, on that report, was named Murphy from Goldman Sachs. I vaguely recall some of his ideas.
    What is your more detailed prediction about this one, and any possible actions taken.
    Thanks,
    Eric

    Reply

    • I googled pension reports in NJ and couldn’t find any though they would likely be no more than curiosities now..

      I think the commission will go after health benefits since those don’t have legal protections. Outside chance of recommending freezing DB accruals but not that likely since the people who will dominate this commission are actuaries who have a prejudice FOR defined benefit plans.

      Reply

      • John–try the Division of Pensions website. It’s been there since it was issued.

        That said, Governor Kean also commissioned a study. It recommended a hybrid pension plan. The employer would guarantee the formula benefit while the employee would fund an Investment Plan. The unions, particular the New Jersey Education Association killed it out-of-hand. As the world turns.

        Reply

  4. Posted by Anonymous on August 9, 2014 at 5:27 am

    John why is a contract negotiated by the union with the state not legally protected? Every 4 years a new contract is negotiated and you are saying this done with out any legal protection?

    Reply

  5. Posted by Javagold on August 9, 2014 at 2:18 pm

    Dog barks at pony. Pony kicks at dog. Dog wears a tutu. Pony runs around ring. The crowd loves it.

    Reply

  6. Posted by Anonymous on August 9, 2014 at 3:28 pm

    The crowd loves the entertainers and the entertainers love the crowd because neither got any love from their parents.

    Reply

  7. On May 4, 1982 Governor Kean signed Executive Order 7 establishing the ‘Pension Systems Review Commission”. The Findings urged the establishment of a Hybrid pension plan. 32 years later it looks like the Legislature will give it a shot.

    Reply

    • Posted by Tough Love on August 10, 2014 at 11:32 am

      If implemented, applied to all CURRENT workers (for their FUTURE service) and costed-out (using reasonably conservative assumptions) to provide taxpayer-funding EQUAL TO (but not greater than) that granted Private Sector workers by their employers, NJ’s pension systems MIGHT have a chance at survival.

      But knowing the mindset and self-interest of our politicians, and the extreme greed of the Public Sector Unions/workers ….. there is far LESS than a snowball’s chance in hell of implementing such a Plan.

      Reply

  8. Posted by hondo on August 10, 2014 at 11:52 am

    Like always wall street will line their pockets charge us high fees then walk away! Like TL said “greedy” then taxespayers on the hook for bailout!

    Reply

  9. Posted by bpaterson on August 10, 2014 at 12:31 pm

    only prediction I have is that they will request additional time for the study. JB1 have you met any of these guys?

    Reply

    • Met Tom Byrne when he asked me to speak to some other committee he was chairing a few years ago and I know Ethan Kra from his frequent comments/questions at Enrolled Actuary meetings.

      Tom Byrne I thought would be on it but Ehtan Kra was a complete surprise and he could well be a stumbling block to the intended goal of the committee (lowering the state’s contribution). I see Kra either dominating this committee or leaving it.

      Reply

  10. EK is missing 5 of the early years on his resume… anyone know where he spent them?

    Reply

  11. Let’s face it, this Commission’s life will be very short lived because it was only established to rubber stamp what the Christie Administration has already decided. C’mon, how much independent work/analysis can be done by 9 people in 30 days? Once again, Mr. Christie shows his arrogance. My guess is the Legislature will have a bill shortly after the “Report” is issued.

    Reply

    • Posted by Tough Love on August 10, 2014 at 8:37 pm

      Arrogance ?

      Why, because he (unlike his predecessors) has recognized, publicized and is trying to address (rather than hide from) a REAL problem …. grossly excessive pension & benefit promises, with Unions/members refusing to give back more than 5 cents for each dollar of givebacks desperately needed, and a Democratic Legislature BOUGHT-OFF with Public Sector Union campaign contributions and election support ….. and not finding it appropriate (or wise) to make the very wealthy … who already pay FAR more than their “fair share” …. pay even more in taxes?

      Reply

  12. Posted by hondo on August 10, 2014 at 11:22 pm

    TL always protects the very wealth like herself the 1 percen ters want to control everything !

    Reply

  13. Posted by hondo on August 11, 2014 at 11:16 am

    Yes indeed you are well informed and I enjoy your comments. My intent was not to abuse you but, some of your previous comments were very abusive !

    Reply

    • Posted by Tough Love on August 11, 2014 at 1:05 pm

      There is a large distinction between “abusive” and “fairness”,,which re pensions I define to mean EQUAL Public/Private Sector “Total Compensation” (cash pay + pensions + benefits) in comparable jobs.

      Strongly advocating for that “fairness” is not abusive…. as is my often called-for very material pension formula & provision reductions for the future service of CURRENT workers (actions that are both legal and routine in the Private Sector).

      Public Sector workers are deserving of an EQUAL, but not a better deal on the taxpayers’ dime.

      Reply

  14. I see Ethan Kra removed the early years Prudential “association” from linkedin (and the 5 year post-Pru hole in his resume)

    Reply

  15. Posted by Javagold on August 11, 2014 at 2:09 pm

    The Jersey Comeback .

    HA HA HA HA HA !!!!

    Reply

  16. John Bury:

    Will you be giving testimony to the Commission?

    Reply

    • No one asked me and with those nine people and 23 days left I’m sure they have enough things to throw against a wall to keep themselves occupied for the duration.

      Reply

      • Governor Kean’s Commission needed more than a year. But they were trail blazers inasmuch as they recommended a hybrid plan 30 years ago.

        Reply

      • Posted by Tough Love on August 15, 2014 at 6:42 pm

        In my opinion the WISEST recommendation they could come up with is to move ALL current workers into a pension (DC +DB) plan identical to the pension applicable to (post 1986 hire) Federal employees.for their future service years.

        It would be real hard for the greedy Unions (and their enabling bought-off elected officials) to argue that what is good for Federal employees is not sufficient for NJ’s Public Sector workers given the enormity of NJ’s current financial problems.

        While it’s still far GREATER than what PRIVATE Sector workers typically get, it’s also far LESS than what PUBLIC Sector workers routinely get right now.
        ——————-

        That plus MAJOR cuts in retiree healthcare … elimination (for everybody) replaced with perhaps $300-$500 into an HSA ….. just “MAY” save NJ from insolvency.

        Reply

  17. […] is now 54 days since the formation of that commission, 47 days since nine* members were announced, and  29 days since the commission chairman gave an update to […]

    Reply

  18. […] of the original Commission members did not sign off on this […]

    Reply

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