Doublie-Dipping Deception

David Jones is a retiree under the State Police Retirement System (SPRS) getting $90,650 annually.  He is also running for Mercer County sheriff and Bil Schluter, who appears to be his campaign director, editorializes today that David Jones…

“has taken a stand of courage and self-sacrifice by opposing the double-dipping practice of collecting a state pension while also receiving a salary for service in another public office: He has said he will forego* his pension if elected sheriff.

Though Mr. Schulter later admits:

“Some might say that the pension savings of one sheriff and several undersheriffs are small when compared to all the pension extravagances taking place in New Jersey. But isn’t it because of the multiplicity of pension excesses that the unfunded liability of state pensions has grown to the point where sustainability of the system is in jeopardy?”

No! Not at all!  It is a combination of a lack of independent oversight allowing everyone to supposedly get whatever they want and a general innumeracy (sometimes legitimate and sometimes feigned for convenience) among stakeholders that has doomed the New Jersey state pension system.  Double-dipping is not the problem and in many cases is a cost container.

According to the SPRS handbook (page 23):

Returning to Work in a Position Covered by a New Jersey State-administered Retirement System Other than the SPRS
In this case, provided that you are a “bona fide” retiree, your retirement allowance continues and you can receive salary but you cannot become a member of that retirement system (see “IRS Provisions” regarding federal tax implications).
Retirees Serving in Elected Office
Under N.J.S.A. 43:3C-3 a retired member of a State-administered retirement system who is elected to public office may either continue to receive a retirement benefit from the former employment and would not be eligible for enrollment in the new retirement system, or may suspend the retirement benefit (and any related health benefits coverage) from the former employment and enroll in the new retirement system while serving in the elected office. Upon termination of the elected office, the retirement benefit from the former employment would be reinstated.
Normally retirees under the SPRS who get other New Jersey government jobs must continue their pensions.  This is not a plot to bankrupt the pension system but a legitimate means of limiting benefits since were retirees allowed to reenter a retirement system their benefit accruals would be massive.  If the PERS 1/55 formula were applied to the $135,795 salary of David Jones his annual benefit accrual of $2,469 would be worth about $40,000 and possibly more depending on life expectancy, future salaries, and eventual tax brackets.
Suspending your pension while accruing additional benefits is a decision that SPRS retirees (unless they are elected officials) are not even allowed to make in part because it often makes financial sense for them personally to suspend benefits whereas it could be injurious to the long-term outlook of the plan.   As it turns out, Mr. Jones would indeed be making a sacrifice (whether he realizes it or not) but only because the New Jersey pension plans do not have a long-term.
.
.
.
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* This is the forego/forgo confusion and it is used incorrectly in the article though that possibly has more to do with the Star Ledger (which I recently learned now gets its checks sent to NJ Advanced Media so it may not be around too much longer) cutting back on editorial staff.  And while I’m in a footnote (and rambling) I might mention that I happen to know and like David Jones.  We had a business lunch a few years ago when he was head of the State Police union and I wound up doing some work for the union.

15 responses to this post.

  1. Posted by LGreene on August 18, 2014 at 10:39 am

    If Someone retires and then gets a job at WalMart, they aren’t double dipping are they? So why is it double -dipping if they get another job elsewhere in government?

    Also if someone else took the job mentioned above wouldn’t taxpayers have to pay a retirement benefit for that new person?

    This helps explain the ” myth ” behind the so-called ” double-dipping”, but it is confusing. Please continue to explain it. While there are many issues that need to be addressed, we need to clarify the ” false issues” that cause confusion and keep energy from being focused on real issues.

    Reply

    • Posted by MJ on August 18, 2014 at 5:40 pm

      If someone retires, that means that person is no longer working. Douple dipping is not only taking advantage of the already doomed system but is taking a job away from another qualified individual who may need a job. I’m sure these public jobs do not reuqire one to be a rocket scientist to perform the tasks required. Wlamrt is exactly the type of job for truly retired people who want to do something with their time and earn a little extra money.

      Reply

  2. Posted by Tough Love on August 18, 2014 at 11:01 am

    Confusing ….

    Hasn’t the … “lack of independent oversight allowing everyone to supposedly get whatever they want” …. to a large degree RESULTED in “pension excesses” (i.e., Public Sector pensions MUCH more generous than necessary, reasonable, or justifiable) that has materially contributed to the NJ Plans’ huge “unfunded liability” ?

    FWIW, I agree that double-dipping while obnoxious (and while it should not be allowed), is not a major source of NJ Plans’ unfunded liability.
    ——————————————-
    Quoting … “Normally retirees under the SPRS who get other New Jersey government jobs must continue their pensions. This is not a plot to bankrupt the pension system but a legitimate means of limiting benefits since were retirees to reenter a retirement system their benefit accruals would be massive. ”

    While all of this is true, it begs the REAL “problem” …. that PUBLIC (but not PRIVATE) Sector pension formulas and provisions (e.g., very young full/unreduced retirement ages) are so generous that they PEAK in benefit “value” at about 10 years younger than Private Sector pensions (often in the 50s) ENABLING (and ENCOURAGING) young retirements where workers are still able to start a second career.

    With 80-90% of the total cost of PUBLIC Sector pension foisted upon Taxpayers (NOT the workers) there is no justification for this. If Public Sector pensions peaked in value at age 65 (with that value no greater than it’s current peak-50’s value) double-dipping issues would disappear completely …. and “fairness” to the Taxpayer-payers of Public Sector pension would be much greater.

    Reply

  3. Posted by Javagold on August 18, 2014 at 12:25 pm

    When the words retired and disabled , do NOT follow their definitions, than it must be another ponzi word game, played by the public takers.

    This double dipping scam is there best one of all in my opinion. It gives them cover, by stating they are “saving” taxpayers money, while keeping others who may want/Need the job , far away from the pig trough.

    They are screwing the taxpayers but they are really killing the younger generation, with this pyramid ponzi scam.

    Reply

  4. Posted by Endalimony4ever on August 18, 2014 at 12:44 pm

    Its not going to matter in the end. The pensions are doomed and when they go belly up, the state workers who are getting screwed are going to come running back to the taxpayers to bail out their pensions. Nothing doing. the taxpayers have had enough and many are hurting financially. When the Fed inflated bubble (real estate and capital markets) pops it going to be lights out for not only the pensions but for the economy as a whole. We are doomed.

    Reply

    • Posted by Tough Love on August 18, 2014 at 1:49 pm

      I fear you be may correct …….. but it’s our economy tanking that I’m concerned with,, NOT material reductions to these overstuffed Public Sector pensions.

      Reply

  5. Posted by hondo on August 18, 2014 at 2:20 pm

    I agree taxpayers will be on the hook for the bailout after wall street pockets billions in active management fees. However, they recommended in past high risk investment that drop off the cliff or floated bonds. You can fool the players but, not the fans! TL

    Reply

    • Posted by Tough Love on August 18, 2014 at 2:37 pm

      Gee, I didn’t read My Bury suggesting that Taxpayers would be paying for a “bailout”.

      But he did suggest that NJ’s plan were dead (long-term), specifically saying … “As it turns out, Mr. Jones would indeed be making a sacrifice (whether he realizes it or not) but only because the New Jersey pension plans do not have a long-term.
      .”

      Reply

  6. Posted by MJ on August 18, 2014 at 5:37 pm

    While I don’t know Jones personally, I hardly consider someone who can retire at a relatively young age on 90K + pension and other perks and payouts as making a sacrifice. Its actually quite the chuckle. Let me get it straight, we as taxpayers have to pay them once for their working years, pay them again in retirement and then pay a 3rd time when they retire and take their next public job. If they die, we still have to pay. Quite a scam they got going on, ride the train till it goes off the cliff.

    Reply

  7. Posted by Carlos on August 19, 2014 at 9:57 am

    I noticed he is running on the republican ticket. They do seem to be the worst offenders of the double dipping scam. I’m sure piggie will support him fully like he does the rest of his double dipping pals.

    Reply

    • Posted by Tough Love on August 19, 2014 at 10:58 am

      Yeah, terrible isn’t it …… those darn Republicans who support a few hundred well-connected double-dippers, unjustly costing taxpayers a few $ MILLION annually.

      Or ……., perhaps it’s really the Democrats whose granting of (and refusal to fully and appropriately reduce) the grossly excessive pensions and benefits promised ALL Public Sector workers, unjustly costing Taxpayers a few $ BILLION annually.

      Reply

  8. Posted by hondo on August 19, 2014 at 3:10 pm

    Yes I agree they should not let them double dip. However, they’re not breaking the law so they keep doing it until, they stop it.
    Don’t forget to watch tonight. PBS/ Frontline “Money, Power and Wall Street” The Retirement Gamble. PBS thirteen/wnet NY/NJTV Public Media. This was a great,wait and see when wall street take control of fail pension! It will not be public versus private went the smoke clear we both loss everything!

    Reply

  9. Posted by MJ on August 19, 2014 at 3:24 pm

    That’s why it is best to take control of one’s own destiny, employment, investments and retirement planning. We all know what happens when there is over dependence on the government. Sell your house in NJ as quickly as you can, rent if you have to. Secure your monies with banks and institutions that are reputable and did not take bail out money. Advise your children NOT to purchase a home in NJ as any real estate is a huge liability with the highest taxes in the country. If you can, move your business to a nearby tax friendly state like DE, it really isn’t that far, we’ve done it. Get out of NJ before it is too late.

    Reply

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