Christie Shorting NJ Pension by $3.8 Billion?

The story first appeared in the International Business Times (IBT) with lots of charts under the screaming headline:

Gov. Christie Shifted Pension Cash to Wall Street, Costing New Jersey Taxpayers $3.8 Billion

Today it was picked up by AOL, Esquire, and Daily Kos all using the angle that Christie wants to take money from retirees barely scrimping by so he can give it to his Wall Street friends who then donate to political campaigns of his choosing.  But is that the real story?

Is the national median return for Public Pensions for 2014 really 17.39%?  What plans are they sampling and where did they get their information?  Was that net of expenses?

As far as fees for alternative expenses the scare paragraph in the article is:

In 2009, the year before Christie took office, New Jersey spent $125.1 million on financial management fees. In 2013, the most recent year for which data is available, the state reported spending $398.7 million on such fees. In all, New Jersey’s pension system has spent $939.8 million on financial fees between fiscal year 2010 and 2013. That’s only a little less than the amount Christie cut from state education funding in 2010 — a cut that played a major role in shrinking the state’s teaching force by 4,500 teachers. That money might also have reduced the amount the state needs to pay into the pension system to keep it solvent.

The $125.1 million and $398.7 million numbers are taken from these pages of the respective State Investment Council (SIC) Reports for the two years. However what is not figured in is that these fees are generally on a percentage of assets basis and the amount in Alternative Investments went way up in those four years.  As of June 30, 2009 they were reported to be $7.3 billion while as of June 30, 2013 according to audited report there were $20.23 billion in Alternative Investments.  Expense ratios would then have been 1.71% in 2009 compared to 1.97% in 2013 which is a little steep but certainly not the windfall that the IBT article implied.

And as far as the donations to Christie and Republican campaigns go they are pikers compared to Union County pay-to-play arrangements that are far more obvious (and lucrative).

This is not to say that Christie and his cabal are managing the New Jersey pension funds well. Examine the comical numbers coming out of the actuarial reports.  Look over some of the legal briefs Christie lawyers have put out there arguing for the legalization of theft.  Examine those alternative investment values and see if that money is really there.  Consider that after five years and $14 billion in skipped payments the stage we are at now is waiting for a study commission report.  The New Jersey pension system is a train wreck and you don’t need to invent issues to show that.

20 responses to this post.

  1. Posted by Tough Love on August 26, 2014 at 8:23 pm

    Yes,…… “after five years and $14 billion in skipped payments”.

    But how much LOWER than the current Plan costs would Plan costs be if the GENEROSITY of NJ’s Plans was EQUAL TO (but not greater in value than) the retirement packages typically granted comparable Private Sector workers by THEIR employers …… $5 Billion lower? $10 Billion lower?, perhaps even $20 or $25 Billion lower, meaning that Taxpayers may have have ALREADY contributed MORE than a “fair share”…. even WITH the skipped payments?

    Reply

    • Posted by Anonymous on August 26, 2014 at 10:49 pm

      TL in total agreement of 75 percent of what John says! This by her calculations! What a bunch of malarkey. Of course the truth is she disagrees with practically everything John says. Aterall she is supports Chris Christie wholeheartedly, lies and all!

      Reply

      • Posted by Tough Love on August 26, 2014 at 11:00 pm

        Well, in THIS blog posting, John said ….”The New Jersey pension system is a train wreck” and in his PRIOR blog posting John said …”The trick is to get public employees to see that their pensions could be cut by 70%”.

        I agree totally …. likely by MORE than 75%.

        Reply

        • Posted by Anonymous on August 27, 2014 at 9:07 pm

          TL living a dream like life in fantasy land. She believes in politicians!

          Reply

          • Posted by Tough Love on August 27, 2014 at 11:44 pm

            Actually I don’t believe in our politicians. Christie CAN’T fix the pension problems w/o BIG cuts to your pension/benefits. You lose……. Greed HAS consequences.

  2. Posted by Anonymous on August 26, 2014 at 9:15 pm

    hmmm.. what always interests me is when people compare “private plan” costs with and against “public db plans”. the comparison is mute, and yet they insist. as a graduate from a prestigious university, I had the choice of accepting several offers, both from private and public sectors. I chose public for several reasons, not the least among which included; employment security, slow but steady wage-adjusted/inflated security, now specactualr, but secure and reasonable growth… I am one of those who could have made 2x more privately but I chose Public because I had children and was (am) not a gambler.

    fast forward 15 years….Public employees (of my degree and caliber) are making huge amounts of money and doing very well on wall street. Me? I’m making 3% and suppose to be happy because I have no or little choice over my investment options.

    I’m not stupid. I made my decisions based upon a “promise” I could trust from the government “at the time”. Now you want me to say that was a stupid/bad decision? and that my decisions should be negated? LOL

    I say fuck you. Pay higher taxes and cut spending. I did my time in hell. It’s your turn. Yeah, I know… pass on the problem to younger generation? well, guess what? who do you think is taking care of your junkie, non-working, drug-addicted loser children? I am.

    Reply

    • Posted by Tough Love on August 26, 2014 at 9:25 pm

      Your last paragraph show your true colors …. and yeah, you certainly sound like one ……, ….” who could have made 2x more privately”. When pigs fly. Your sound more like an arrogant SOB who would repeatedly be fired in the Private Sector.

      Hope you’ve been saving OUTSIDE that big pension and generous retiree healthcare benefits you’ve been counting on (by “F”ing the Taxpayers). By now, you should know that in a few years …. NJ’s Plans are “toast”.

      Reply

      • Posted by Anonymous on August 26, 2014 at 10:51 pm

        TL what makes you think you are protected? you are delusional.

        Reply

        • Posted by Tough Love on August 26, 2014 at 11:05 pm

          I do expect very modest tax increase combined with much much greater Public Sector pension and/or benefit reductions for CURRENT & retired workers.

          Me delusional? No, but Public Sector workers must be certainly be delusional to believe this pension/benefit thievery could go on indefinitely.

          Reply

      • Posted by Anonymous on August 26, 2014 at 10:55 pm

        TL believe that the private sector does things the right way! I have know several people who lost their pensions because the private sector company failed to contribute. TL all for democracy as long as it doesnt take away the money she stole from americans through her crooked insurance company.

        Reply

        • Posted by Tough Love on August 26, 2014 at 11:07 pm

          There is scum in the Private Sector too, but we don’t hold a candle to Public Sector.

          Reply

          • Posted by Anonymous on August 27, 2014 at 3:57 pm

            TL talking out her behind as usual, Enron and Bernie Madoff did cause many people to lose their life savings.

          • Posted by Tough Love on August 27, 2014 at 4:20 pm

            Well, just the EXCESSIVE, unnecessary, and unfair (to Taxpayers) share of Public Sector pensions (throughout America) is undoubtedly in the TRILLIONS………. but I’m confident a good portion will never be paid.

            And the promised employer (meaning TAXPAYER) provided Public Sector retiree heathcare benefits (that almost nobody in the Private Sector gets any longer) is ALSO in the Trillions. I’m confident that much of this will never be paid as well, being even easier (than pensions) to just reduce/end.

            Taxpayers should renege on the funding of ANY of the pension & benefit promises that are greater than what THEY get from their employers.

            Earth to Public Sector workers …. you’re NOT “special”and deserving of a better deal …… on our DIME.

    • Posted by Javagold on August 26, 2014 at 10:59 pm

      NOW spectacular. Nice Freudian slip !!!! HA. HA. HA.

      Reply

  3. Posted by hondo on August 27, 2014 at 8:38 pm

    I guess TL likes the train wreck. The more negative news the better! Just give me my pension & i will invest it myself. Everybody looses Public & Private.

    Reply

    • Posted by Tough Love on August 27, 2014 at 8:57 pm

      How about we give you your contribution back w/interest?

      You see, THAT AMOUNT would be sufficient buy only 10%-20% of your grossly excessive pension, which is the ROOT CAUSE of the problem (NOT “funding”, which FOLLOWS from that grossly excessive “generosity).

      Reply

    • Posted by whistler on September 1, 2014 at 1:16 pm

      It has been estimated that a 30-35% correction in the S&P which lasts through one full pension year, which is inevitable unless QE (directed infaltion) continues indefinitely, will result in a 55-65% devaluation of public pensions, already underfunded by reasonable actuarial assumptions. Most public pensions are effectively dead man walking.

      Reply

  4. Posted by Lu Tibbetts on August 27, 2014 at 10:30 pm

    Well, looks like the governor has succeeded, at least in this forum, in getting the taxpayers and public workers to turn on each other instead of looking back at the government where lie the corruption and waste in far greater $$$$ than public pension payments. I”d like to see the public employee union chiefs spend some time and money investigating and shining a light on where the big dollars are really going. Further, reading that the % the fund managers are taking in fees is lower than in the past based on the value of “alternative” investments, I am troubled by the determination of the value of these alternatives. Who decides their value? Only when they are sold will a buyer decide and I am skeptical that the reported values are real. What are these alternatives anyway?- fine wines, artwork, tulip bulbs?

    Reply

  5. […] like Ray Rice, ISIS, and Nancy Pelosi. On pension issues all he had to say yesterday was: . . I too believe that David Sirota’s initial story was thin but Christie calling him a hack makes me […]

    Reply

  6. […] that difference is explainable.  More money in investment vehicles that charges fees based on the value of those investments* […]

    Reply

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