Pension Boards’ Complaint Against Christie

It turns out that it was the pension boards for three of the plans (TPAF, PERS, and PFRS) that the state of New Jersey is responsible for funding who joined in the complaint filed today to get those arbitrarily higher contribution amounts paid rather than the arbitrarily low-balled amounts that the Christie administration deigned to deposit.

Generally what you would expect though the complaint did include a couple of surprises:

The pension boards pick the contribution amount?

12. The annual payment of the normal contribution and the unfunded accrued liability contribution is mandatory and ministerial. The legislative branch and the executive branch play no role in the calculation or determination of the amount of the contribution. There is no discretionary element or aspect to the State’s obligation to make this annual contribution. The amounts due are to be entirely calculated by the Plaintiffs and their actuaries.

Here I was thinking that it was the legislature that passed laws to pick the actuarial assumptions and define full funding as some fraction of the ARC while the governor got to decide whether to make those mini-contributions as recommended by actuaries who fully understand they have to be mini-contributions they are ‘recommending.’  If it’s the pension boards and their actuaries who do the calculating then why do their numbers always come out so low?

If the state won’t pay then the participants and retirees shouldn’t either:

69. The Boards are therefore in doubt as to whether they can continue to require the current employees and the retirees to continue to provide their consideration of increased contributions and acceptance of decreased COLAs in view of the State’s failure to provide its consideration.

If they all pull together maybe they can bankrupt this thing by next Tuesday.

 

42 responses to this post.

  1. Posted by Javagold on December 10, 2014 at 10:10 pm

    I was hoping it would collapse on Monday. The sooner rug is pulled and all the rot underneath is exposed. The sooner we all can become honest human beings again. Until then. Keep papering overing and lying. It’s the only way for GROWTH. Because the VELOCITY is at stall speed.

    NJ can’t breathe.

    Reply

  2. Posted by Tough Love on December 10, 2014 at 11:53 pm

    John. Quoting … “The amounts due are to be entirely calculated by the Plaintiffs and their actuaries.”

    That sounds like the NJ retirement “systems” would like to solidify their authority and make the FULL ARC mandatory …. following the game-plan VERY successfully implemented by California’s Public Sector Unions (and their Union-friendly Legislature).

    CalPERS, the giant CA retirement system legally “dictates” what each participating gov’t entity MUST contribute annually…. and all do pay. But it to will fall due to pensions even greater than NJ’s, and the impossibility of the State, Cities, and towns to keep paying the forever-growing annual bills. Nothing like a 7.5% liability discount rate to just about make CERTAIN those bills will grow forever.

    Reply

    • Posted by bpaterson on December 12, 2014 at 7:24 pm

      “the amounts due”??? don’t we know that already, its $180 billion dollars. why go thru the motions again, except maybe to ascertain the number that John puts out there of $300 billion.

      so write them a check already.

      Reply

  3. Posted by Eric on December 11, 2014 at 1:34 am

    John:
    What possible consideration did retirees provide for a “decreased” cost of living adjustment when certain retirees were already retired prior to the law having been changed? The statute, in existence at the time of their retirement, provided for a COLA which was relied upon and then summarily extinguished.
    Communist China and Putin’s Russia have a legal system with far greater rights and contractual protections than NJ.
    What bargain did these retired people enter into and with whom? What is the “decreased” COLA if it stands at Zero?
    What kind of fools and clowns are we dealing with in this state?
    Eric

    Reply

    • Posted by Tough Love on December 11, 2014 at 1:39 am

      Re-tort…. What “consideration” did NJ’s workers (as well as retirees, I believe) provide when they were granted a RETROACTIVE 9% increase in pension benefits (about 10 years ago).

      It created an instant unfunded liability equal to the value of that retroactive increase in benefits, and since Taxpayers are the one responsible for the UAAL, it was nothing but a theft of taxpayer wealth.

      Reply

      • Posted by Anonymous on December 11, 2014 at 9:31 am

        Re-tort…. What “consideration” did NJ’s workers (as well as retirees, I believe) provide when they were granted a RETROACTIVE 9% increase in pension benefits (about 10 years ago).

        I must have missed that or you are wrong, I have been retired for 16 years and NEVER received the above 9% or any other increase for that matter except the now gone COLA..

        Reply

        • Posted by Tough Love on December 11, 2014 at 10:41 am

          I recalled that this pension improvement was extended to retirees (as well as actives) when implemented, which is why I stated above …… ” (as well as retirees, I believe)”.

          It looks like at least ….. not all….. retirees received it.

          Does anyone know if ANY retirees received it?
          ______________________________________

          Of course this issue aside, that RETROACTIVE pension increase for which ZERO worker “consideration” was provided, was grossly irresponsible and nothing but a THEFT of taxpayer “wealth”. When (not if) Public Sector pension reductions become necessary in NJ, a reversal of that retroactive increase should be near the top of the list of reduction options.

          Reply

          • Posted by Tough Love on December 11, 2014 at 10:54 am

            Follow-up…. looks like “retirees” DID get that 9% retroactive pension increase Anon, perhaps you forgot.

            I just Googled that 9% NJ Public Sector pension increase. The quoted paragraph (below) is from the following source:

            http://articles.philly.com/2010-09-13/news/24979240_1_pension-funds-pension-assets-pension-system

            “In 2001, Gov. Donald DiFrancesco effectively increased pension benefits for current and retired public workers by 9.12 percent. The increase was retroactive, which meant that even retirees already receiving pensions saw their pension checks increase.”

          • Posted by dentss dunnigan on December 12, 2014 at 4:10 pm

            Anybody ever ask how that 9%+ increase in checks was to be funded ? why not sue the state for making another promise that could not be met . Greed has consequences .

      • Posted by Anonymous on December 11, 2014 at 11:31 am

        Sometimes relying on tidbits in a newspaper article without proper research can lead to misconceptions, however convenient they may be.

        Reply

        • Posted by Tough Love on December 11, 2014 at 1:13 pm

          There are always those (seemingly such as yourself) who look to challenge ANYTHING that makes them look greedy, even when that description fits very well …….

          Instead of simply challenging the validity of my reference, couldn’t you have checked it’s validity yourself, and said something ONLY if you determined that it was false? And perhaps you did check, finding that indeed the 9% increase DID apply to retirees (at least MOST of them), but since that conclusion wouldn’t support your pension reform obstructionist mindset, you simply ignored it and responded as you did. If so, that certainly would be disingenuous on your part.

          To put the issue to bed definitively, the following quote (below) referring to the 2001 9% pension increase, is from the State of NJ Treasury Department website (http://www.state.nj.us/treasury/pensions/coltr01.shtml#over55), in a July 2001 listing:

          “SUBJECT: Change in Retirement Calculation Formula, Increase in Allowance for Retirees, and Change in TPAF Contribution Rate

          “A new law, Chapter 133, P.L. 2001, changes the formula for the calculation of retirement benefits for most types of retirement for the Public Employees’ Retirement System (PERS) and the Teachers’ Pension and Annuity Fund (TPAF). The law also provides for an equivalent increase in retirement benefits for most members already retired. It further decreases the contribution rate for TPAF members. These changes are explained in detail below.”

          Reply

          • Posted by Anonymous on December 11, 2014 at 4:30 pm

            it is amazing how TL paints Christie as an the most truthful governor we have ever had. It is actually hilarious that she believes this. Although it very sad that she doesnt think the federal government and US Dollar will collapse long before the NJ pension system. She is not allow most people have their head in the sand. Cant blame them, too difficult to face the truth

          • Posted by Tough Love on December 11, 2014 at 5:58 pm

            Anon, Where did I mentioned Christie (or reference supporting him) in any comment on this blog article?

            You appear to have a “Christie” phobia, and I’d bet it stems from a (likely correct) fear that your pension is indeed in jeopardy.
            ———————————–

            And quoting …. “the federal government and US Dollar will collapse long before the NJ pension system”

            If you really BELIEVE that, you have the financial/economic common sense of a 6-th grader.

  4. Posted by Eric on December 11, 2014 at 10:07 am

    John:
    It seems Donald Di Fransisco was governor. I was incorrect. Whitman had just left office. The increase was nevertheless there to assist in the election. You may delete the prior posting.
    Eric

    Reply

    • Posted by Anonymous on December 11, 2014 at 10:37 am

      No let’s leave the post it shows an identity crisis or maybe someone answering their own post under another identity.LOL

      Reply

      • Posted by bpaterson on December 12, 2014 at 7:35 pm

        that increase was politically driven by the republicans and it failed for them…and we got McGreevy to boot! The residents and taxpayers were the big losers all around and to this day the corrupted system hasn’t abated.

        Reply

  5. Posted by Eric on December 11, 2014 at 10:44 am

    Tough Love:
    The 9.09% increase was wrong to include retirees. I agree with you.
    My point about retirees, and more specifically, cost of living adjustments, is strictly a legal one. If one retired, and his or her contract had been completed, and the law which he or she relied upon, at the time of retirement, which was a statute, in the State of New Jersey, a subsequent law may not remove that benefit from that retiree. The contract is no longer executory meaning that there is nothing left to perform. It may no longer be modified if the modification of the law had not been passed or been in effect while the person was still employed “in the system.” This is in addition to any employee handbook that John refers to in his postings which is another reliance issue.
    If the state destroys a right to a completed contract that pertains to a subject involving a non-forfeitable right, such as the cost of living adjustment, it has become a Banana Republic. This is why entities are now hesitant to enter into agreements with the state since a precedent of disregarding the law, including statutes, with impunity, frightens would be investors. This is why NJ’s debt financing is now at a great risk. This is the “bigger picture” than some worker and his or her pension.
    Eric

    Reply

    • Posted by Tough Love on December 11, 2014 at 11:26 am

      Quoting …”The 9.09% increase was wrong to include retirees. I agree with you”

      Are you saying that it was ONLY wrong for those ALREADY retired?

      That’s preposterous ….. what “consideration” did employees “active” at the time of implementation provide in exchange for having their (future) pensions calculated assuming that the INCREASED formula applied to service years PRIOR to the laws enactment? As an extreme example, there were long-career employees who retired shortly after the law’s effective date whose incremental pension value was over $100,000 (the present value of the increased annuity payments). Not $1 of “consideration” was paid for that $100,000 increase.

      Nothing …. and the very substantial “cost” of that increase was, as I stated above, was nothing but a theft of taxpayer wealth.
      ———————————–

      I understand your point with respect to contracts. At some point a Court may have to look into those contracts and decide if, as I believe to be correct, these “contracts” are defective and unenforceable, having been “negotiated” in bad faith with nobody at the “negotiating table” rightfully looking out for Taxpayer interests, and therefore, if it is reasonable and acceptable to so “bind” a 3-rd party “payer” (the Taxpayers) so betrayed, to “perform” under such circumstances.

      Of course in NJ, reality and the “Math” may make any Court decisions moot ….. I don’t believe NJ taxes could or ever will be raised by an amount even close to what would be needed to make NJ’s pension Plan’s whole.

      ——————————————-
      And, I do not believe, as you suggest, that outside parties are reluctant to deal with NJ because of “contract” issues per se. I believe they are being extremely cautious because of NJ’s EXTREMELY precarious financial situation, and a fear that Union/Political pressure may force THEM to absorb a far greater (legal and historically correct) share of losses should NJ become insolvent and be unable to pay all of it’s creditors (including Public Sector retirees and actives with past service accruals).

      Reply

      • Posted by Anonymous on December 11, 2014 at 4:40 pm

        TL this also may come as a shock to you, most people wont read past the first few lines of your posts. Conciseness would make your posts more desirable to read.

        Reply

        • Posted by Tough Love on December 11, 2014 at 5:59 pm

          If you say so, it “must” be true ……….. ???

          Reply

        • Posted by bpaterson on December 12, 2014 at 7:45 pm

          anon, you aren’t really correct, depending on which side one is on would determine how much one reads of the opposition’s posts. Or those that just want to learn about the state pension program and whether its viable or not, thats where I stand..

          as for TLs posts, and no disrespect to TL, they are lengthy and very informative…but many times redundant in certain accusations…and occasionally I end up reading the first few paragraphs and the last 2, and if it doesn’t convey enough I go to the full body.

          Reply

    • Posted by bpaterson on December 12, 2014 at 7:39 pm

      eric, another byproduct of what you are saying that whatever was in place then should prevail, would be lifespan calculations. As lifespan increases, the fixed amount of money should be spread out over more years make the distributions thinner.

      Reply

  6. Posted by Anonymous on December 11, 2014 at 9:05 pm

    I am glad you took my advice, very refreshing for you to get to the point instead of rambling aimlessly

    Reply

  7. Posted by Eric on December 12, 2014 at 12:29 am

    Tough Love:
    I give the Governor credit. He said that we cannot print money as can the Feds. This is very true and something that many do not wish to hear.
    Eric

    Reply

    • Posted by Tough Love on December 12, 2014 at 2:34 am

      I give him credit as well. Like him or not, he is the first Governor to admit that we have a HUGE pension/benefit driven problem …. one that he inherited from PAST administrations …. and is trying to address it.

      Unfortunately, “addressing it” is very very difficult because the hole we are in is so huge that SOLVING it MUST include great pain, and there are ONLY 2 parties that are on the table to share that pain … the Taxpayers via higher taxes and reduced services, and the Public Sector workers via reduced pension & benefits.

      We must face it. This problem will only get WORST the longer we delay addressing it in a strong way … NOT tinkering around the edges. NJ tried that in 2011 and look where we are now.

      Reply

      • Posted by test1234567890123 on April 24, 2015 at 4:07 pm

        Tinkering around the edges?
        PW are paying a lot more each month then they were before 2011.
        Note that higher paid PW are paying over 10k more per year for healthcare and pension. Others: 3-7K more. If they are suddenly paying so much more, where did the money go? You would think the state would have put all that extra money right in the pension system since they didn’t have it before. But no, they find another way to steal it (higher pension management fees!!!!).

        Reply

  8. Posted by Pat on December 12, 2014 at 1:33 am

    You got if first John. NJ Spotlight just posted an article on the pension board suit, it makes sense that the state can not claim that a law is unconstitutional without vacating the entire law. This will force Christie to do something about it during his term, not stick it on the next governor.
    http://www.njspotlight.com/stories/14/12/10/state-pension-board-trustees-suing-over-christie-s-2-4-billion-cut/#

    Reply

    • Posted by Tough Love on December 12, 2014 at 2:49 am

      Seems counterproductive. If the law is repealed with COLAs restored and employee contribution increases rolled-back, that will only ACCELERATE the Plans’ demise (running out of assets).

      Talk about shooting yourself in the foot…….

      Reply

  9. Posted by Anonymous on December 12, 2014 at 8:48 am

    John:

    What do you believe is a reasonable percentage of pension promised that I can get as an imminent retiree ? Is it 75%, 50%, )?? How does one do reasonable financial planning and decide when to retire when we have an irresponsible governor in the State House ?

    Reply

    • Posted by Tough Love on December 12, 2014 at 1:00 pm

      I’ll answer the first part.

      Assuming your Public Sector “cash pay” was comparable to what a Private Sector worker would get doing comparable work, your Public Sector pension (as a % of final cash pay), SHOULD BE equal to (factoring in BOTH the richness of the “formula” and the Plan “provisions”) what a comparable Private Sector worker would get if retiring at the SAME age and with the SAME service.

      Right now in NJ, your Public Sector pension is TYPICALLY 3-4 times greater in value at retirement.

      Reply

      • Posted by Another Anonymous on December 12, 2014 at 3:56 pm

        Thank you, Mr. Bury.

        Reply

      • Posted by test1234567890123 on April 24, 2015 at 4:17 pm

        Except that you forget, someone who started their career 40 years ago, didn’t have comparable pay and other benefits aside from pension. For example I used to teach – was making 10k when I left. After one year was making 19k in the private sector, building up a pension and a 401K matched at 66.66%. After about 20 years, my public teacher husband finally caught up to me on salary (because he got his masters). How can he make up for those 20 years of lost salary because he couldn’t put away as much? That is a huge over time!! So to arbitrarily reduce everyone’s pension the same, would not be fair.

        How can you fix the crisis when you basically have different scenarios of folks (ones who fought for higher salaries but took it on the chin until it happened knowing their pensions would be there vs. those who came in with a decent starting salary that could save more)?

        Reply

        • Posted by test1234567890123 on April 24, 2015 at 4:21 pm

          and by other benefits above, I mean:

          Vision plan
          legal plan
          adoption plan
          bonuses
          stock options
          etc.

          not many folks talk about these benefits teachers never received, yet folks in private sector got these. I was one of them in the private sector. Before I left a certain company I got stock options as late as 2004. the other plans are still in effect INCLUDING a 401k and a pension!!

          Reply

    • Posted by bpaterson on December 12, 2014 at 7:58 pm

      some suggestions is do what the private sector has been doing for the past 25 years: nothing; live hand to mouth, depend on the social security and what paltry savings they could put away for at least to cover any morsels, count on the charity of the family, and curse the rich and the govt for the predicament they are in.

      Not a good direction for filling the boat with other passengers but misery loves company, especially when the company created this whole mess.

      Reply

      • Posted by Tough Love on December 12, 2014 at 11:31 pm

        Or, due what the Public Sector workers have (up till now) done ….. become parasites feeding off the backs of the Taxpayers who get SOOOOO much less.

        “Up till now”, because this Public Sector pig-fest is rapidly coming to an end.

        Reply

        • Posted by test1234567890123 on April 24, 2015 at 4:26 pm

          so much less?
          Got a 15% bonus from my company this past year. I consider that a retirement contribution! That’s on top of my 4% raise

          If you get sooooo much less – maybe you should put your destiny into your own hands!

          Reply

      • Posted by test1234567890123 on April 24, 2015 at 4:22 pm

        BS on the last 25 years. Maybe 15 -18 years ago.

        Reply

      • Posted by test1234567890123 on April 24, 2015 at 4:27 pm

        Funny…
        depend on the social security

        The republicans want to take that from you too or haven’t your heard?

        Reply

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