Real Scandals of Pension Spiking

It’s not that a connected politician will get an extra $1 million dollars in pension benefits for working three years in his new job as township administrator for Scotch Plains but that Scotch Plains will only have to pay $43,000 to ‘fund’ that benefit.  Here are the details:

Al Mirabella has been a Union County Freeholder since 1991 earning about $30,000 per year for that part-time position that includes membership in the New Jersey Public Employees Retirement System (PERS).

Last Thursday he was appointed the new township administrator for Scotch Plains at a reorganization meeting where it was reported:

Giamis, the sixth township manager in five years, resigned from his position, citing the “political realities” of a now Democratic council that did not intend to rehire him. The council flipped to a Democrat majority after November’s six-way election, in which two Republicans lost their seats to members of the other party.

Had Mirabella stayed in his freeholder position only (he has said he will hold both jobs) his annual pension on 1/1/18 after 27 years of service would have been about $14,727 ($30,000 / 55 x 27).  With his second job added that annual pension jumps to $73,636 ($150,000 / 55 x 27).  That $58,909 annual difference for a relatively young retiree with COLA adjustments is conservatively worth about a million dollars.

Who will pay that extra million dollars? Not the township of Scotch Plains which according to the PERS contribution schedule will only need to pay 11.92% of his salary (about $43,000 over 3 years).

The honest fix is to have the Scotch Plains payment be based on the the actual amount of benefits being accrued on account of that job which would mean about $300,000 annually. That’s not going to happen which is one reason that Mirabella’s extra million dollars doesn’t bother me.  It’s only on paper.  He will never see anything near that.  The sad part is that people who really earn their pensions for real work are in the same boat.

9 responses to this post.

  1. Posted by skip3house on January 3, 2015 at 12:53 pm

    Back in 1947, the new NJ Constitution likely guessed future NJ citizenry would be as knowledgeable with 8th grade arithmetic, plus also elect/hire ‘straight shooters’ to carry out all things government, including standard retirement plans based on the savings account thinking then.

    Deposits would be made regularly based fairly on (limited) pay for hours worked, and continually adjusted life expectancy. Too late now to base pensions on this simple idea of times past, as NJ has already obligated and squandered much more than will exist, or ever did, in that savings bank, including expected investment earnings/interest.

    “…extra million dollars doesn’t bother me. It’s only on paper. He will never see anything near that. The sad part is that people who really earn their pensions for real work are in the same boat.”..by Mr. Bury here.

    Why can’t NJ now step aside, recalculate present/expected funds from paychecks and government, plus compress downward all the existing pensions highest ‘half’, until balance is achieved with ‘…people who really earn their pensions for real work…’ ?

    Reply

  2. Posted by Tough Love on January 3, 2015 at 4:17 pm

    John, It seems like you have clarified a “detail” I have wondered about … whether in the situation you outlined above, the final town granting that high-paying position was financially responsible for the HUGE incremental cost of the pension.

    Based on your write-up, it appears NOT to be the case. So the obvious next question is … are the previously worked-for towns (or organizations) responsible for the pension’s new (much larger) total cost (NOT paid for by the final town) in proportion to service years (or some other Unit of measure), or does that huge incremental cost simply become an “obligation” absorbed by the pension “system” and spread across all participating entities ? Anything but charging the FINAL town for the full incremental cost is grossly unfair to the any OTHER payers.

    I have always felt that the ability to turn LONG, VERY PART-TIME service (as Councilmen, etc.) into a FULL-SIZED pension (comparable to that of a full-time, full-career worker) is one of the greatest ABUSES of NJ’s pension structure.

    CLEARLY, the beneficiaries (mostly political types) like it that way, and refuse to implement the structure common in Private Sector Plans that all but eliminates such abuse …. changing from the current standard of earning a minimal PAY amount (which I believe is now $7,500 annually) to a standard that, to earn ONE YEAR of pension service credit, you need to have documented 1,000 hours of PAID service in the calendar (or “Plan”) year.

    Reply

    • Contributions have always been based on a percentage of current salary since it’s easier that way but what it will lead to is increasing privatization of jobs which Union County is doing (they’ve shed about 300 jobs at their nursing home and golf course and are looking at their jail). In theory if they privatized all jobs they would have no requirement to contribute to the state pension system and would have successfully walked away from those massive liabilities.

      Reply

  3. […] for him, will be after he has put in the three years to inflate that base salary upon which his pension, with all that freeholder service, will be […]

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  4. Posted by bpaterson on January 3, 2015 at 10:40 pm

    JB1: BTW, he works full time presently at chubb insurance and will probably receive another roughly $40,000/year in pension based on the chubb salary, longevity and calcs. Can’t argue the private sector pension since if a client doesn’t like that set up can just change to another insurance company.

    The public sector is another issue since its a monopoly and the union county criminal enterprise forces this type of pension padding on all us beleaguered taxpayers even though he has no experience (public or private) for this position and the watchodgs have basically proven him a failure at leadership in the county yet just because of NJ corrupt politics he gets the top job at scotch plains. Simply incomprehensible.

    Reply

    • Posted by Tough Love on January 3, 2015 at 10:54 pm

      He’s got friends in high (or at least the “right”) places. Simply another example of the Public Sector’s financial “mugging” of the Taxpayers.

      Remember this WHEN (not IF) these Plans go bust and these greedy bastards plead for taxes increase to support their ridiculous pensions and benefits.

      Reply

  5. […] Real pension gamers with political connections who cash in at the end: […]

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  6. […] Last year I blogged about another politician gaming the system: […]

    Reply

  7. […] fomer mayor Kevin Glove in 2015 after supposedly losing his private sector job. This was seen as a move to put Al Mirabella in a position to retire with the pension of a full-time employee […]

    Reply

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