Can New Jersey afford to annually pay $15.6 billion for a budget item that now stands at $700 million (in a good year)?
Based on raw data provided by the state showing retiree monthly payouts for the years 2012 through 2014 (with partial data for 2011) that is what will need to be paid in 2024 to 423,000 retirees out of the state budget (the ‘trust’ fund having been long depleted by then) if the rate of growth on pension payouts from 2012 through 2014 continues. But that’s still a best-case scenario since:
- Cost-of-living adjustments on pensions (stopped in 2011) could be reinstated by the courts;
- Localities looking to balance their own budgets could put more pressure on older higher-paid workers to retire;
- Workers being forced to pay higher percentages of their salaries for benefits could retire earlier on their own; and then there is the old stand-by…
- Longer life expectancies.
Taking into account all these factors (and the current state of political leadership here) a better estimate of what the actual amount that will be paid out of the New Jersey Retirement System in 2024 is either:
- $20 billion; or