Hard Freeze Proposed For New Jersey Public Pensions

The New Jersey Pension and Benefits Study Commission on their website came out with their proposal and some sort of working relationship with the teachers’ union.

Governor Christie took 20 of the 25 minutes of his budget address to focus on the proposed reform and here are the key two minutes:

Sounds familiar (from three years ago):

Much more on this throughout the week including a practical example of how this could cost Al Mirabella a million dollars.

65 responses to this post.

  1. Interesting that the Commission finally comes out with their recommendation right after the judge rules that Christie has to pay. Not sure what the freeze means or what will happen with the health benefits. He had me up to the state will contribute periodically and a constitutional amendment will be put to the vote to ensure this.


  2. Posted by Tough Love on February 24, 2015 at 5:55 pm

    John, One of the best outcomes of a hard freeze of the existing DB Plans is that all the politicians sitting on 20+ years of very part time service, and waiting for the opportunity to grab a high-paying position for 3 years to retire with a pension …. as though they were a FULL-TIME employee throughout their many service years … will be cut off at the knees.

    BRAVO !


    • Posted by Anonymous on February 24, 2015 at 6:21 pm

      Just remember who has to vote on these changes…the politicians.


      • Not the politicians, the people will vote if I understood him correctly. It would go to a ballot vote to change the NJ constitution so that pension contributions would be made not matter what the financial situation. That would be a real disaster. He is basically handing the mess over to the uneducated, ignorant voters and I hope I am wrong and that NJ taxpayers are really tired of these over paid, ungrateful, entitled, public workers.


        • Posted by dentss dunnigan on February 24, 2015 at 6:41 pm

          Am I right in connecting the dots …Shifting expenses from the State to the Local Level = Huge increase in Property Taxes


          • Posted by JamesC-Del on February 24, 2015 at 7:16 pm

            Connect the dots… all savings will be at the state level. Any savings by the town will be absorbed by the state as towns will now contribute to the teacher’s retirement benefits. We will pay less for our DPW employees but much more for our teachers. Part of the justification for an income tax was to fund teacher’s retirements.Is the income tax being lowered? As a local taxpayer I have had to make up for years of skipped payments for local employees. The state is not only walking away from their contribution- they want us to make up for their skipped payments for state employees. Hopefully people realize the shell game will not end well for the local taxpayer. Before any freeze the local and state systems must be completely severed.

          • Posted by Tough Love on February 24, 2015 at 7:50 pm

            Mj, I went more into the Commission Report detail, and the State-to-Local cost shifting is supposed to be structured so as to be cost-neutral to the Local Gov’ts.

        • Posted by Anonymous on February 24, 2015 at 9:02 pm

          And guess who votes to even get it on the ballot.


        • Posted by S Moderation Douglas on February 24, 2015 at 10:34 pm

          Are those uneducated ignorant voters the same ones you want to have a seat at the bargaining table?


        • You stated “That would be a real disaster. He is basically handing the mess over to the uneducated, ignorant voters and I hope I am wrong and that NJ taxpayers are really tired of these over paid, ungrateful, entitled, public workers”.
          Well, I’m one of those so called greedy public workers.
          I’m retired now and partially paralyzed w/ 3 replaced upper neck discs from
          a law abiding citizen who used a steel pipe to the back of my head and neck.
          I receive less than $25,000.00 dollars a year, I’m very greedy.


          • Posted by Tough Love on February 25, 2015 at 2:19 am

            I fell very sorry for your situation, but for every safety worker truly “disabled” by common sense standards that would rise to an approved disability in a Corporate-sponsored disability Plan, there are 10, 20, maybe 50 that are the phoney minor “disabilities” that pass legal muster ONLY because the standard for disablement in the PUBLIC Sector is so extraordinarily easy to meet. The Taxpayers are clearly being treated as the sucker in this equation.

            Witness the NJ Transit Police officer under disability retirement in his 40s because he stapled his rigger finger.

          • No I want the smart well informed taxpayers at the bargaining table and at the voting booth

          • Read Tough Loves comment below. I second that. It’s a shame that your dishonest , greedy brothers out on their phony disabilities give you all a bad name and causes one to pause and think if yours is true or embellished like the others we read about.

    • Posted by Anonymous on February 24, 2015 at 8:09 pm

      That is not true, since 2011 part-time employees are enrolled in existing dc plans so they still qualify for retirement payouts from a provider. TL you know nothing about the NJ pension system. The existing system doesn’t have an age requirement or service.


      • Posted by Tough Love on February 24, 2015 at 9:01 pm

        I’m talking about their DB Plans. If the current DB Plans are “frozen” and replaced with “Cash Balance” DB Plans, their opportunity to cash in (via an end-of-career high paying job) ends …. even if you (incorrectly) state otherwise.


        • Posted by Anonymous on February 24, 2015 at 9:09 pm

          You know nothing about the existing dc plans, nor the State db plans, therefore you add nothing to the resolution process. Many dc participants have frozen db funds, the payout is guaranteed under state law. You are incorrect.


          • Posted by Tough Love on February 24, 2015 at 9:12 pm

            Arguing with you is like Stephen Hawkins arguing with Archie Bunker.

          • Posted by truthnolie on February 25, 2015 at 2:29 am

            It’s Stephen HAWKING not Hawkins……genius…..

          • Posted by Tough Love on February 25, 2015 at 3:28 am

            Nice catch … I’m impressed by this contribution to the discussion.

            P.S. … .I’d bet you never expected a Commission recommendation for a pension freeze for CURRENT workers.

      • Posted by Anonymous on February 24, 2015 at 11:50 pm

        TL when she is losing an argument she resorts to name calling. It could get bad, because she is often losing


        • Posted by Tough Love on February 25, 2015 at 1:02 am

          You claim that I do not know what I am talking about re NJ’s DB Plans yet, in John Bury NEXT article (CF1 – Christie Freeze: The Obvious Critics) he is saying the EXACT SAME thing as I.

          So is John wrong too?

          Or perhaps you are ?


  3. Posted by Carlos on February 24, 2015 at 7:40 pm

    1. Doesn’t affect me as a retiree. 2. Christie is on the ropes in every way, if you need proof look at all the staff members resigning. You know pigs fleeing the burning barn. Will never pass in current form,may not pass in any form after that stinging,humiliating ruling from the judge yesterday. The dems can smell the the stench of failure from this administration and will exploit. Oh by the way guess how he plans to pay for his transportation trust fund fiasco ? Well by borrowing money we don’t have of course. Great job piggie !


    • Posted by Tough Love on February 24, 2015 at 7:56 pm

      Quoting …. “Doesn’t affect me as a retiree.”

      That’s a shame ….. to the extent you UNJUSTLY benefited (perhaps 50% of your pension and 75% of any retiree healthcare subsidies), those that follow you (as well as the taxpayers) lose.

      The proposed changes should have (AT LEAST) recommended rolling back the 2001 RETROACTIVELY APPLIED pension increase.
      That “stench” you are smelling emanates from the insatiable greed of the Unions/workers.


      • Posted by Anonymous on February 24, 2015 at 8:15 pm

        TL you really need mental health counsel in and medication. Christie threw in the towel, of course local taxes will increase to cover benefits of municipal employees, same for county taxes.


        • Posted by Anonymous on February 24, 2015 at 8:25 pm

          TL werent you listening over the years. What you are speaking about is has virtually no effect since it is such a tiny percentage. Although I am pleased they wont be able to take advantage of the loophole for now


        • Posted by Tough Love on February 24, 2015 at 9:10 pm

          Anon, If my strongly advocating for EQUAL (but NOT better) Public Sector pensions & benefits so upsets you, it is you who is in need of mental health assistance. …. or at least an in-depth examination of your morals, ethics and greed..


          • Posted by Anonymous on February 25, 2015 at 12:34 am

            TL you need to have the moral, ethics and integrity conversation with CC. He appears to be a compulsive liar, you appear compulsive with a repetition disorder. You imagine yourself to be a genius like Mr. Hawkins the physicist, you really are delusional.

          • Posted by Tough Love on February 25, 2015 at 1:04 am

            Anon, Not sure if it’s an official “disorder” but “denial” is not an effective option.

      • TL- Yeah I’m all torn up about it. Yawn. Jobs aren’t all equal,pay isn’t equal,benefits aren’t equal,life isn’t fair. Get over it,I navigated life better,I’m smarter and better situated. That’s life in the big city. Winners and losers.


  4. What is the Court’s decision on the retiree Cola issue?


  5. Posted by Anonymous on February 24, 2015 at 8:27 pm

    TL you had better hope the democrats dont win the governorship as well as majority in senate and assembly, you taxes will rise and you may run but it wont be soon enough. oh lord, this is rich!


    • Posted by Tough Love on February 24, 2015 at 9:20 pm

      Sorry, but if I decide to move out of NJ (taking my tax payments elsewhere), I promise to keep opining on the need for NJ pension reform ….. for the oppressed taxpayers I will leave behind.


    • Posted by Carlos on February 24, 2015 at 9:22 pm

      Of course they are going to win the Gov.mansion. The NJ republican party was as popular as a fart on a hot summers day to begin with. After this administrations stench of failure,corruption and record borrowing with no mechanism to pay it back it may be decades before the NJ voter will put a pubbie in state wide office again.


      • Posted by Tough Love on February 24, 2015 at 9:25 pm

        The track record for Democrats is marvelous, simply marvelous….right ?


        • Just for clarification the pension increase that you like to cry about was granted by a republican gov. and a republican legislature. I may be wrong,but I believe this administration has borrowed more money than any previous one.


          • Posted by Tough Love on February 24, 2015 at 9:41 pm

            Like all politicians (driven by self-interest) he pushed through that retroactive increase on the eve of an election, just to lock up the Public Sector Union vote.

  6. So glad that we sold our tax high house in September. No regrets there. The only possible outcome is that it will not end well for the public takers–those that provide an over priced service and get paid more that their private counterparts in salary, benefits and retirement. Not a Christie fan but have to agree when he “its just not fair”


  7. Posted by Sean on February 24, 2015 at 9:32 pm

    As a public high school teacher and someone who has also studied the financial markets for the past fifteen years, I believe that I have a rather unique perspective on the issue…

    As a teacher, I feel for my coworkers who are concerned about their pension benefits. On the other hand, I also have no doubt that after speaking with them, they have no real grasp of the magnitude of the problem. Basically, the problem stems from a few areas:
    1. our contributions aren’t even close to being sufficient to pay for the benefits (relying on taxpayers is fine as long as property values, and the markets go up forever, which they don’t)
    2. The promised benefits are basically a fantasy that no one in the private sector could ever talk any sane business owner to agree to.
    3. the retirement age is way too low, by a long shot.
    4. People are living much longer than anticipated.

    In addition, I also hear my fellow teachers saying the usual things like, “we payed our share faithfully, and they didn’t pay theirs” along with, “a pension is a promise” and “we are guaranteed no matter what – it’s in the constitution” (I live in Illinois). My (unspoken) response to these:

    1. we may have paid in faithfully, but our entire contributions could be paid back, on average, in about two years. That’s right. Two years.
    2. “They” may not have paid in as they were supposed to, but this was often done with full union approval to avoid lay-offs, or to get pay raises. Sorry, but I find it to be a bit hypocritical to hear people say that about the politicians, AFTER they got the same politicians to get them all the perks and benefits they wanted beforehand. I am not defending politicians in any way, because I believe that their vote buying is really, truly, at the root of all evil. All I care about is the truth, whether it is pleasant or not.
    3. As far as promises and constitutional guarantees go, well, it’s kind of like the Titanic. The designer of the Titanic said it could never be sunk. In fact, he said that “not even God could sink it.” We all know the end result, but I must say, some of the comments I read on these posts remind me quite a bit of that mentality.

    Anyway, I will pass on what I have no doubt will happen, and everyone can take it for what it’s worth:

    The one universal law that trumps all others is this: That which cannot go on forever, won’t. That which cannot be paid will not be paid. Just like the Titanic’s builder may have PROMISED the ship could not be sunk, he could not GUARANTEE the ship wouldn’t be sunk. There’s a big difference between a promise and a guarantee. And I can promise you, as sure as Tuesday follows Monday, there is not anywhere near enough money to fulfill these obligations. Not even close. So, we are living in a real-life Ponzi scheme, the likes of which will dwarf Bernie Madoff. Public pensions are a bubble, just like tech stocks in the 90s and real estate in the past decade (health care and higher education are also bubbles that will implode).

    Personally, I am trying to build my own retirement, because, like social security, if my pension is there, great. If not, I won’t be completely unprepared, like a lot of employees at Enron, who never thought they needed to do anything else.

    Anyway, one more observation. There seems to be a lot of hits against the posts of the person going by the name of “Tough Love.” It kind of reminds me of the prophets in the old testament of the bible. Every time a prophet comes along, that prophet is mocked and laughed at, and told to go away, that they have it all wrong, until their words come to pass. Just my opinion, but “Tough Love” actually has it right, and no, I am not some shill going undercover. Feel free to contact me, and I will show you my teaching credentials. I am simply a guy who tries to look as objectively as possible to find the truth.

    To all my fellow teachers out there, I would just say, don’t get hung up on listening to the orchestra on the Titanic. The ship is taking in water fast, and no matter what we feel we’ve been promised, the ship will sink. There is no way around it. Anyone who doubts this has no real concept of how massive the waves are that are coming in. Once the public is aware of what’s going on, these pensions are toast.


    • Posted by Anonymous on February 24, 2015 at 9:41 pm

      LOL…..Whatever you say…..Tough Love


      • Posted by Tough Love on February 24, 2015 at 9:44 pm

        Ok….you got me. I was trying a different way of posting and pretending to conceal my whining & delusional thoughts by posting as a high school teacher.


        • Posted by Tough Love on February 24, 2015 at 9:55 pm

          I didn’t post he above … nor the long comment from “Sean”…..


          • Posted by Tough Love on February 24, 2015 at 10:02 pm

            As a matter of fact, if you look at the graphic symbols next to each post, the same symbol is used repeatedly by each unique commentator (perhaps via IP address).

            It looks like commentator “joelfrank” sent that comment under my “Tough Love” handle. If he chooses to do so, John can verify that via IP addresses accompanying each comment that he receives.

      • Posted by Tough Love on February 24, 2015 at 9:52 pm


        Astounding comment, coming from a current Public School teacher (I suspect Math or economics).

        And bravo for your honesty.

        About the only point that I did not follow was your prediction of a “bubble” in higher education. What did you mean by that comment ?


        • Posted by Sean on February 24, 2015 at 10:19 pm

          Try not to laugh, but I am an English teacher. For some strange reason, I became totally fascinated with trading stocks and futures back in 1999, as a way to supplement my income as a teacher…

          As for the higher education bubble, what I mean is that there are many bloated institutions of higher learning that are over-expanding and have their own massive pension/benefits payment problems, and they are being financed by putting massive student loan debt upon the backs of students who can scarcely find a decent job.

          Student loan default, pension costs that are out of control, along with the hidden killer, the advancement of technology, will bring many, many universities to their knees as they crumble under the weight of their massive obligations.

          The students of the future are not so anxious to take on $50,000-$100,000 worth of debt for dubious degrees and then enter a slumping job market. Plus, premiere schools are starting to offer a LOT of stuff online, at a fraction of the cost, thus creating a “race to the bottom.” Here is a link to a great article on the subject from one of the best blog sites in the world. (interestingly, the people who go to that blog are much more financially oriented, and they have a MUCH different view on the pension crisis. I’ll give you a few of those links as well.)



          Finally, when you do go on “Mish’s” site, just type the word “pensions” in the search box, and you will see a ton of stuff.


          • Posted by Tough Love on February 24, 2015 at 10:49 pm


            Thanks , I didn’t realize that you were taking about the rapidly growing pension & OPEB obligations of “Public” Sector Universities. The Calif. University system is in BIG trouble because of these excessive promises. Most Private Sector Colleges/Universities provide for retirements via DC Plans administered by TIAA-CREF and have avoided such problems.

            Actually, these problems have been growing for quite some time. Going back 20+ years MOST college instructors were employed in “tenure track” positions with good salaries. Today, because of the cash shortfall, there are VERY few “tenure track” positions open even for the VERY well qualified. The colleges just hire mountains of part-time “instructors” with low pay and no benefits.

            Re your links: I’ve been reading MISH’S Global Economic Trend Analysis for a while. Interesting fellow, and certainly speaks his mind with no holds barred.

            If you are looking for more HONEST/OBJECTIVE analysis of the nationwide Public Sector pension mess, a few people whose work should be read include:

            Tia Goss Sawhney (an Illinois Public Sector pension actuary bucking the status quo), Mary Pat Cambell (an actuary who blogs on the subject), and the R.I. Treasurer/ Governor-Elect Gina Raimondo (a breadth of fresh air on the subject).

            Googling any of them will bring up numerous content.

      • Posted by Sean on February 24, 2015 at 10:00 pm

        Hey “Anonymous.” Why don’t we play one of my favorite games. It’s called “Put Up or Shut Up.” If I can’t prove who I am, with my credentials, I’ll publicly acknowledge that fact, and pay you $1000. On the other hand, if I DO prove, YOU pay me $1000.

        Sorry, I am not who you wish I was. I’m just a guy who seeks to know the truth, not protect my viewpoint at all costs.

        You will probably, of course, have no desire to look into this, but I would highly recommend that you, and all the others out there with the courage to look into it, read Illinois Pension Scam, by Bill Zettler. It doesn’t matter what state you live in, the problems are all the same. This guy did his homework, and provides proof of his findings.

        We either want to know the truth or we don’t. But mathematics, just like gravity, can be defied for only so long before brutal reality sets in.

        If you do not want to see the truth, well, sit back, turn up the music, and bash anyone who threatens your fantasy. It will not change the outcome, but at least you’ll hit the freezing water with a happy song in your head. Good luck!


    • Posted by javagold on February 24, 2015 at 10:17 pm

      Very good honest post. But I will sum it up even better.

      It’s simple math. It cannot be paid. It’s unsustainable.


    • Posted by Anonymous on February 24, 2015 at 11:57 pm

      Sean loves what he has posted, he feels a great sense of accomplishment


      • Posted by Sean on February 25, 2015 at 12:11 am

        And on the other hand, those that have nothing of substance to contribute will resort to attacking the person. Sorry, I’ll just stick to the mathematical certainties. Thanks anyway. : )


    • Posted by Anonymous on February 25, 2015 at 12:43 am

      Your formal and informal education appears to be a waste, the State of NJ through private insurers sponsored a hybrid defined contribution program 401a and 403b. TL is a drama queen, meanspirited disciple of chicken little, there is a solution to transfer the risk to employees and private sector providers.


      • Posted by Tough Love on February 25, 2015 at 1:11 am

        There are no workable options for materially underfunded Public Sector Plans to transfer their liabilities to Private Sector insurers because the funds to purchase those Private Sector products do not exist.

        Such transfers work for Private Sector Plans when fully funded, and it is THOSE Plans that you hear about in articles discussing such transfer of risk.


        • Posted by Anonymous on February 25, 2015 at 10:04 am

          You are wrong it happens in NJ often in higher ed Patti v implants transfer from NJPERS to NJABP. The PERS funds are frozen but retain the same payout guarantee. TL you need to do your homework. Sean the information about dc plans should be in your union contract read and share.


    • Posted by Tom on February 27, 2015 at 4:42 pm

      History teachers should know all about situations that are unsustainable.

      The pope said that Henry VIII could not divorce his wife. So Henry VIII decided that he was the head of the Church of England. Now he could give himself permission to divorce his wife. Brilliant!

      The Articles of Confederation required a unanimous vote of all 13 states to amend the Articles. So 11 states simply ignored the Articles. They joined a new Constitution that only required a 2/3 vote for ratification.

      Russia had been a rising power in Europe for over a century. Even Napoleon had not been able to defeat Russia. French investors figured that they couldn’t lose by investing in Russia. Then the Communists came in to power. In the 1990s, the debt was finally extinguished at less than a penny on the dollar.

      When a situation cannot last, then it will not last. No law, constitution, or established power center can stand in the way. No politician can bind his successors to a course of action. If taxpayers are forced to choose between doubling their tax rate and reducing pensions for EXISTING retirees, they will pick the latter.

      If the unions had been responsible to their members, then they should’ve been the ones pushing for a defined-contribution system all along. After Florio lost his job for funding the pension, and Whitman got reelected, anything else is wishful thinking.


  8. Posted by Anonymous on February 25, 2015 at 1:00 am

    Well now Christie has a roadmap….before it was a toolbox….whats next oh that’s right a helicopter but at least it won’t be Marine 1.


  9. Hi all,

    Just a simple question while the heavyweights are in their corners:

    When will the Court decide the retiree COLA issue?


    • Posted by truthnolie on February 25, 2015 at 11:15 pm

      Isn’t it obvious??

      What they are doing (at the behest of Christie & his minions) is stalling the COLA case as long as possible so as to not have to pay it. So, they’ll keep it in court as long as they can by using various legal ploys to keep it from being decided (all the while costing taxpayers more money in legal fees AND then fees to plaintiffs when case is finally decided in their favor).

      BTW…..Christie’s “roadmap” pipe dream has ZERO chance of passing as is…..for one look at this from report (what?…he didn’t think we’d notice?):

      “46 The cost of living adjustments (COLAs) at issue in Berg v. Christie, 436 N.J. Super. 220, 241 (App. Div. 2014) are not funded by the existing plan and would not be preserved or restored under the Commission’s proposal.”

      HAHAHA…..so he’s expects public workers to give up something that has already been challenged and decided in their favor? Gee…..I wonder if he would extend the olive branch of kindness if it were the other way around?

      That condition (and many others) make any agreement out of the question. He already knows this but is throwing something out there to look good and like he’s doing something. He also can later play the big hero saying he tried to do something but the unions wouldn’t budge.

      Anyone who thinks this has any chance of going anywhere in its present form is just a naive dreamer.


      • Posted by Tom on February 27, 2015 at 5:13 pm

        Right now, it is just barely possible to fully fund the frozen credits and the frozen pension … if there’s no COLA, and if health care costs are reined in.

        If there’s COLA, and if health care costs keep going up, then the obligations will just compound, year after year. The longer you wait, the more the problem blows up. A far harsher reform will be needed in another 10 years that cuts benefits for EXISTING retirees.

        What do you want? A little bit of pain now, or an excruciating amount of pain later? There is no third choice that taxpayers will allow.


        • Posted by Tough Love on February 27, 2015 at 5:40 pm

          Tom, you’re wasting your time. Truthnolie is the epitome of the insatiably greedy Public Sector mindset. No taxpayers tears will be shed if he gets his way (meaning no material soon-enacted reductions) because getting his way means definite Plan failure …… and I’ve got a bridge to sell him if he thinks NJ’s Taxpayers will pony up an ADDITIONAL $8+ Billion annually in taxes to continue paying pensions to retirees on a pay-as-you-go basis.


      • Posted by Tough Love on February 27, 2015 at 5:20 pm

        What percentage of employer-sponsored Private Sector Plans include COLAs….. maybe 1%?

        Public Sector workers are NOT underpaid in “cash” (vs their Private Sector counterparts) and THEREFORE there is ZERO justification for greater taxpayer-funded pensions (of which the inclusion of COLAs is but ONE very costly example) and/or benefits.

        And speaking of “benefits”, while close to 100% of PUBLIC Sector workers get free or heavily subsidized retiree healthcare, it is VERY rare to see ANY current accruals toward employer-sponsored retiree healthcare in the Private Sector today.

        ZERO justification.

        You’re NOT “special” …. on the Taxpayers’ dime.


  10. 30 years ago Governor Kean wanted a combination plan comprised of a DB and DC component. But the NJEA declared war and held rallying meetings in all 21 counties. I applauded the Governor’s proposal at one of the rallying sessions. The policed asked me to leave quickly because it became ugly. Here is a Governor that was spot on!
    It’s just a shame that his proposal was rejected out of hand without any debate by the rank and file members of the union. The leadership says jump and they ask how high? They jump and they do not come down until the leadership says come down.


  11. Legally the cola is part and parcel of the DB. So if the DB for current retirees is preserved under the proposal, it follows that the cola is also preserved.


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