Thomas Byrne, the son of former Gov. Brendan Byrne, is a member of Gov. Chris Christie’s Pension and Benefit Study Commission, a private investment manager and former chair of the state Democratic Party. This morning he had a guest opinion column in the Times of Trenton asking us to consider:
The State’s 2015 budget was approximately $33 billion; its pension plans paid out $7 billion in benefits. That money came [from] the $79 billion of pension plan assets. Let’s fast-forward a decade or so and imagine what will happen if pension plans run dry.
He then proceeds to outline why changes have to be made, specifically those proposed by his commission which he claims “would fully fund the $40 billion hole in the pension funds”, and ends with:
This is all avoidable, but not without leadership and political courage. Over-simplification of this problem will do no favors for public servants who have done nothing wrong and who deserve the pensions they have earned. Let’s not dither and let the hourglass run out.
He is wrong on a number of points.
- Based on raw data provided by the state showing retiree monthly payouts in 2014 there was $9.65 billion paid out to retirees up from $8.71 billion in 2012. CAFR numbers show $9.44 billion billion being paid out for the year ended June 30, 2014 with payouts only being at $7 billion back in 2009.
- $79 billion may be what the Division of Investment claims to have but that is aspirational since so much is tied up in ‘alternative’ investments where values are pegged by those who make higher fees from inflating those values.
- Again with the $40 billion unfunded number – try $166 billion.
- This is now NOT avoidable because even if we had people with “leadership and political courage” they would still lack honest information on the scope of the problem.*
* Due in large part to a compromised actuarial profession which is getting some focus today.