Breaking News: NJ Supreme Court To Hear COLA Case

According to one of the litigants:

The Supreme Court of New Jersey on Tuesday agreed to hear a major case, Berg, et. al. v. State, et. al. concerning New Jersey’s ailing pension system.   At issue is the constitutionality of the so-called Cost-of-Living-Allowance (COLA) freeze imposed as part of  the 2011 reforms signed into law by Governor Christie.  Last year, an appellate court ruled that the indefinite suspension of COLAs  violated the contractual rights of all retired public workers and remanded the case back to the trial court.  The case will likely be argued this fall.

46 responses to this post.

  1. Posted by Anonymous on July 30, 2015 at 5:16 pm

    Wow this could be big – not. I understand law does not necessarily equal logic. However, after their c.78 funding ruling clearly only one way to rule, uphold the suspension?

    Reply

  2. Posted by Anonymous on July 30, 2015 at 5:50 pm

    Will the COLA be retroactive?

    Reply

  3. Posted by Anonymous on July 30, 2015 at 7:09 pm

    what the heck does retroactively suspended, I dont think they can take back money they have already paid. I never got one red cent by the way

    Reply

    • Posted by truthnolie on July 30, 2015 at 10:44 pm

      They mean employees who had their COLA’s illegally suspended years back would be entitled to retroactive payments for those missing years.

      Reply

  4. Posted by truthnolie on July 30, 2015 at 7:10 pm

    Just as I posted a day or two ago from an “inside source” (I like saying that because doubters have derided my info in the past…..which has turned out to be 100% true then and now)….that the Supreme Court would issuing an announcement shortly.

    Reply

    • Posted by Anonymous on July 30, 2015 at 7:33 pm

      Any idea on the outcome, all kidding aside good call!

      Reply

    • Posted by Anonymous on July 31, 2015 at 4:01 pm

      actually you said either the supreme court would hear it or send it back down, not really inside information. common sense isnt it. I hope you are right about issuing decision shortly, I doubt that will be the case

      Reply

      • Posted by Tough Love on July 31, 2015 at 8:54 pm

        Yes, since oral arguments won’t even begin until this Fall ………..

        Reply

      • Posted by truthnolie on August 1, 2015 at 12:55 am

        @ Anon:

        No….while it was known that it would happen AT SOME POINT my post was to say they had reached a decision (whether they would hear it or remand it) and would be announcing THAT decision shortly…..up until that point it was in limbo and no one had a clue when they would announce their decision.

        JB even had a post about it a while back about it being on hold status but no other information available. So…my info was an update to that and that an unknown would shortly be known……i.e.; its status and where it would be heard.

        BTW….I never said they would be issuing a decision “shortly” on the COLA lawsuit…..only issuing a decision shortly as to whether they would be hearing it or remanding it. It was clearly stated…go back and read it.

        @TL:

        You also must have misread what I was saying as you agreed with Anon about what I WASN’T saying…..and fall is probably the earliest to contemplate them hearing arguments….probably drag it later though.

        Reply

  5. Posted by Anonymous on July 30, 2015 at 9:30 pm

    Will COKE be testifying on behalf of COLA?

    Reply

  6. Posted by Anonymous on July 31, 2015 at 9:07 am

    Ok so worst case scenario COLA are reinstated and must be paid retroactively. Pension funds run out of money sooner and pay as you go contributions skyrocket. Only way, legally, for the State to react, 100% premium share for hralth benefits active and retired. Anyway you look at it reform is inevitable.

    Reply

  7. Posted by fouls123 on July 31, 2015 at 4:00 pm

    And increased taxes are inevitable. They should raise taxes asap to stop the bleeding in the pension fund hole and do the right thing for a change and stop delaying. But of course Christie’s presidential bid would then be even deader than it is already.

    Reply

    • Posted by Tough Love on July 31, 2015 at 8:58 pm

      “do the right thing for a change and stop delaying” should apply to the Pension Commission’s proposals the freeze all of the Public Sector DB Pension Plans and to materially reduce healthcare benefits, NOT to increasing taxes.

      Reply

  8. Posted by Anonymous on July 31, 2015 at 4:02 pm

    yeah I am shocked that the tax thinks that if the pension fund goes bust, they will be saved from higher taxes

    Reply

    • Posted by Tough Love on July 31, 2015 at 9:38 pm

      Still in denial?

      Tax increases will be minimal, but pension and/or retiree healthcare reductions will be massive.

      Reply

  9. Posted by Tough Love on July 31, 2015 at 9:53 pm

    Interesting how clueless some journalists are. Ted Dabrowski in an article linked here:

    https://www.illinoispolicy.org/chicago-and-detroit-trading-places/

    Said that one key pension reform ….. “Chicago and its sister governments should place all new workers in self-managed accounts like 401(k)s offered in the private sector.”

    and …”That would immediately stop the unfunded liabilities from growing further and give city workers the retirement security they deserve”

    Really ?

    (a) Without (at a minimum) ALSO freezing the future Service accruals of all CURRENT workers ?
    (b) Without (at a minimum) a massive increase in contributions (from current levels) ?

    Reply

  10. Posted by dentss dennagan on August 1, 2015 at 12:05 pm

    I believe the SC will rule just like they did before …”for the greater good” ..

    Reply

    • Posted by Tough Love on August 1, 2015 at 12:37 pm

      Regardless of the decision, NJ’s Plans (ALL of them, STATE and LOCAL), will hit “PAY-GO” soon (State Plans in less than 5 years), just sooner if the COLA’s are reinstated.

      THAT’s when the “Sh**” hits the fan. Will our Elected Officials have the nerve to raise taxes or make HUGE additional cuts service to generate the incremental $6 billion or so needed to keep paying the existing retirees ….. or will they say no, and VERY materially reduce the retiree healthcare benefits and/or the Future Service accruals for Current workers.

      My guess is the latter and with BOTH options implemented, because while reducing future service accruals is absolutely necessary to stop the unfunded liability from growing even larger, by itself, it save little immediate money. Retiree healthcare cuts are an immediate savings, and $ for $ can be used to continue payments to the retirees.

      Reply

  11. Posted by Anonymous on August 1, 2015 at 5:03 pm

    John,
    Can you offer your opinion on the following:
    Retired mid 50’s receiving a NJ DBP w/ health benefits and no COLA. In an attempt to control my own destiny I’ve applied for various private and public jobs, receiving an offer with the State of Florida.I’m relocating and accepting the position.

    My question is this. Im planning on working 10 years because I’ll be vested after eight years and just in case of potential NJ retired health benefits I’ll be medicare eligible. Approximating my DBP pension should be about $500 month with a 3% member contribution OR a DCP with a 3% employer match. Total combined contribution (6%) over the 10 years without gains/losses estimated to be $30k.

    Assuming generally good health and average life expectancy I’m trying to decide which plan to select. Financially the DBP seems better but what about the viability of the FRS, considering the mess NJ’s in?
    Thank you!

    Reply

    • Posted by Anonymous on August 1, 2015 at 5:09 pm

      Forgot to ask, are there any State and/or Federal restrictions in multi State DBP participation?

      Reply

    • For most public plans you’d have to be about 12 years old to have the DC plan work better for you than the DB unless the DB plan has New Jersey-type issues.

      The latest valuation I found for the FRS was July 1, 2012: https://burypensions.files.wordpress.com/2015/08/frs-2012-val.pdf

      What I look for is on pages:

      9 – $18 billion unfunded and 87% funded. Bad by most pension standards but in the top 10% for public plans.

      89 – benefit formula – as Tier 2 it looks like you would get 1.6% of CAREER AVERAGE salary times years of service with NRA at 65 and 8 years. Assuming $50,000 average salary and 8 years at age 65 that comes to an annual benefit of $6,400 which is worth about $80,000 as a lump sum and you would be paying $12,000 for it in 3% employee contributions over 8 years. The DC plan would get you an extra $12,000 in employer contributions for a total of $24,000 + whatever interest they apply in their plan but it probably won’t bring you much past $30,000.

      Reply

      • Posted by Anonymous on August 1, 2015 at 5:28 pm

        Thanks John, appreciate your informational response!

        Reply

      • Posted by Tough Love on August 1, 2015 at 6:13 pm

        John, I have been saying … for years…. that Public Sector Pans are UNFAIRLY generous (vs what Private Sector workers typically get from their employers), TYPICALLY being 3x-4x greater in value at retirement.

        The DB Plan that Anon described is on the VERY low end of Public Sector DB Plans with only a 1.6% per-year-of-service-factor and using CAREER Average earnings (not FINAL or FINAL AVERAGE earnings as 99% of Public Sector Plans do), and the DC Plan Anon was offered is akin to what Private Sector workers typically get from their employers.

        So what do we have ….per YOUR analysis ….. a LOUSY (by “Public ” Sector stands) DB Plan being $80K/$30K or 2.67 TIMES greater in value at retirement than what a similarly situated Private Sector workers would get from his/her employer.

        A more typical Public Sector Plan, with a higher formula factor and based on FINAL or FINAL AVERAGE earnings, gets us to the 3x-4x.

        So much for the BH’s and the S. Moderation Douglas’s of the world who consistently challenge my demonstrations.

        Reply

        • Posted by Anonymous on August 1, 2015 at 6:18 pm

          True but even taking into account the more generous NJ DBP versus FL, NJ’s unfunded liability is, on a percentage basis, significantly greater due to inadequate funding.

          Bottom line P&B Commission reforms are necessary now with a dedicated funding all via a constitutional amendment.

          Reply

          • Posted by Anonymous on August 1, 2015 at 6:35 pm

            Another point, somewhat insignicant in the total net benefits, prior to FRS 2011 pension reform member’s contribution was zero. Now as John mentioned it’s 3%.

          • Posted by Tough Love on August 1, 2015 at 7:17 pm

            True … but ???

            No so. The “funding” level has nothing (absolutely NOTHING) to do with the relative “generosity” of Public Vs Private Sector Plans.

            But we agree that implementation of the NJ pension Commission recommendations are necessary … along with a dedicated funding source (a funding guarantee that ENDS if the pensions are subsequently increased).

          • Posted by Anonymous on August 1, 2015 at 7:29 pm

            Agreed but the funding level, or lack thereof in NJ’s case, has everything to do with the pension’s unfunded liability.

          • Posted by Tough Love on August 1, 2015 at 7:49 pm

            The “funding level” is the ratio of Plan assets to the PV of Plan liabilities.

            The “unfunded liability” is the Excess of (a) over (b), where:
            (a) PV of Plan liabilities
            (b) Plan assets
            They are both addressing the SAME issue, one as the “percentage” funded, and the other as a “dollar” shortfall.

            And NEITHER has anything to do with the Plan’s “generosity”.

        • Posted by S Moderation Douglas on August 2, 2015 at 1:47 am

          Oh My Goodness
          I’m laying by the pool, minding my own business, trying to read a good novel after swimming my laps; and my ears start burning. Very annoying. Sure enough, I find TL using my name in vain….again. (There is no period after “S”, by the way. It’s not an initial. My given name is S)

          To add insult to injury, I have been saying … for years…. that …..your logic is still faulty. The math is still futile. You still cannot directly compare public and private pensions while ignoring the difference in wages. Average private sector wages in Florida are 15% higher than public sector wages.

          Sorry, bro, your “demonstrations” are still a joke.

          Keep yo hands off my Public Sector Pans.

          Reply

          • Posted by Tough Love on August 2, 2015 at 3:05 am

            Oh, we have, with 4% lower Public Sector “wages” in NJ …. that swings to 23% HIGHER _”Total Compensation” when pensions and benefits are included … all per the AEI study we have BOTH quoted so often.

            Surely you haven’t forgotten that … so I guess you just trying to mislead AGAIN.

          • Posted by S Moderation Douglas on August 2, 2015 at 5:47 am

            Ah, but we’re talking Florida now. Thirteen percent lower pay resulting in only seven percent higher compensation. And this was calculated on data before the 2011 reforms that, among other things, added the three percent employees contributions. Then factor in the margin of error of your favorite study…..

            There’s not a misleading bone in my body.

          • Posted by Tough Love on August 2, 2015 at 10:12 am

            Oh, and how much higher would the PUBLIC Sector wages AND Compensation be if the HIGHEST (by far) compensated group of PUBLIC Sector workers had not been excluded for that study … all SAFETY WORKERS ?

            STILL …omitting “material facts” ?

          • Posted by S Moderation Douglas on August 2, 2015 at 11:55 am

            “how much higher” is not a “material fact”. It’s just speculation.

            According to the BLS, the mean wage for a firefighter in California is $71,630. In New Jersey, $77,550. Florida is $52,040.

            http://www.bls.gov/oes/current/oes332011.htm

          • Posted by Tough Love on August 3, 2015 at 12:55 am

            No, “how much higher’ is not a material fact, but omitting that the Highest paid PUBLIC Sector workers (“safety workers”) are excluded for the Public/Private Sector comparison is … as it materially distorts the results.

            And while we’re at it EACH of the 3 States CA, NJ, and FL shows that the MUCH Greater Public Sector Job Security (like not being unemployed for a few years as is common in the Private Sector over one’s career) is worth and ADDITIONAL 10-11% of pay …………… another material fact that you omitted.

          • Posted by S Moderation Douglas on August 3, 2015 at 2:17 am

            “See my long answer above.”

  12. Posted by Anonymous on August 1, 2015 at 7:40 pm

    BTW, there’s a misperception in the private sector regarding public sector workers. It’s not something I can change, nor would I try if I could. I’ll take my ball and go work where I’m wanted. NJ’s (tax) loss not mine. I’d of stayed but was not considered employable by the private sector, and so it goes.

    Reply

    • Posted by Tough Love on August 1, 2015 at 7:53 pm

      And that mis-perception is ?

      Reply

      • Posted by Anonymous on August 1, 2015 at 7:59 pm

        Similar to the opinions you and others have expressed on this blog.

        As far as mincing words on the funding/benefits topic. No amount of reforms will sure up the pension funds without adequate employer contributions. Conversely, without P&B reform the adequate funding required would be cost prohibitive.

        Unfortunately, right now we have the “perfect storm”. No reforms and inadequate funding.

        Reply

        • Posted by Tough Love on August 1, 2015 at 8:22 pm

          Good analysis ……. now see if you can convince the Union-brain-washed Public Sector worker/retiree masses that such reforms are INDEED necessary …. and for their own good.

          But be careful ……… I’d bet that most would rather tar & feather you for such views, than agree with you.

          Denial & stupidity are a tough combination to overcome.

          Reply

      • That they actually “work” for a living instead of going through motions for 30 years.

        Reply

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