What New Jersey is claiming in the cost-of-living-adjustment (COLA) case is that COLAs are not part of the ‘benefits program’. However the 2011 law defines an item specifically exempt from being a non-forfeitable right and that item is not the COLA. After trying to blame the IRS for this language:
5. a. For purposes of this section, a “non-forfeitable right to receive benefits” means that the benefits program, for any employee for whom the right has attached, cannot be reduced. The provisions of this section shall not apply to post-retirement medical benefits which are provided pursuant to law.
the state veered off into the twilight zone:
It takes repeated viewing to understand where this is going and you might get to a different place but here is where I am:
The legislature that enacted the non-forfeitable right did not recognize COLAs as being nonforfeitable because in 1969 that legislature amended the Pension Adjustment Act (43:3b-8) and it said that:
should there be a blanket increase in pensions then COLAs shall terminate thereafter.
Then in December, 1987 (?) six months after the legislature put in the non-forfeitable right statute the legislature enacted Chapter 281 (8.5 of some Pension Act) which exempted firemen from that COLA termination provision and allowed the state to argue:
How could the legislature that enacted the non-forfeitable right think that it had created a contractual right to COLAs and then six months later say: “Oh wait, we need to exempt firemen from the termination clause.” If the firemen had a nonforfeitable right then there would have been no need to do that.
Maybe someone out there can speak to the accuracy of the law the state cites but, bottom line, did the state just admit that firemen DO have a non-forfeitable right to COLAs?