Lifeguard Pensions Sinking Atlantic City?

Christie said the mayor can either cooperate “or the inevitable will occur, and the inevitable is they will face bankruptcy, and if they do then the bankruptcy court will control their fate, not the state of New Jersey, if that’s what they prefer it’s their choice”.

For most people who see a future (or are stuck) here that’s no choice at all.  Could a bankruptcy judge have done any worse fiscally over the last twenty years in Atlantic City (or New Jersey)?

But the poster boys/girls for Atlantic City’s troubles have been made out to be the lifeguards and they are only in the sense that the pensions they get are a result of a short-sighted system of governance designed to accumulate debt recklessly.

It is not only Atlantic City that has pensions for lifeguards.  According to excerpts from the New Jersey Statues Annotated (NJSA) put together for the Sea Isle City Beach Patrol:

43:13-24. Retirement for Service and Age

In all cities of the fourth class (cities bordering on the Atlantic Ocean which are seaside or summer resorts) any member of the life guard force, whether employed as an officer or a guard, who has or shall have served on such force for a period of twenty years, and shall have attained the age of forty-five years, and for a period of ten years preceding his application has been continuously in such service, may, either by the governing body of any such city or upon his own application, be retired upon half pay.

43:13-27. Pension Fund

For the purpose of paying the pensions hereunder, a fund shall be created as follows:

  1. There shall be deducted from every payment of salary to each member of the life guard force in the city four per cent of the amount thereof.
  2. The city shall raise by taxation and pay into the fund yearly an amount equal to four percent of the total salaries paid to members of the life guard force.
  3. Any fines imposed upon a member of the force, money given or donated for the purpose of the fund, money deducted from the salary of a member of the force because of absence or loss of time and half of any reward paid to the force or an member thereof shall be added to the fund.

If at any time there is not sufficient money in the pension fund for the purposes thereof, the governing body shall include in any tax levy a sum in addition to amounts theretofore contributed which shall be sufficient to meet the requirements of the fund. This sum shall be raised by tax levy no longer than is necessary to meet the requirements of the fund. Whenever the fund exceeds an amount which the governing body by resolution from time to time determines to be adequate for the fund, no moneys, except the four per cent of salaries and the fines, donations and rewards specified in this section, shall be paid in to the fund unless and until the fund falls below the amount so determined to be adequate.

What this means is that a lifeguard can work 20 years at an annual salary of $10,000 and $16,000 would be deposited into a fund over that time to pay out $5,000 a year for life to a 45-year-old.  The math does not work out for adequate funding and, according to Paul Mulshine’s column today, it’s even worse in practice:

The most lucrative such pension goes to a guy who collects $52,000 a year according to a recent article in the Atlantic City Press. The piece was headlined “Atlantic City may try to rein in lifeguard pensions.”

May try? The city is $400 million in debt. Mayor Don Guardian says non-essential services will have to be curtailed after April 8. Why is the city still paying pensions for jobs that college kids will gladly do for minimum wage?

To get an answer I called Seth Grossman, an attorney who heads up the citizens’ group Liberty and Prosperity. He served on the Atlantic City Council in the 1980s. He recalls being surprised to find out that lifeguards were on the payroll long after the summer ended.

“I’d ask, ‘Why do we have lifeguards on the payroll in October and November?'” Grossman said. “They’d reply, ‘These guys are retiring soon and we need juice up their pensions. We have them painting lifeguard boats.'”

Since pensions are based on the highest salary what happens is that lifeguards game the system to increase their benefits, as most of us do in our own jobs. So is it the lifeguards to blame or the crafters of the system? Or those who ignore what the crafters do until they get the bill and it’s too late?

6 responses to this post.

  1. Posted by dentss dunnigan on March 24, 2016 at 10:34 am

    But yeah we should constitutional guarantee these pensions ,man’s got to get paid for a job well done …..cmon’ it was promised ,and I want it !


  2. there was an article many years ago as to the number of teachers who were seasonal lifeguards.. some guys in their 50s won some lifeguard contest and all teachers in Northern Jersey..unmarried peter pan bums sharing a house. I wonder if some collect both pensions


  3. Posted by Tough Love on March 24, 2016 at 1:22 pm

    Quoting ….. “Since pensions are based on the highest salary what happens is that lifeguards game the system to increase their benefits, as most of us do in our own jobs. So is it the lifeguards to blame or the crafters of the system? Or those who ignore what the crafters do until they get the bill and it’s too late?”

    I’m not sure what opportunities Unionized PRIVATE Sector workers (in fields like Sweeney’s iron-workers) have to “game the system” other than taking as may jobs as they can find in their last years (which really ISN’T “gaming the system”), but the vast majority of Private Sector jobs are non-union and for the few that still get DB pensions, I can assure you that the opportunity to goose one’s pension by any means is near ZERO.

    With Private Sector pensions being paid for with the COMPANY’S money (not the Taxpayer’s money) the structure itself rarely leaves ANY opportunity to goose one’s.

    Such BS ONLY exists in the PUBLIC Sector. and reneging on the results of such “gaming the system” should be at the top of the list of pension take-aways when AC (and other cities/towns) goes bankrupt (or when States simply become insolvent and cannot pay their bills).

    In my opinion, the crafters of the system and the administrations that followed (and allowed it to continue and fester) are primarily to blame. But it’s the workers/retirees that are the financial beneficiaries of this “financial “mugging” of the Taxpayers, so THAT is where the Taxpayers must look to right this wrong …. by reneging on that 50+% share of their pensions that certainly would not have been granted in the absence of the collusion between their Unions and the Elected Officials BOUGHT with Union campaign contributions and election support.


  4. Posted by MJ on March 24, 2016 at 5:32 pm

    The fact that lifeguards receive pensions is ridiculous as is 50 year old life guards. I think that says it all. These jobs were meant for college students and older high school kids working summer jobs not a bunch of old geezers hanging on for dear life so that they can collect a second pension. Most if not all would have to be teachers as this is the only occupation that has the summer off. It’s almost funny if it wasn’t so sad.


  5. Posted by robert on March 24, 2016 at 6:49 pm

    So lets assume a teacher makes an average of $50,000/yr and they contribute 6% of their annual salary toward retirement for 30 years. That’s 180% of their annual salary. Now let’s say their pension is 60% of their annual salary that they will receive for 25 years of retirement. That’s 15 times their annual salary. Said another way, they will have contributed $90,000 and will collect $750,000. Yes I’ve ignored both inflation and return on investment assumptions for simplicity, but the point is the same just not inflated or discounted.


  6. Posted by robert on March 24, 2016 at 6:49 pm

    There is a huge difference between private sector and public sector unions: in the private sector the unions negotiate with employers who can go out of business and who are directly affected by the results of the union negotiations. In the public sector, the employer cannot go out of business and decisions are made by politicians who are more interested in securing the votes of union members than in the economic consequences and reasonableness of the terms they negotiate. Those politicians will also be retired and collecting their own government sector pensions when the true costs of the contracts they have negotiated are realized. Note the incredibly bloated pension packages awarded by the NY State legislature to NYC uniformed workers and teachers – totally unsustainable. (Same for Illinois and California)


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