Under S3040, passed 37-0 on Monday, a newly expanded board of trustees would assume management of the Police and Firemen’s Retirement System, which has more than 85,000 members who are working or retired. The police and fire unions would also obtain broad discretion over both the size of members retirement benefits and the contributions needed to support them.
Here is what is in the law and what the unions would get:
COLAs back (page 2)
The Board of Trustees of the Police and Firemen’s Retirement System may adjust the monthly retirement allowance or pension of its retired members in accordance with subsection b. of section 13 of P.L. 1944, c.255(C.43:16A-13).
Benefit Protection (page 4)
Nothing in the provisions of P.L. , c. (pending before the Legislature as this bill) shall be interpreted to diminish the non-forfeitable right to benefits provided to any member of the Police and Firemen’s Retirement System under State law or affirmed by a ruling or holding of a court in the Judiciary Branch of State government.
Higher Benefits (page 16)
The board may, in its discretion and at such time and in such manner as the board determines, enhance any benefit set forth in P.L.1944, c.255 (C.43:16A-1 et seq.) as the board determines to be reasonable and appropriate or modify any such benefit as an alternative to an increase in the member contribution rate, which increase the board determines to be reasonable, necessary, and appropriate, or reinstate, when appropriate, such reduced benefit to the statutory level without an additional contribution by the member. The board shall act exclusively on behalf of the contributing employers, active members of the retirement system, and retired members as the fiduciary of the system. The primary obligation of the board shall be to direct policies and investments to achieve and maintain the full funding and continuation of the retirement system for the exclusive benefit of its members.
A New Actuary (page 21)
The board of trustees shall retain an independent actuary to review prior investigations into the mortality, service, and compensation experience of the members and beneficiaries of the retirement system and to review the three prior actuarial valuations to certify that the actuary of the retirement system conducted the investigations and valuations in accordance with generally accepted actuarial standards.
Investment Power (page 21):
The board of trustees shall have authority to invest and reinvest the moneys in, and to acquire for or on behalf of the funds of, the board. The board shall formulate and establish, and may from time to time amend, modify, or repeal, such policies, objectives or guidelines as it may deem necessary and proper to govern the decisions, actions, methods, practices, or procedures for investment, reinvestment, purchase, sale, or exchange transactions of the board.
Dictatorial Power on Benefits if 8 Agree (page 25):
At least eight votes of the authorized membership of the board shall be required to approve any enhancement or reduction of a member benefit, other than for the activation of the application of the “Pension Adjustment Act,” P.L.1958, c.143 (C.43:3B-1 et seq.), or retirees, or to approve any increase or decrease in the employer contribution that is more than what is recommended by the actuary for the system for the purpose of the annual funding requirements of the system.
More Power (page 29):
The board of trustees is authorized to make an adjustment to the uniform contribution rate of the members set forth in this subsection as the board deems reasonable, necessary, and appropriate after consultation with, and the recommendation of, the actuary. Any adjustment to a contribution rate shall be made at such time and in such manner as the board shall determine.
Enforcement Power (page 36):
Upon certification by the board of trustees to the Director of the Division of Local Government Services in the Department of Community Affairs of an employer contribution payment being days past due, the director shall withhold any State aid payments that are disbursed by the Division of Local Government Services from the employer in an amount equal to the amount of the employer contribution due to the board. If the employer is eligible for transitional aid, the Division of Local Government Services shall consult with the board to develop a payment plan to ensure that the required payment and interest owed is paid in a timely manner. The director shall release the State aid payments held pursuant to this subsection to the employer upon certification by the board of trustees of its receipt of the delinquent employer contribution. Nothing in P.L. , c. (pending before the Legislature as this bill) shall relieve State or local government employers of any present or future obligations of their normal cost or unfunded liabilities required to be paid into the retirement system.
What the unions would really get, as taken from the latest actuarial report, is a debt of over (much over with honest values) $11 Billion: