NJ Police and Firemen Splitting

Per nj.com:

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:

30 responses to this post.

  1. Posted by Anonymous on March 16, 2017 at 4:09 pm

    Like I said before, the Local employer contribution mandate should be eliminated!

    The State mandates Locals’ contributions but the NJSC interpretation is the State’s contributions aren’t mandated. Somewhere there’s something amiss? Let’s see if the State now tries to separate out SPRS and JRS, wonder how the NJSC would rule on that when challenged by the various TPAF and PERS unions?


  2. Posted by Anonymous on March 16, 2017 at 4:16 pm

    Better yet include local employers P&B contributions in the property tax cap!


  3. Posted by NY on March 16, 2017 at 5:31 pm

    OK — so what’s the logic of the bill’s proponents? Are they naive, or nefarious?–


  4. Posted by boscoe on March 16, 2017 at 5:54 pm

    So, as I commented elsewhere:

    What’s wrong with this picture? Judging from the 37-0 vote in the state Senate, you’d think nothing. On the other hand….this bill is about a lot more than turning over the administrative management and investment authority to a reconfigured PFRS Board of Trustees. From the bill (S-3040) statement:

    “Under the bill, the board of trustees has the authority to establish a process for the review, approval, and appeal of applications for retirement. The bill provides the board of trustees with authority to modify the system’s member contribution rate; cap on creditable compensation; formula for calculation of final compensation; and standards for special retirement and disability retirement. The bill allows the board to reinstate cost of living adjustments for retirees. Under the bill, the board may alter any benefit set forth in statute for the PFRS.”

    Note the last two sentences. Pension benefit formulas for virtually all public employees are currently established by statute. Now we have an exception for one group of public employees. The new PFRS board will be empowered to alter benefit levels and reinstate COLAs with no further legislative or executive approval. Why is this reserved for one pension system only? What makes the Police and Firemen’s Retirement System different than the Teachers’ Pension and Annuity Fund? They both are comprised largely of local employees and employers. And the PFRS is in a heck of a lot better financial shape than the teachers’ fund. What is voter/taxpayer recourse if they aren’t happy with benefit changes made by the new board? What about the members of the PFRS who are state employees?

    There are many questions raised by this legislation. Maybe they have answers, but I haven’t seen them addressed yet.


    • Posted by George on March 18, 2017 at 3:07 am

      Why is this reserved for one pension system only? Like it or not, the police and military tend to get special treatment, everywhere and historically. One reason single payer systems like Canada and UK work is it forces everyone into the same health insurance and delivery scheme.


      • Posted by George on March 18, 2017 at 3:08 am

        I personally think Sweeny et al went over the top on this. All the police really needed was a separate plan, eventually the ‘bail out’ would come to them.


  5. Posted by marbs on March 16, 2017 at 6:05 pm

    The State wants to dump the State portion of PFRS because it is terribly underfunded. While this bill might sound good to the Cops and Fireman it is a total scam by the State, including the State PFRS will severely dilute the value of the Local plans. Also if you scour the bill they have inserted a little phrase that the State is not subject to the required contribution set by the Trustees ONLY to the reduced contributions they are now making according to the law the State passed in 2011.


  6. Posted by Eric on March 16, 2017 at 6:35 pm

    This law changes nothing that ch. 78 did not already authorize. Read ch.78. Am I the only one on this site that has? Remember, I have told you to read ch. 78 with an “open mind?” I will not tell you all of the bad things that could happen, in case the bad things were not thought of before. I would not want anyone to be “royally screwed” by my big mouth or by my big letters.
    I learned Dutch and German before I learned English. What is wrong with you people? This is your native tongue! Read the Fnnn law!
    Lazy Americans.
    Why don’t you blame Putin for this?


    • Posted by Anonymous on March 16, 2017 at 7:18 pm

      Can you please save us the legal ease mumbo jumbo and summarize c78’s dirty deeds? From previous posts it’s clear you’re much more versed in the legal technicalities.
      TY, annon


    • Posted by Anonymous on March 16, 2017 at 7:35 pm

      Or better yet talk about it at home with your microwave and TV on so Obama can hear you and Trumputin…..


    • Posted by boscoe on March 16, 2017 at 10:12 pm


      You are not only rude, you appear to be hallucinating. If this bill changes nothing that Chapter 78 authorized, why is it necessary that this bill become a law at all? I don’t remember Chapter 78 authorizing the transfer of the Police and Firemen’s Retirement System from the state of New Jersey to the trustees of the system. Maybe I missed it. Or maybe you’ve had your head in the microwave too long and some of your circuits are fried. And what does Putin have to do with it? Or are you Eric the Red?


      • Posted by Anonymous on March 17, 2017 at 6:42 am


        It’s, unfortunately, the new normal. Isolation, secrecy, deflection, and deceit. There’s only one reason for this legislation, preferential treatment! Federal pensions, are, by all accounts, pay as you go but I don’t hear increasing military retirement ages or eliminating their health care coverage. Certainly anyone injured in the line of duty domestic or abroad should be an exception. I foresee similar future legislation for select State sponsored plans resulting in TPAF and PERS with less protections.


  7. Posted by MJ on March 17, 2017 at 7:12 am

    John, can you in the simplest terms possible explain what this means in terms of where the money is coming from for funding, reinstating COLAs, etc and exactly what this will mean for taxpayers. I’m far from well versed in pension rules, but from what I just read it sounds like they will now be able to do whatever they want……….without approval from anyone but their chosed board


    • It means nothing except possibly a tiny bit more transparency as what gets transferred is $2 billion less than what they have been told is in the plan – market vs. actuarial value.

      Like the quarterly contribution requirement this is a diversion that does nothing substantial – which is why it gets unanimous approval.


      • Posted by NY on March 17, 2017 at 7:46 am

        John — This is interesting. Do you also have a view that can explain the motivation for this bill: naive, or nefarious?


        • This idea has been on the table for a while now. I did some work for the State Police years ago when they were looking at leaving. It’s a power grab for what they see as more control. The key question is what happens when that bill is sent to the state and localities for what their new actuary says is needed to fund this plan and it gets ignored.


          • Posted by Anonymous on March 17, 2017 at 7:09 pm

            Thanks but I’m not sure that’s what I meant. For example; the $2.5B Governor’s Recommended “pension contribution” what, if any, formula is used to allocate the $2.5B to TPAF, PERS (State), SPRS, JRS, and PFRS (State)

          • Fairly simple. There is a Pension Contribution amount in each report and, for example, the 6/30/17 amount is based on the 7/1/15 valuations. Those contribution amounts totaled $4.65 billion for the State portion:
            Teachers: $2.74 billion; PERS-$1.25 billion; PFRS-$484 million; State Police: $133 million; JRS: $44 million. You add those up and then, arbitrarily, take 40% of it to get the $1.86 billion. For 6/30/08 those contribution totals would be around $5 billion which is then multiplied by 50% to get that actual contribution amount.

          • Posted by Anonymous on March 17, 2017 at 8:46 pm

            Thank you, so really the JRS or SPRS going to zero isn’t an initial funding crisis, possibly even the PERS State for the first or so that it goes to zero. It’s not until the TPAF joins the group of zeros (which would be accelerated) that a lack of appropriations causes a pension benefit funding crisis. Unless there’s a statute that governs the total pension appropriation allocation as you’ve indicated or someone challenges a disproportionate appropriation allocation once JRS goes to zero, and then depending on the NJSC ruling – your thoughts on this?

          • Without rules or laws it would all be a guess. Mine is a Democrat, probably Murhpy, with massive union support gets in and payouts continue, possibly with caps, with selected bonds defaulting as necessary.

          • Posted by Anonymous on March 18, 2017 at 1:16 pm

            That’s a possibility but as you said without rules or laws I’d say the State pension contribution appropriation will be allocated disproportionately. This will further delay any NJSC ruling allowing the State to fund JRS and soon after SPRS on a pay as you go basis.

  8. Posted by MJ on March 17, 2017 at 1:34 pm

    John, what makes you think that the localities will ignore the pension payment bill?


    • Depends on the size of it. If the state keeps putting in those mini-contributions and their plans go bust (ie JRS in 2021) and localities start getting bills two-to-three times what they are used to getting there will be calls for ‘relief’.


      • Posted by Anonymous on March 17, 2017 at 5:43 pm

        Any idea how the State allocates the annual pension contribution appropriation(s) amongst the various State sponsored funds?


        • Each plan has their separate valuation with assets supposedly allocated proportionately based on what comes in and goes out. That’s why the JRS is first to go – extremely low employee contributions combined the highest payouts and the state skipping a lot of contributions.


    • Posted by Anonymous on March 17, 2017 at 5:37 pm

      Odd response, ‘depends on the size of the bill? When did the PFRS sustainability come into focus, with this legislation?? Bottom line, the State legislation mandates Local employer contributions which leaves two options – pay it or declare insolvency (unless the new trustees are planning to continue to kick the can)!


  9. Posted by Eric on March 17, 2017 at 11:23 pm

    John is far more astute than I am regarding pensions. I was just being facetious about blaming Putin, since he is blamed for anything and everything that has gone wrong in the United States. Why not throw pensions into the mix as well? I will not spell out what I view as possible dangers regarding ch. 78, in case I outline or create a “road map” for “screwing people” that Trenton may not have thought of yet. I would not want that on my conscience. I just get frustrated how people do not take the time to read, and also “cut and paste” comments made by others on other sites regarding pensions. Some were even my own comments that were cut and pasted. Wow! I am flattered.
    You are probably a lot brighter than I am, and it would be wonderful, if you would just read the proposed laws written in your own native language. The danger is that some people read into them, ie the laws, what they want them to say. This is why you must read them with an “open mind” since Trenton will screw you. That was my only point.
    I am an old man, and am not into name calling or making enemies, since the real enemy is Trenton, New Jersey not me. I am sure that we can agree upon that.


  10. Posted by Rich on March 19, 2017 at 6:19 pm

    I like to know who is going to asume responsibility when it fails, The system is almost fully funded why mess with it. This is a bad idea!!!


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