Ed Donnelly is president of the New Jersey State Firefighters Mutual Benevolent Association who argues in an op-ed on njspotlight today in favor of Police and Firefighters managing their own pension system.
The state’s failure to meet its obligations and its willingness to give local employers a pass through “pension holidays” created a shortfall in the PFRS system of more than $11.1 billion. The state is on the hook for more than $2.7 billion and local employers owe $8.373 billion.
Shortfall numbers from the July 1, 2016 PFRS actuarial report and one of several points that Mr. Donnelly gets dangerously wrong.
“This bill provides for a board to be appropriately trained in ethics (another alien concept in New Jersey) and investments.”
Who will be defining ethics here? Politicians who take legalized bribes to get into office or appointees who are often acolytes of these bribe-takers?
“[T]he board will also determine its investment policy, which may be different than the whims of the front office, which has paid exorbitant fees for terrible returns.”
If anything returns on investments have been suspiciously spectacular in this low-interest environment. Had a good chunk of pension money been in low-fee Money Market funds or CDs instead of hedge funds for the last ten years the total fund might now be valued at $50 billion instead of the $71 billion that is supposedly there.
All official numbers designed primarily to keep contribution amounts ‘manageable’. The honest shortfall is in the $25 billion range.
4) Way Forward
“The bill does nothing to change the obligations of the employer and will determine contribution requirements in the same way they are determined today.”
Then S-3040 would indeed change nothing that matters to most people.