New Jersey Pension Angst

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AFP’s solution:

  1. Understand the problem
  2. No tax hikes
  3. 401(k) plan

The problem:

Who’s coming up with that $235 billion?

Going to some type of Defined Contribution plan simply means that all contributions will be allocated by participant and, in theory, when you take actuarial calculations out of the equation it will be impossible to develop further deficits.*

If you believe you can lose weight without diet or exercise then your remaining option is disease…..or you’re only fooling yourself and going to get fatter. So it is with paying off a $235 billion liability without tax hikes or reducing future accruals. Your default option is bankruptcy or you’re only fooling yourself.

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* Though if any entity can develop a funding deficiency in a Defined Contribution plan it would be the state of New Jersey.

 

11 responses to this post.

  1. Posted by Tough Love on October 10, 2017 at 2:29 am

    DB to DC (for CURRENT as well as new workers) would be a great 1-st step.

    Of course it doesn’t address the unfunded liability for PAST service accruals, but as they say, the FIRST step in digging yourself out of a deep hole is to STOP digging, and every day that participants NJ’s current DB plans continue to earn additional accruals, that hole gets a bit DEEPER.

    P.S. ………… I LIKE that video !

    Reply

  2. Posted by MJ on October 10, 2017 at 6:48 am

    Repudiation of the illegal debt as is written in our NJ constitution……..I’m starting to believe that it really may come to this as citizens wise up to what’s going on.

    Reply

  3. Posted by George on October 10, 2017 at 9:17 am

    http://safeguardnjfuture.com/why-pension-reform/
    The link to their e book did not enable a download when I looked. There are no events listed.

    They appear to be part of:
    https://americansforprosperity.org/

    They advocate a bunch of stuff like repeal of Obamacare. They are silent on ‘conservative’ massive spending like foreign wars and defense. So with big budget items off limits they are stuck looking for cuts in social welfare.

    Oddly they are silent on the New York state constitutional convention ballot item, which might potentially be important.

    Reply

    • Posted by Tough Love on October 10, 2017 at 11:08 am

      The “Five Innovative Ideas” (under their e-book tab) to address NJ’s problems didn’t go far enough.

      While WHETHER we’ll need to reduce pension promises to those already retired is not clear yet (i.e., will the stock market keep going up or will we shortly have a 25% decline and a long recovery?), anyone who thinks that NJ has ANY chance of fixing it’s pension mess without either:

      (a) a hard freeze on all current DB Plans (with Zero future growth) or if not that,

      (b) a VERY material (think 50%) reduction in the VALUE of current-worker future accruals

      is a charlatan, a fool, and/or very seriously lacking in even the most basic math skills.

      Reply

  4. Posted by skip3house on October 10, 2017 at 11:32 am

    Be careful here….AFPF is Americans For Prosperity Foundation

    Reply

  5. Posted by George on October 10, 2017 at 8:18 pm

    NJ STATE PENSION POISED TO MAKE FIRST INVESTMENT IN INFRASTRUCTURE

    Proposal would take an up to $125 million stake in fund managed by Stonepeak Infrastructure Partners

    “As an infrastructure-investment fund, Stonepeak, which has offices in New York and Houston, is offering the state a discounted management fee of 1.375 percent, and a 15 percent performance fee”

    http://www.njspotlight.com/stories/17/10/09/state-pension-officials-poised-to-make-system-s-first-investment-in-infrastructure/

    Unsolicited investment advice: Macquarie is known for Infrastructure funds that are structured more like normal investment funds, which are bought and sold on normal exchanges. I don’t see the need for a hedge fund all the time.

    https://en.wikipedia.org/wiki/Macquarie_Infrastructure_Company
    http://www.macquarie.com/mgl/com/us/mgu/

    Reply

  6. Posted by Javagold on October 10, 2017 at 11:40 pm

    Take away all Health benefits. Inflate the USD fiats to worthless and then Tax the public TAKERS pension Ponzi payoffs at 99% ……………

    Reply

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