There was a meeting of the New Jersey State Investment Council yesterday and the story on it was mostly celebratory:
There was a bit of bright news Wednesday for New Jersey’s troubled public employee pension fund.
State officials disclosed the fund held $76.3 billion in assets at the end of the October, its highest value in over two years.
Robust returns, including 13 percent in the last fiscal year, helped boost the health of the fund, which pays out benefits to hundreds of thousands of retired government workers and has obligations to hundreds of thousands of active workers.
Christopher McDonough, director of the state’s Division of Investment, said the fund, which saw challenging investment years chip away at its assets, has reached its highest total value since July 2015.
Not only was there no consideration that:
- assets in Defined Benefit plans where benefits are still accruing SHOULD be going up as more benefits accrue,
- values placed on alternative investments are questionable, and
- had the Plan been fully funded, 13% asset growth would have resulted in about $30 billion of earnings instead of $9 billion.
But the big numbers, as well as their trajectories, were ignored.
According to the July, 1 2016 GASB 67 disclosures:
Compared to the July 1, 2015 disclosures:
That is an increase in the total liabilities of $26.4 billion and the unfunded liabilities of $32.4 billion (about the size of the entire annual New Jersey budget) in one year.
Then there are the annualized payout amounts taken from valuation data:
Burypensions Blog 
Posted by S Moderation on November 30, 2017 at 12:46 pm
It’s a no win situation. Pensions are a big problem in New Jersey and most other states. But they aren’t the only problem. New Jersey is one of the highest taxed states in the nation even without paying the ARC for years.
The pension fund should have $244 billion (or more) to be 100% funded.
If that money were actually there, there would be a hue and cry for tax cuts…
“Why are we paying the highest taxes in the nation, when there is $244 billion sitting there for the overpaid trough feeders?”
If there were $244 billion earning 13%, MOST of that $32 billion “earnings” is TAXPAYER money (or earnings thereof) and should be used for tax reduction or needed services.
Posted by Tough Love on November 30, 2017 at 1:01 pm
Or ……………. all that money that rightfully HASN’T been put in (BECAUSE NJ’s Plans are unjustifiably grossly excessive) has remained in the Taxpayers’ pockets for THEM to (rightfully) enjoy the benefits of that 13% return.
Posted by Tough Love on November 30, 2017 at 1:18 pm
John,
I suggest that you send a copy of this blog post to NJ’s current and next Governors, as well as every member of NJ’s Senate & Assembly, and to all of NJ’s major newspapers.
You should identify yourself as a credentialed actuary with a specialty in pensions, strongly point out the EXTREME lack of reason to celebrate, and that a celebratory reaction to this very modest increase in the dollar amount of Plan assets shows either a complete lack of understanding of the seriousness of the problem or the lack of Political will to confront the Unions and implement pension/benefit REDUCTIONS …. which are without question a NECESSARY element of ANY “effective” solution to NJ’s pension mess..
Posted by Anonymous on November 30, 2017 at 7:23 pm
John if and when you do what TL suggests don’t forgot to mention all of those bad budget choices that NJ State and Local governments make that could go a long way yo bolster funding. Because the other key element TL left out is consistent and adequate funding which has clearly been lacking since, at least, Whitman.
Posted by NJ2AZ on November 30, 2017 at 8:11 pm
Is there any place that shows what the annual contributions would have been if they had actually made them each year? Curious to see what it would have eaten up out of the budget
Posted by Anonymous on November 30, 2017 at 8:51 pm
And don’t stop there b/c IF they were made, especially when the market was down, where would the pension funding levels be now.
Posted by Tough Love on November 30, 2017 at 9:08 pm
NJ’s taxpayers have over the years ALREADY contributed (via their taxes) funds sufficient to pay for 100% of the cost of a pension EQUAL to that typically granted COMPARABLE Private Sector workers.
NJ’s Public Sector workers never “deserved” more and the actual promises made are WITHOUT QUESTION the result of collusion between the Public Sector Unions and our Elected Officials, with the former BUYING the favorable votes of the latter with BRIBES disguised as campaign contributions. Such grossly excessive pension were never necessary, just, fair to taxpayers or affordable.
And the fact that Nj’s Taxpayers have NOT contributed more to these Plans just means that NJ’s Taxpayers have been less “suckered” into doing so that many other States and Cities.
Posted by Anonymous on December 1, 2017 at 10:07 am
Blah blah blah with your two faced double standard BS!
Posted by Tough Love on December 1, 2017 at 10:37 am
(1) Private Sector Pensions (or DC plans) are about 1/3 as generous as NJ’s Public Sector DB Plans (even after adjusting for any Public/Private Sector “wage” differentials).
(2) NJ’s Taxpayer’s HAVE already contributed enough to fund 100% of the cost of a Public Sector Pension EQUAL in generosity to that provided comparable Private Sector workers (who never “deserved” more …. but just BOUGHT more with Union BRIBES).
Pretty straight forward, so tell me …….. exactly WHAT is that “double standard” ?
Posted by Anonymous on December 1, 2017 at 11:08 am
You’re constantly comparing private to public and conveniently disregard the other, better taxpayer funded government P&Bs – yes including the Feds! I have no problem with adjusting NJ’s P&Bd ‘equal to not greater than’ the Feds including, if applicable, salary adjustments!
Posted by Tough Love on December 1, 2017 at 12:11 pm
Wow, so that’s your problem ….
Who do you think is “responsible” for all but the 10% to 20% of the total cost of the grossly excessive NJ Public Sector DB Pensions NOT paid for by NJ’s Public Sector workers ?
It’s NJ’s Taxpayers not Federal Taxpayers nor other State’s Taxpayers. The generosity of NJ’S Public Sector Plans SHOULD BE compared to the generosity of the pensions (or DC Plans) granted those being force to pay the vast majority of the cost …..NJ’s PRIVATE Sector Taxpayers.
Posted by S Moderation on December 1, 2017 at 1:14 pm
We don’t know what kind of fiduciary (or legal) standards you or your company adhere to, but to most, it is not acceptable to base financial decisions on your “opinion” of data or your “opinion” of morality.
Your opinion on the relative generosity of public and private compensation is based on one study which happens to support your preconceived bias. The author of that study himself noted the various ways that available data and assumptions can affect the accuracy of the comparison.
“My point is not that 2 percent is “wrong” and 14 percent is “right,” but rather that there is a range of reasonable answers found in studies of federal salaries and the CBO’s result is likely toward the lower end of that range.”
And other equally experienced experts in the field have challenged his methods for calculating the “true” value of pensions.
One may as well use Ed Ring’s computation that state and local workers earn twice as much as the private sector.
I don’t think you should worry about the “unions” suing you for libel for your continuous claims of bribery, because they know it’s just your puerile prejudice speaking. Right or wrong, money and influence affect every aspect of government and private business, at every level. In many ways, the unions are playing defense… barely.
In any case, even though in your “opinion”, NJ taxpayers have over the years ALREADY contributed enough, there is still a legally recognized debt, and much of that debt will be paid. In response to NJ2AZ post, they will probably end up paying a lot more than they would have if they had kept up the Actuarially Required Contributions all along.
SMH
Posted by Tough Love on December 1, 2017 at 2:40 pm
SMH,
I don’t dwell on Federal wages or benefits. While it does impact me, Federal wages and benefits are VERY far removed from the LOCAL excesses I see daily, unlike LOCAL excesses that very directly impact BOTH my Property taxes and my State & Local Income taxes.
I won’t entertain your continued attempt at irrelevant “distractions”.
YOU keep trying to force FEDERAL wages & benefits into the discussion of NJ compensation. It doesn’t belong there because NJ’s Public Sector wages & benefits are paid for by NJ’s Taxpayers.
***************
Quoting …………
“Right or wrong, money and influence affect every aspect of government and private business, at every level. In many ways, the unions are playing defense… barely.”
Baloney. Public Sector Workers/Retirees are Americas new ROYALTY, achieved via their Unions’ collusion with our Elected Officials to financially “mug” America’s Taxpayers.
*******************
Quoting ……….
“In any case, even though in your “opinion”, NJ taxpayers have over the years ALREADY contributed enough, there is still a legally recognized debt, and much of that debt will be paid. ”
And HOPEFULLY ……….. because it’s eminently justified due to the fraudulently way those pensions & benefits were obtained …………… a large share of NJ’s Public Sector pension/benefit “promises” will NEVER be paid.
============================
P.S. I don’t care if it was a 50% increase and 25% increase a 10% increase or a 1% increase, what legal “consideration” did YOU provide to CA’s Taxpayers in exchange for the RETROACTIVELY APPLIED (to PAST years of service) increase in YOUR pension.
Don’t bother, we know the answer …. NOTHING … and as such it was a Union/Politician organized THEFT of the Taxpayers money and rightfully should be reversed.
Are you sending in an annual check returning those ill-gotten gains… stolen form CA’s taxpayers?
You’re hardly one to be preaching what’s fair and appropriate.
Posted by Anonymous on December 1, 2017 at 4:56 pm
Apples to apples you banana, comparison of public v public & private v private YOU are the master of distraction constantly mixing it up!
Posted by Anonymous on December 1, 2017 at 7:25 pm
Anonymous (December 1, 2017 at 4:56 pm) ………
Try to make some sense in your comments. It’s very difficult determining exactly WHAT IT IS that you are complaining about.
Posted by Anonymous on December 1, 2017 at 8:27 pm
I know you get it TL/Anon
Posted by bruce paterson on December 1, 2017 at 2:56 pm
all legislators, Senate Community and Urban Affairs,
Assembly Community development comm,
SenVanDrew@njleg.org, AsmAndrzejczak@njleg.org, AsmLand@njleg.org,
SenWhelan@njleg.org, AsmBrown@njleg.org, AsmMazzeo@njleg.org, SenSweeney@njleg.org, AsmBurzichelli@njleg.org, AsmTaliaferro@njleg.org, SenMadden@njleg.org, AsmMoriarty@njleg.org, AswMosquera@njleg.org, SenCruzPerez@njleg.org, AsmBarclay@njleg.org, AswJones@njleg.org, SenBeach@njleg.org, AsmGreenwald@njleg.org, AswLampitt@njleg.org, SenAllen@njleg.org, AsmConaway@njleg.org, AsmSingleton@njleg.org, SenAddiego@njleg.org, AsmHowarth@njleg.org,
AswRodriguezGregg@njleg.org, SenConnors@njleg.org, AswGove@njleg.org, AsmRumpf@njleg.org,
SenHolzapfel@njleg.org, AsmMcGuckin@njleg.org, AsmWolfe@njleg.org, senbeck@njleg.org, AswDowney@njleg.org, AsmHoughtaling@njleg.org, SenThompson@njleg.org, AsmClifton@njleg.org, AsmDancer@njleg.org, SenKyrillos@njleg.org, AsmOScanlon@njleg.org, AswHandlin@njleg.org,
SenGreenstein@njleg.org, AsmDeAngelo@njleg.org, AsmBenson@njleg.org, SenTurner@njleg.org, AsmGusciora@njleg.org, AswMuoio@njleg.org, SenBateman@njleg.org, AsmCiattarelli@njleg.org, AsmZwicker@njleg.org, SenBSmith@njleg.org, AsmDanielsen@njleg.org, AsmEgan@njleg.org, SenDiegnan@njleg.org, AsmKarabinchak@njleg.org, AswPinkin@njleg.org, SenVitale@njleg.org, AsmWisniewski@njleg.org, AsmCoughlin@njleg.org, SenLesniak@njleg.org, AswQuijano@njleg.org, AsmHolley@njleg.org, SenKean@njleg.org, AsmBramnick@njleg.org, AswMunoz@njleg.org, SenScutari@njleg.org, AsmGreen@njleg.org, AsmKennedy@njleg.org, SenDoherty@njleg.org, AsmDiMaio@njleg.org, AsmPeterson@njleg.org, SenOroho@njleg.org, AswPhoebus@njleg.org,
AsmSpace@njleg.org, SenBucco@njleg.org, AsmCarroll@njleg.org, AsmBucco@njleg.org, SenPennacchio@njleg.org, AsmWebber@njleg.org, AswDeCroce@njleg.org, SenCodey@njleg.org,
AswJasey@njleg.org, AsmMcKeon@njleg.org, SenRice@njleg.org, AsmCaputo@njleg.org, AswTucker@njleg.org, SenRuiz@njleg.org, AswPintorMarin@njleg.org, AswWatson@njleg.org, SenSinger@njleg.org, AsmKean@njleg.org, AsmRible@njleg.org, SenCunningham@njleg.org, AsmChiaravalloti@njleg.org , AswMcKnight@njleg.org, SenSacco@njleg.org, AsmPrieto@njleg.org, AswJimenez@njleg.org, SenStack@njleg.org, AsmMukherji@njleg.org, AswChaparro@njleg.org, SenGill@njleg.org, AsmGiblin@njleg.org, AswOliver@njleg.org, SenPou@njleg.org, AswSumter@njleg.org, AsmWimberly@njleg.org, SenSarlo@njleg.org, AsmSchaer@njleg.org, AswCaride@njleg.org, SenWeinberg@njleg.org, AsmJohnson@njleg.org, AswHuttle@njleg.org, SenGordon@njleg.org, AsmEustace@njleg.org, AsmLagana@njleg.org, SenCardinale@njleg.org, AswSchepisi@njleg.org, AsmAuth@njleg.org, SenOtoole@njleg.org, AsmRooney@njleg.org, asmrusso@njleg.org, AswJones@njleg.org,
AswRodriguezGregg@njleg.org, SenStack@njleg.org,
Posted by Anonymous on December 1, 2017 at 5:31 pm
That’s great thanks, I’m sure our emails will end up in their JUNK folder!
Posted by larrylittlefield on December 2, 2017 at 11:06 am
“State officials disclosed the fund held $76.3 billion in assets at the end of the October, its highest value in over two years.”
At the peak of stock market bubble.
“New Jersey is one of the highest taxed states in the nation even without paying the ARC for years.”
Nope. About average, with above average public services. You want to see high taxes as a percent of income, look across the river.
Posted by S Moderation on December 2, 2017 at 12:48 pm
One of my favorite sources: ITEP Who pays?
“States commended as “low tax” are often high tax states for low- and middle-income families.”
https://itep.org/whopays/
Californians also like to say they are the “highest taxed”. I often see in the blogs, people who can’t wait to get away from these high taxes. Better do your homework first.
If you look at the different income quintiles, California “middle income” families pay a lower share of income than the national average (8.2% vs. national average 9.4%) They list NJ also slightly lower at 9.1%, and New York highest at 12%.
(See Appendix A)
……………………………………….
TAX THE MILLIONAIRES !!!
California has the distinction of being the highest taxed “1%”, as a percent of income,
at 8.7%. NY is second at 8.1%, and NJ at 7.1% is about the fourth highest.
Note that in all cases, state and local taxes as a percent of income, the top 1% pays less than the national average for middle class taxpayers.
Your mileage may vary. These are just averages. In any state, you could live next door to someone with the exact same income, and have radically different tax burdens. Look before you leap.