NJEA on Pensions

The New Jersey Education Association (NJEA) buys time on ‘public affairs’ programs to spread their message. In regard to the worst funded state pension system here is that message:

The problems with it:

No time: 2 minutes and out; no informed discussion or questioning of some fairly naive premises.

What is a crisis?: something that won’t “run out of money in a year or two” is not a crisis only to someone who plans on occupying their job for only a year or two.

State  Supreme Court affirmation: did not extend to COLAs and it will not extend to benefits over a certain amount when that time comes.

What are the numbers?: How much should be contributed and by whom? Start there or go away.


35 responses to this post.

  1. Posted by Tough Love on February 4, 2018 at 8:24 pm

    Gotta love his focus on the employees always paying their 7.5% (Today. It was lower for many years), when the Total Cost of their promised pensions for those who stay for 25+ years is a level annual 30% of pay (closer to 40% if COLAs are reinstated) when valued (NOT using NJ’s PHONY “official” assumptions & methodology but) using appropriate and reasonable assumptions & methodology comparable to that required in Private Sector pension valuations.


    • Posted by anonymous 8 on February 4, 2018 at 10:53 pm

      I agree.

      What the NJEA people are talking about when they say “full payment by employees” is that they made the CONTRACTUAL payment.

      It wasn’t a fair payment based on what their pension and OPEB benefits would eventually cost.


      • Posted by Tough Love on February 4, 2018 at 11:01 pm

        That correct ………. because very “generous” Plans are also very “costly”.

        What the employees pay towards a PROPER estimate of Total Plan costs is a pittance, but you’ll never hear a Union official discuss that issue.


        • Posted by Anonymous on February 5, 2018 at 6:13 am

          Tough love also believes that the state’s contributions have been complete and also very fair over the years. She has failed to mention that since your argument is always one-sided


          • Posted by MJ on February 5, 2018 at 8:06 am

            The gentleman in the video clearly stated that if NJ had to make full payments to the pensions, it would cripple the state………..they are making some payments based on what’s there so maybe pension expectations should match that reality

            I think the crisis is long past the argument of employees making their contractual payments and the state not making those payments……if NJ could easily make those payments why not just do it>????

          • Listen again. He was not talking about making contributions to the pension fund. He was referring to making “pay as you go” payments directly to the retirees. “Constitutionally required”, but not financially possible.

            And the state abrogating it’s obligation through several administrations.

            IF… the state had been contributing it’s (admittedly low-balled) ARC since 1997, the ARC would never have grown to it’s present size. Would New Jersey still be underfunded, had the required payments been made? Almost assuredly, like most other state and local pension plans. But not nearly to the degree it is now.


          • Posted by Tough Love on February 5, 2018 at 1:20 pm

            While I’m not happy that NJ CAN’T pay the full amount that would be necessary to fully fund it’s Public Sector pensions, I sure AM happy that they HAVEN’T paid such amounts ……….. because such calculated amounts are a FUNCTION OF (and directly related to) the generosity of the promised pensions ….. and the promised pensions (clearly the result of the Public Sector Unions’ BUYING the favorable votes of NJ’s Elected Officials with BRIBES disguised as campaign contributions and election support) are undeniably grossly excessive, unnecessary to attract and retain a qualified workforce, unfair to Taxpayers now responsible for 80% to 90% of the total cost of these absurd “promises”, and are clearly unaffordable.

            We should NOT fund them until (just as 1 of many steps) future service accruals are reduced to a level such that the normal cost contributions of those reduced pensions (when valued on the same basis as that required of Private Sector Plans) are no greater than what Private Sector workers typically receive from their employers in retirement security contributions.

            And for the uninformed, doing so would likely require pension formula/provision reductions of 50% for non-Safety workers and about 75% for Safety workers ……….. because we are “starting” form the point of VERY generous and hence VERY costly pension promises.

            Of course AFTER we do the above, Taxpayer subsidies towards Public Sector retiree healthcare costs should be reduced to what Private Sector workers typically get towards retiree healthcare from their employers ….. most often NOTHING !

          • Ell oh ell

            “And for the uninformed,…”

            Why not? Ladies and gentlemen. Why settle for being uninformed, when you can be deliberately mis-informed?

            “reductions of 50% for non-Safety workers and about 75% for Safety workers ……”

            Even having never set foot in New Jersey, I could safely predict cuts for future accruals, and possibly even cuts for current retirees. (Sorry, Patrick.) But not 50%. And certainly not 75% for safety workers.

            And retiree healthcare… As in the graphic from the previous article, your opinion may be “true”, but it is one dimensional. Governments are typically seen as “model employers” they promote, legislate, and lead by example in areas like equal opportunity employment, and in healthcare benefits. It would be hypocritical to encourage private employers to provide healthcare, and retiree healthcare, if they didn’t lead by example. How much would they gain by savings in employee costs compared to increased social service costs? Having said that, it does appear NJ healthcare costs are higher than other states. It may be that eliminating retiree healthcare would be a blow to the insurance industry as well as to employees.

            Though retiree healthcare cost may be reduced or costs shared in New Jersey as well as other states, I doubt it will be eliminated entirely, unless and until universal healthcare is adopted nationwide.

            Your opinion that public pensions on average are greater than private pensions is a given. I have never heard anyone reasonably dispute that. That is not evidence that public workers are overpaid.

            #23%bulls hit

          • Posted by Tough Love on February 6, 2018 at 12:22 am

            Stephen Douglas, as if you don’t know what I mean from many prior comments ……….

            But for those who may not, when I call for 50% reductions for non-Safety Public Sector worker pensions and 75% reductions in Safety worker pensions to being them down to the level typically granted comparable Private Sector workers, those % reductions are in the VALUE of those Public Sector pensions. Not all of it need come from cutting the pension formula (which determines the monthly annuity). In fact, about half of the total reduction I’m calling for can be achieved solely by increasing the youngest age at which one can begin collecting an unreduced pension to the age such unreduced pensions are first available in Private Sector pensions.

            As to retiree healthcare, sorry but your argument is unconvincing. Unless Public Sector wage are demonstrably lower than those of their Private Sector counterparts (after adjusting for hours workers and “productivity”, where measurable) there is ZERO justification for making Taxpayers fund something for Public Sector workers that THEY do not get from their own employers.

            And all to gobbledygook …… “Governments are typically seen as “model employers” they promote, legislate, and lead by example ” ….. is simply saying “we’re SPECIAL and deserving of a better deal.”

            No you’re NOT.

          • Posted by Stephen Douglas on February 6, 2018 at 1:11 pm

            Not special, Mr. Love. Just different.

            Like the Lord, government works in mysterious ways. Much to the disappointment of many taxpayers, and even many public sector managers, government often grants contracts and makes purchases based not on lowest bid, but on “equal opportunity” factors like businesses owned by women or minorities. The same goes for wages and benefits at the lower levels. Even though public employment is “only” fifteen percent of the market, employers like Walmart could get away with paying even less. And fewer benefits. You can pooh-pooh the idea, but phrases like “lowest common denominator” and “race to the bottom” came about for a reason.

            As to your internet math, your comment to Tim… “Granted, Private Sector data is harder to come by……….. but choosing to comment on what’s irrelevant because what’s relevant is hard to find is NOT helpful or appropriate.” … Your math is apparently based on your experience. We have seen nothing to substantiate that. You were apparently unaware, or “not knowledgeable” about the multi-employer plans, with features such as a full pension “at any age” with thirty years tenure.” Multi-employer plans are not irrelevant just because you have little knowledge of them, or because information is “hard to find”. If I recall correctly, multi-employer pensions account for one in four of all those covered by PBGC. Hardly irrelevant, whether or not you are familiar with them. What other facts are you not aware of?

            Donald Rumsfeld

            “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

            For that matter, how much information do you really have on public plans? There is a plethora of public pension plans and provisions. COLA? Some cities have a 5 percent increase annually, regardless of CPI. Mine, and many others, have COLAs tied to CPI increases, with a 2 percent max. Some cities (ask John Moore), have 3%@50 for cops, and 3%@60 for miscellaneous. Both safety and non-safety are in SS. City of Fresno (allegedly the only city in California that is one hundred funded), neither safety or miscellaneous are in SS, formulas are lower than average, and there is no employer paid retiree healthcare. (Retirees are allowed to stay in the group plan, if they pay themselves.)

            Your math is still illogical (GIGO). How you ever sorted through that morass and came up with a multiplier (4.62?) to two decimal places, is unfathomable.

            The rest of your above comment to Tim… “Granted, Private Sector data is harder to come by………”

             “Look at some of the AEI studies linked above…… difficult yes, but the authors of those studies were able to find sufficient data for RELEVANT comparisons.”

            Yes, look at their nationwide data, comparison of public and private compensation (Table 4) Biggs shows that positions in the public sector requiring a Master’s degree earn 24 percent lower wages than in the private sector. (Or, as I prefer, private wages are 31 percent higher.) Yet, total compensation is nearly equal (3 percent difference). Clearly, the “pension” portion of the public secret worker is larger (twice as large? Meh), but the total compensation is near equal. And even worse for those with higher education. Why you insist on reducing pensions for this group is beyond me.

            This is not speculation this is actual data. It doesn’t care whether the private pension is defined benefit, 401(k), or no pension at all.

            As I tried to say subtly before, I believe his results are exaggerated because of his “corrected” discount rate, and up to ten years out of date. Nothing is as it was ten years ago.

            23%bulls hit

          • Posted by Stephen Douglas on February 6, 2018 at 1:25 pm

            Forgot to mention. In Fresno, DROP is available to safety and non-safety. All DROPS are not the same.

          • Posted by Tough Love on February 6, 2018 at 6:45 pm

            Quoting Stephen Douglas …………

            “Not special, Mr. Love. Just different.”

            LOL ……. Baloney, “just different” is a euphemism for “we’re special” and deserve MORE.

            No you don’t !

            Re your comment on Multi-employer Plans, I clarified that my comments re Private Sector Pensions are for single-employer-Corporate-sponsored pension Plans. Those Plans function as a classic final average salary DB Plans are supposed to work.

            Multi-employer Plans DO NOT. A “negotiated ” employer contribution instead of a contribution based on developing experience is anything BUT the proper way a DB is supposed to function. I’m surprised the Gov’t EVER allowed them function as they do.

          • ” Re your comment on Multi-employer Plans, I clarified that my comments re Private Sector Pensions are for single-employer…” yadda, yadda, yadda, ad nauseum.

            Missing the point by a mile. “Re” your whole “50% for non-Safety workers and about 75% for Safety workers …”

            rant is built on a foundation of sand.

            “… reductions in Safety worker pensions to being them down to the level typically granted comparable Private Sector workers,…”

            Is based on your own distorted view of private pensions, and oversimplified view of public pensions.

            No data to back it up.

            Borrowing from Donald Rumsfeld…
            ” But there are also unknown unknowns.”

            You don’t know what you don’t know.

            Borrowing a phrase from…

            Mike… on February 7, 2018 at 4:38 am

            I agree, the analysis was lazy and superficial. Why did they bother?

          • Posted by Tough Love on February 7, 2018 at 10:43 am

            Stephen Douglas,

            The 75% reduction in value for Safety workers is needed because (while typically making MORE in cash wages than Private Sector workers with equal experience, education, skills, and knowledge ….. thereby giving NO justification for greater pensions or benefits) their pensions are ROUTINELY 4 times greater in value upon retirement than those of comparable Private Sector workers.

            It’s real-easy to show the 4 times ……….

            Unreduced pensions at age 55 for Safety vs 65 for Private Sector workers DOUBLES the value of Safety worker pensions. It would even be larger if I used the early retirement adjustment factors that Social Security uses in their calculations.

            NJ Police get a pension of 65% of final pay after 25 years. That gives a per year of service formula-factor of 0.65 / 25 = 0.026 or 2.6%, about DOUBLE that of many Private Sector Plans …… and assuredly even a greater multiple of Private Sector retirement security provided via 401K-style DC Plans.

            If you double something TWICE, you get 4 times…………….. the math’s easy, even for someone who’s career included changing light bulbs.

          • Posted by Stephen Douglas on February 7, 2018 at 1:00 pm

            Quoting Tough Love, to Tim Alexander….

            Posted by Tough Love on November 21, 2017 at 1:49 pm

            Ok number crunching is on the way………

            In the meantime, if you indeed have a new/unique “Model” to solve many of society’s financial ills, TRUE credibility for an “economist” is achieved by acceptable and publication in a peer-reviewed Professional Journal. I suggest that you pursue doing so.

            I’ll be the first to congratulate you.

            Posted by Tough Love on November 22, 2017 at 12:56 pm

            If you want credibility, write a clear paper detailing your unique Model and submit it to a well-respected professional economics journal for peer review as part of the acceptance-for-publication process. Who knows, perhaps very early one morning years from now you’ll get that very special call from the Nobel Committee.

            Moderation, to Tough Love:

            Get your computation submitted to a well-respected professional economics journal for peer review. As it is, even Brietbart wouldn’t touch it. And to those of you at home, remember…

            Sayeth Moderation:

            “It is invalid to compare pensions outside the context of total compensation.”

            Don’t be invalid.

          • Posted by Tough Love on February 7, 2018 at 2:47 pm

            I don’t claim to be a “conomist nor a pension expert BY PROFESSION.

          • Posted by Stephen Douglas on February 7, 2018 at 3:35 pm


            But, quoting Tough Love…

            “If you want credibility…”

    • Posted by MJ on February 7, 2018 at 9:25 am

      Does the state match the 7.5% contribution??

      I am also still wondering what the value is of never losing your job and getting raises each year, being reimbursed for Medicare, keeping spouses and young adult children on health insurance once retired…………is there any calculation for all of these perks? ….and they wonder why the state is going belly up

      I did listen again and the NJEA guy clearly stated that if NJ had to fund directly from the budget, the state would be crippled…..not sure if he was implying pay as you go….


  2. Posted by skip3house on February 5, 2018 at 10:16 am

    ‘….From 2014 to 2015, the year Pew reviewed, New Jersey’s pension debt rose from $113.1 billion to $135.7 billion….’
    Way too large an amount to relate with. Wonder if this even includes the remarkable full refund of Medicare, and full various Rx to Medicare age, plus of course the hundreds of dollars monthly for ‘the amount not covered’ in part B of Medicare, per AARP United ads?
    Want to understand $135 Billion, break it down to one person retiring in ~50s’ ages.,…..


  3. I have been receiving my state retirement payment for 2 years. During the 30 years I worked my contributions into the pension system totaled roughly $97K. At the conclusion of my 2nd year into retirement I have recouped all of my contributions and the all future payments will be 100% taxpayer-funded. I also receive free medical.

    I am hardly complaining or gloating. Just trying to break it down to an individual level. I am now 55 years old. The math does not work and the pension fund is bankrupt. It is not sustainable. But what can I do now? Give it back? Volunteer a haircut of 30% – 40%?


    • Posted by skip3house on February 5, 2018 at 1:07 pm

      Perfect sample of why politicians made promises, but little funding. Thank you.


    • Posted by Tough Love on February 5, 2018 at 1:22 pm

      Just write a check to the Treasury of the State of NJ.


    • Posted by PS Drone on February 5, 2018 at 9:19 pm

      Go back to work. No benefits should have been payable to you or your buddy drones until you hit age 66 (just like SS). You and those like you are the principal reason the funds are going bust. I would reclaim a portion of benefits from all current retirees until the inappropriate largesse was recouped. To get benefits from age 55 to 70 and then get nothing because the fund paying the benefits is broke is not exactly something to look forward to.


  4. Posted by skip3house on February 5, 2018 at 4:05 pm

    Given amounts stated above by Patrick W, one might wonder if already, or when, are present NJEA working members pension withholdings needed to pay pensions now?
    Are NJEA pension funds now still greater than those just belonging to workers? Just how far ‘out’ will this be true, if true even now?


    • Posted by Tough Love on February 5, 2018 at 4:40 pm

      Given the low (in the 30s%) funding ratio for the NJ teachers’ Plan, it’s VERY clear that member contributions are NOT being saved and invested to support the pensions of “ACTIVE” workers, but being used to support (the excessive) pensions of those already retired …amd soon to retire.

      The younger/shorter-service workers are “screwed”. THEY should be screaming for change to make sure they aren’t left with nothing.


  5. Posted by MJ on February 7, 2018 at 9:18 am

    Read what the LA cops are getting in DROP payments, salaries and disabilities……then starting new businesses, running marathons and the like….hmmmm and they wonder why that state is about to go over the cliff


    • Posted by Tough Love on February 7, 2018 at 10:30 am

      States/Counties/Cities that include “Drop” Plans are the MOST-“suckered” of all. It’s always presented as a way to keep the experienced working and presented as “cost-neutral”.

      It’s not even remotely cost to cost-neutral, and if it’s important that employees keep working to an older age, it’s simple. Make the pension LESS-generous so that they can’t afford to retire at younger ages.


      • Posted by Stephen Douglas on February 7, 2018 at 3:47 pm

        You are aware, I assume, that not all DROP plans are the same.

        Yet you seem to paint them all with the same broad brush.


        • Posted by Tough Love on February 7, 2018 at 7:41 pm

          If Public Sector pensions maxed out at about 50% of pay (after 35 years of service) and coundn’t be collected w/o reduction (of about 5% per year of age if one elects to begin collecting at a younger age) until age 65 ……….. which describes MANY Private Sector Plans ……… we wouldn’t be having this conversation, because Public Sector workers would NEED to work to age 65.

          And the Taxpayers wouldn’t be even MORE suckered by laying on top of what are already ludicrously excessive pensions, the financial abusive (to Taxpayers) of DROP Plans.


          • Posted by Stephen Douglas on February 8, 2018 at 12:43 am

            “If you want credibility, write a clear paper detailing your unique Model and submit it to a well-respected professional economics journal for peer review as part of the acceptance-for-publication process.”

          • Posted by Tough Love on February 8, 2018 at 6:46 pm

            Sure Stephen Douglas, ignore comparisons of Public to Private Sector pensions, benefits, (and yes wages) because doing so doesn’t support your biased version of reality …….. and then tell those that point it out, to go write a paper for credibility.

            Speaking of credibility, you are a retired CA public Sector worker whose job duties included changing light bulbs. No offense to light-bulb-changers, but I’ll seek “credible” opinions elsewhere.

            A couple of articles just came out re Public Sector pensions in your home State of CA. While you would like everyone to leave things as they now are, being just hunky-dory, the authors of these article ……….. without question more “credible” than you ……. would beg to differ:



          • Posted by Tough Love on February 8, 2018 at 9:14 pm

            Hey Stephen, If those 2 linked articles aren’t sufficient, here are 2 more directly addressing DROP Plans in CA.

            After you read them, get back to me on whether you still think CA’s Taxpayer’s aren’t being “suckered” as I stated earlier…………



          • Quoting Tough Love…

            ” While you would like everyone to leave things as they now are, being just hunky-dory, the authors of these article ……….. without question more “credible” than you ……. would beg to differ:”

            Funny, Jack Dean asked me the same thing. “Now do you believe there is a pension crisis?”

            I don’t think I ever denied it. I only ever said that pension reform is not necessarily pension reduction. Although reduction may be a part of the process.

            …an old Leo Durocher story: After watching a rookie infielder make three or four consecutive errors at third base, old pro Durocher steps onto the field, sends the rookie to the sidelines, says, “Let me show you how to play third base, kid.” Next ball bounces down to Durocher, skids off his shins, caroms into the outfield. Durocher turns to the kid and screams, “You’ve got third base so screwed up nobody can play it!”

            That’s what we have here. Most, or nearly most, public pensions are in deep trouble. Some seem to have crossed the Rubicon. Alea iacta est.

            Barring some miracle, New Jersey, Illinois, and others are so screwed up nobody can play them.

            There will be cuts.

          • Posted by Tough Love on February 9, 2018 at 6:34 pm

            God, and the sooner those cuts come, the better.

            And without question for the FUTURE service of all CURRENT workers (you know ….the STOP digging the hole deeper every day thing), and where financial circumstances so necessitate, for the PAST service accruals of both actives and those already retired.

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