S5 Progresses

It seems inevitable that management of the New Jersey Police and Firemen’s Retirement System (PFRS) will be transferred from the Division of Pensions and Benefits in the Department of the Treasury to the Board of Trustees of the PFRS. Earlier this week S5 got a thumbs up from a Senate Committee (11 -1) and surprisingly the Office of Legislative Services (OLS) did have an opinion on the fiscal impact.

The OLS notes that the authority provided to the Board of Trustees of the PFRS under the bill may have a fiscal impact on the administrative costs of operating the PFRS. For instance, the bill requires the board to hire an executive director, actuary, chief investment officer, and ombudsman and retain experienced legal counsel. Administrative costs will depend on the board’s future decisions, such as a decision of the board to employ additional staff instead of continuing to use the services of the Division of Pensions and Benefits in the Department of the Treasury. Additionally, as the PFRS board chooses to make and execute agreements with public and private companies for the management of the investment of the PFRS, the administrative costs and investment expenses of the PFRS will be impacted.

The OLS notes that the bill may increase employer pension costs because the bill allows the board to reinstate cost of living adjustments for retirees and to alter any benefit set forth in statute for the PFRS.

Since the bill requires the board of trustees to conduct a review of the performance and funding levels of the retirement system and allows the board to petition the Legislature to consider legislation that reverts control of the system to the Department of Treasury or another agency, if the PFRS underperforms over the six-year period, the State and local government employers may incur higher employer costs to fund the PFRS pension fund. The converse is also true, if the PFRS out performs over the six-year period, the State and local government employers benefit from higher returns and may experience lower costs to fund the PFRS pension fund. As of June 30, 2016 (most recent), total administrative expenses allocated to the PFRS were $4,779,598, and investment management expenses and fees allocated to the PFRS were $1,837,898. Related consultant costs for an actuary, actuarial services, and other consulting costs for the PFRS were $1,188,034 in FY 2016. In FY 2016, the PFRS accounted for approximately 11 percent of total pension fund administrative expenses. Administrative costs for actuarial services (40 percent), medical reviews and exams (25 percent), elections (55percent), and travel (27 percent) were higher, as a percentage of total PFRS administrative costs, than other PFRS administrative costs.

In addition, the bill requires local governments to make their annual payment to the PFRS on a quarterly basis, which may require additional short term borrowing by these governments. The bill permits a local government to reduce the pension payment by the additional borrowing cost

S5 Sca (1R) Transfers management of PFRS to Board of Trustees of PFRS.
2nd Reading in the Senate
 

Last Session Bill Number: S3040   (1R) A99 Sweeney, Stephen M.   as Primary Sponsor
Kean, Thomas H., Jr.   as Primary Sponsor
Bucco, Anthony R.   as Co-Sponsor
Oroho, Steven V.   as Co-Sponsor
1/9/2018 Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee
2/1/2018 Reported from Senate Committee with Amendments, 2nd Reading
2/1/2018 Referred to Senate Budget and Appropriations Committee
2/5/2018 Reported from Senate Committee, 2nd ReadingIntroduced – – 51 pages PDF Format    HTML Format
Statement – SSG 2/1/18 – 4 pages PDF Format    HTML Format
Reprint – – 50 pages PDF Format    HTML Format
Statement – SBA 2/5/18 1R – 3 pages PDF Format    HTML Format
Committee Voting:
SSG  2/1/2018  –  r/Sca  –  Yes {5}  No {0}  Not Voting {0}  Abstains {0}  –  Roll Call
SBA  2/5/2018  –  r/favorably  –  Yes {11}  No {1}  Not Voting {1}  Abstains {0}  –  Roll Call

Sarlo, Paul A. (C) – Yes Stack, Brian P. (V) – Yes Addiego, Dawn Marie – Yes
Bucco, Anthony R. – Yes Cruz-Perez, Nilsa – Yes Cunningham, Sandra B. – Yes
Diegnan, Patrick J., Jr. – Yes Greenstein, Linda R. – Yes O’Scanlon, Declan J., Jr. – No
Oroho, Steven V. – Not Voting Ruiz, M. Teresa – Yes Singleton, Troy – Yes

12 responses to this post.

  1. There are so many reasons this is idiotic.

    It will not stop them from running out of money, for one.

    Reply

    • Posted by NJ2AZ on February 7, 2018 at 2:23 pm

      i figure the impetus is to delay their reckoning by ensuring their fund assets won’t be used when the other funds start going belly up first

      Reply

    • But in line with what NJ has been doing with quarterly contributions and lottery proceeds money. While other other states whose plans are in better fiscal shape seriously, to varying degrees, are looking at reforms NJ keeps hunting for distractions.

      Reply

    • Posted by geo8rge on February 7, 2018 at 4:26 pm

      It will make them feel good. It also means Police+Fire can be bailed out, without bailing out the other pensions. It is also possible the police will get an honest appraisal of the assets and liabilities in their pension plan. Keeping Police, Fire, Teachers, and others united will be more difficult.

      Reply

      • Posted by Tough Love on February 7, 2018 at 5:59 pm

        All that an honest appraisal will do is LOWER the value of illiquid Plan assets, raising taxpayer contributions …… all so that they can keep in place (even for FUTURE service not yet worked) pension that are now ROUTINELY 4 times greater in value upon retirement than those of comparably situated Private Sector workers.

        Reply

  2. Posted by Tough Love on February 7, 2018 at 5:03 pm

    Quoting form the linked bill S5, P16:

    “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-
    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. ”

    With that “BOARD” being primarily Police Union Officials, giving them the above authority is akin to giving the EMPLOYEES in a Private Corporation (owned NOT by those employees, but by it’s SHAREHOLDERS) the right to set their own pensions and tell the the Corporations shareholders (the OWNERS) ….. Tough Luck, pay it it.

    How patently absurd !

    Reply

    • Posted by Anonymous on February 7, 2018 at 5:29 pm

      So they’ll give themselves COLA and bleed the pension dry …..

      Reply

      • Posted by Tough Love on February 7, 2018 at 6:04 pm

        Per S5, if they reinstated COLAs, they would assuredly raise Taxpayers contributions (because their own don’t need to be raised), and send a larger bill to each town. And also per S5, if the town doesn’t pay the FULL bill, they can claim the State aid that would otherwise be due the Town.

        Reply

        • Posted by Anonymous on February 8, 2018 at 4:48 am

          sounds good to me….I’d rather send my money to their pensions than Abbott districts anyway

          Reply

          • Posted by Tough Love on February 8, 2018 at 11:08 am

            You don’t seem to get it. Your Local property taxes will go up to cover the local expenses that the state aid WOULD HAVE funded.

          • Posted by Anonymous on February 8, 2018 at 11:46 am

            My town gets back .06c on every dollar they send to Trenton ,so we’d lose very little

          • Posted by Tough Love on February 8, 2018 at 12:05 pm

            Why are you expressing the $s lost as a % of how much the town “sends to Trenton”?

            If you are looking to express the lost income as a %, the proper denominator of that % should be the Town’s annual budget (or a segment thereof …. such as discretionary expenditures).

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