Russian Roulette with NJ Pensions

A pension actuary for 35 years, Assemblyman Edward Thomson explains the dangers of not having safeguards that protect the state pension system during a hearing on legislation giving police and fire unions full control over their pensions.

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The amendment was not incorporated and today both the Assembly and Senate will pass the bill, against the advice of a few newspapers here.


Murphy has a chance to tell unions no. He should take it. (Star-Ledger)

Sponsors may amend the bill before the vote, and require an 8-5 supermajority to change the COLA, but the governor shouldn’t be fooled. The fatal flaw in the bill is the elimination of the 80-percent funding level requirement, says Assemblyman Ned Thomson, R-Monmouth, an actuary who has administered more than 500 pension plans over 35 years.

“The supermajority means nothing. Funding is everything,” Thomson said. “People seem to think that 80 is a magic number – no, 100 is a magic number. Remember, we were at 116 percent for all pension systems in 2001, and we dropped to 92 in one year in a $60 billion fund. Bad things happen in a hurry. I challenge any actuary to put his name on this bill.”

More bad news for NJ taxpayers: Bergmann (Asbury Park Press)

I have long suspected that New Jersey lawmakers, particularly the Democrats, think their constituents are fools. How else to explain that even though onerous property taxes rank as residents’ top concern in poll after poll, legislators consistently act to make things worse.

The municipal and county associations have offered a number of reasonable fixes to the bill that would eliminate the financial risks to taxpayers. An Assembly committee ignored their suggestions Thursday in an 8-2 vote. Keep track of how your legislators vote today. It should tell you all you need to know about whether they are in Trenton to represent you or to do the bidding for the unions.

Union pension control threatens towns, counties, taxpayers (Press of Atlantic City)

The Legislature instead should heed the advice of the League of Municipalities and give oversight of the pension to a trustee board with an equal number of labor and local government representatives, along with one independent member.

Better still would be the league’s alternate recommendation: Change the pension system from one based on defined benefits to one based on defined contributions. Under that system, which is the norm in the private sector, the public employee unions could have control of the pension fund but would be responsible for how their actions affect their members.

But if elected officials give the unions control while leaving taxpayers on the hook for the unions’ actions, it will be a disservice to the citizens who elected them.

7 responses to this post.

  1. Posted by MJ on March 26, 2018 at 11:54 am

    Ha ha ha I have to laugh…I say let it get passed as written. Once these towns/municipalities get a taste of what they will be billed for when things go awry, as they inevitably will, that will be the real eye opener to taxpayers.

    Reply

    • Posted by dentss dunnigan on March 26, 2018 at 1:32 pm

      It’s already a real eye opener and it’s been chasing them out for years …Murphy’s taxes + Trumps limited deductions will force more people to flee …the only people left will be poor or the very rich …perfect combo for riots

      Reply

  2. Posted by Tough Love on March 26, 2018 at 7:55 pm

    Ned Thomson pointed out the pension benefit restrictions that take place when Private Sector Plan Funding Ratios fall below 80% and the “freeze” that takes Place below 60%. What he DIDN’T make clear is that those cutoff %s are based on the MUCH more conservative PRIVATE sector valuation standards (assumptions & methodology).

    That 60% Private Sector Funding ratio is roughly equivalent to a 100% Funding Ratio using the very LIBERAL standards commonly used in Public Sector Plan valuations…. with the Private Sector 80% being roughly equivalent to a 130% under Public Sector standards.

    If valued under the SAME standards that the US Gov’t requires of Private Sector Plans, MOST Public Sector Plans would not be allowed to grant any further accruals. Private Sector Taxpayers are being royally screwed by this double-standard.

    Reply

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