What PFRS Board Is Getting

Data on participants in the New Jersey Retirement System have been updated through 2017 on the state website and isolating those participants in the Police and Firemen’s Retirement System (PFRS) gives us an idea of the status of that plan now that the unions will be in charge.

There are 45,212 retirees getting total payouts of $2,483,120,081 annually and 40,223 active participants with total annual salaries of $3,699,736,327.

According to the latest actuarial reports (which incidentally are missing from the state website but we have the blog made up when they were available) the system has cash flow of:

About 88% of the plan is for Local Employers so the State will not take the big hit if real costs of benefits are ever presented to taxpayers.

We can expect the asset transfer to be at the end of the year but the dollar amount will not be the $25.4 billion in the actuarial reports. Considering the right-sizing of the numbers that the state is likely to do and continued negative cash flow the PFRS Board will be lucky to come out with $20 billion.

Under the best scenario for PFRS new deposits would be $1.5 billion annually (10% of salaries from participants and maybe 30% from taxpayers) offset by $2.5 billion in annual payouts. That payout amount will rise steadily (especially if COLAs return). The deposit amount may also – but not without a lot of pain for the people who already pay the highest property taxes in the nation.

 

20 responses to this post.

  1. Posted by Tough Love on March 27, 2018 at 11:46 pm

    John,

    (1) Assuming Murphy signs the Bill and the PFRS Trustees are running the show, can they direct their actuary to use say a 6% investment return (and hence liability discount) assumption, resulting in a HUGE increase in the ARC and hand taxpayers the bill ?

    (2) Also, can they change the %-of-ARC grade-in to full-funding?

    While I doubt they WOULD do those things immediately (thereby looking for a big fight), but DO THEY have the authority to do so ?

    Reply

    • Posted by Tough Love on March 27, 2018 at 11:51 pm

      John,

      One more thing………

      If the PFRS Trustees make changes that causes Taxpayer contributions to very materially increase ………. and the Legislators get scared of a Taxpayer backlash ……… can the Legislature simply pass ANOTHER bill that reverses the S5 changes?

      Reply

      • I don’t think anyone has thought it out that far. I expect Conduent to stay and continue with the low-ball numbers until depletion. I do not see this a union ploy to hike contributions but only to get the COLAs back.

        Reply

        • Posted by Tough Love on March 28, 2018 at 1:00 am

          With the very young retirement age of Police/Fire, adding a COLA to an other wise identical Plan w/o COLA increases the Plan’s cost by about 30%.

          That’s a BIG deal ….. not accounting, not timing, but REAL MONEY draining an already low pot of assets.

          And adding COLAs is especially repugnant for a plan that if valued using the SAME assumptions and methodology required of Private Sector Plans, it’s Funding Ratio would be BELOW the 60% cutoff that would bar ANY further accruals.

          Reply

      • Taxpayer backlask? New Jersey? You don’t get the highest taxes in nation by having a discriminating and informed electorate. They’ll forget and keep going for the status quo in different suits.

        Reply

        • Posted by Tough Love on March 28, 2018 at 1:07 am

          You’re correct about NJ’s Taxpayers. Why I don’t know.

          A copy of this Firemen video (and it’s no different for Police) should be send to every residence in the State a few days before every election:

          Reply

          • Posted by Anonymous on March 28, 2018 at 7:58 am

            You are a dreamer why don’t you just move to Republican state and use your brain for e change. Guess you won’t have a good answer for that one probably will say I can’t get a job anywhere else that’s a sad response

          • Posted by Tough Love on March 28, 2018 at 1:43 pm

            Yes, I dream for the day when Taxpayers are not being financially “mugged” by their own Elected Officials via the ludicrously excessive, unnecessary, unjust, and clearly unaffordable pensions & benefits that they have granted their Public Sector workers …………. in exchange for Public Sector Union BRIBES disguised as campaign contributions and election/re-election support.

          • That one is my absolute favorite! lol

          • Posted by Tough Love on March 30, 2018 at 9:02 pm

            Yeah, I liked it too.

            We need a similar one for Police……….. interested in Directing it ?

  2. Posted by MJ on March 28, 2018 at 12:58 pm

    Frankly, I’m surprised that there are only 45,000 plus retired and receiving pensions….

    If the COLA is reinstated won’t that deplete the plan more quickly?

    Reply

  3. Posted by Stephen Douglas on March 28, 2018 at 1:44 pm

    Mary Pat Campbell:

    “Finally, here’s the problem being “solved”: the political problem of getting the blame for needing higher contributions.”

    “Okay, so now the union can force full contributions.”

    “So here’s the deal: when localities get the bill… it will be because of the unions. Not state legislators. The unions will get the blame for the increasing burdens on the localities. ”

    “Unions, the politicians are not being your friends by passing this. They just solved their political problem — after all, your board could vote for lower benefits. That’s what it says.

    If you’re asking for a 33%+ increase in contributions, then that’s because you unions are greedy, you see. You could simply have had all the union member benefits dropped 25% (or more) to fill the gap!”

    “Obviously, the problem grew because the state legislature had made contribution levels way too low for decades. But they just dropped it on you. So now it’s your problem, not theirs. They can just throw up their hands — hey, we thought the unions would fix this!”

    “Unions, you are being set up. I hope you understand that not one thing has been fixed about your pensions with this move.

    You may think you are now in control, but you have just been made a target. The problem that was solved was the huge target on the governor and legislature with respect to your specific union’s needs.”

    Hot potato…

    Reply

    • Posted by Stephen Douglas on March 28, 2018 at 1:46 pm

      ““Obviously, the problem grew because the state legislature had made contribution levels way too low for decades. But they just dropped it on you.”

      Reply

    • Posted by Tough Love on March 28, 2018 at 1:58 pm

      Two things everybody should keep in mind……..

      (1) The ROOT CAUSE of the problem has ALWAYS been the Grossly Excessive pension (AND benefit) “promises”, with the lack of full funding being not the CAUSE of the problem, but the CONSEQUENCE of that real root cause ….. excessive pension/benefit “generosity”

      (2) regardless of who is to BLAME (our Elected Officials and/or the Public Sector Unions), the financial beneficiaries of granting WAY too much are very clearly the Public Sector workers and retirees, so THAT is where Taxpayers must look to right this wrong……….. via Plan “freezes” and/or VERY material reductions in those “promised” pensions & benefits.

      Reply

    • Even if you’re still shooting blanks.

      Reply

  4. Posted by boscoe on March 28, 2018 at 3:14 pm

    Last-minute amendments to S5: COLA vote requirement moved up to 8 from 7. And some other changes. Here is the statement:

    http://www.njleg.state.nj.us/2018/Bills/S0500/5_S3.PDF

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: