NJ Pension System Looking Better

No benefit cuts or contributions of the full ARC but New Jersey is about to report ‘good’ news on the funded status of their retirement system.

Lately when you went searching for New Jersey actuarial reports or other pension data you got this:

As it turns out the New Jersey Division of Pensions & Benefits has revamped their website while releasing July 1, 2017 GASB 67 reports that look like they have typos in the headings:

The funded ratio ticked up from 30.93% (lowest in the nation) to 35.79% which would have New Jersey leapfrogging Kentucky and at the level of Illinois (assuming those states do not play similar games).

What jumps out at you in comparing New Jersey’s GASB 67 numbers from 2016 to 2017 is that the Accrued Liability actually decreased (from $253.59 billion to $221.6 billion) even though benefits continued to accrue. The gimmick is easiest to see by examining one of the plans. The Judicial Retirement System report  shows the development (down) of its accrued liability:

It is that ‘Effect of assumptions changes or inputs’ reduction of $70 billion that jumps out at you. The report explains on page 4:

Municipal bond rates of 2.85% as of June 30, 2016 and 3.58% as of June 30, 2017 were used in the development of the blended GASB discount rate after that point. As selected by the State Treasurer, the rates are based on the Bond Buyer Go 20-Bond Municipal Bond Index. Based on the long-term rate of return of 7.65% and the municipal bond rate of 2.85% as of June 30, 2016 and the long-term rate of return of 7.00% and the municipal bond rate 3.58% as of June 30, 2017, the blended GASB discount rates are 3.11% as of June 30, 2016 and 3.83% as of June 30, 2017. The assumed discount rates have been determined in accordance with the method prescribed by GASB Statement No. 67. We believe this assumption is reasonable for the purposes of the measurements required by the Statement.

It was primarily the increase in the funding interest rate from 3.11% to 3.83% that caused this unusual drop in liability values. But according to this website, the Bond Buyer Go 20-Bond Municipal Bond Index was discontinued as of October 6, 2016, at which point it was 3.20%. Possibly the actuaries projected rates to July 1, 2017 and it is a valid assumption that municipal bond rates would go up as the fiscal situation of governments worsened which is the bizarre part of this measurement.

As states like New Jersey fall deeper into debt the interest rate they will need to pay bond-buyers would rise and using a higher interest rate in GASB 67 calculations would make the funded ratio of pension obligations look better. In theory, were New Jersey to sink so low that they have to pay 20% interest on their bonds and the actuaries interpreted GASB rules to allow them to use something near that rate for valuing liabilities then the plans would look fully funded……….to an idiot.

33 responses to this post.

  1. Posted by Tough Love on April 23, 2018 at 11:31 pm

    Who knows ……. those HIGHER interest rates, and hence LOWER liabilities, and hence HIGHER Funded Ratios ………. might even “justify” reinstatement of COLA’s for the Local PFRS.

    How absurd a conclusion THAT would be …. but I doubt it would stop the “moochers” from doing so.


  2. Posted by Anonymous on April 24, 2018 at 7:08 am

    Isn’t there a saying that goes something like….if you tell a lie enough times, you start to believe it…..ah well promises are better than nothing It must be quite anxiety provoking to “hope” you are going to get everything promised when you have saved nothing on your own but must stay at your dead end job


    • Posted by El gaupo on April 24, 2018 at 9:55 am

      Drop dead for PFRS is somewhere in the 2050’s. Not worried about it. Why? I do save on my own. Been doing so my whole career. Haven’t been able to max my 457 every year but have for about half and came close almost every other year. Max on two Roth IRA too and wife has 401k as well. Just about everyone I work with at least has a 457 plan set up. Let’s see how Pfrs does split off from the state. Probably can’t do any worse. Then No worries about my pension money being used to pay some teacher or highway worker. I am in the bell lap of my career. Thank God. I believe I will be, financially at least, able to leave the profession in 2-7 years and be ok. I know it’s a good deal. Not as good as some of the politicians. I won’t be getting my own flight to South Carolina but hey, that’s only for Christie and his buddies.
      Honestly, with Murphy in there you and I realize that no real reform is going to happen. While this obligations do cost a fortune, the economic doomsday scenario that TL and others predict has not come to be. Yes, of course folks leave nj every year. I may be one of them in five to ten years. But as far as proximity to good jobs and great schools are concerned, folks in there earning prime are staying out until they retire. You simply can’t make the kind of money in most other parts of the country as you can in northern nj. House prices are still high. It’s expensive to live here no doubt. I pay $14500 a year in tax. Almost ten of which goes to the schools. Your police dept is really not a huge chunk of your bill. Now, if you want to talk about ridiculous building regulations, and the impact on property values of C1 stream building restrictions, I can go back and forth all day on that. Ridiculous. Talk about legalized theft.


      • Posted by Anonymous on April 25, 2018 at 6:24 am

        el gaupo…I wasn’t referring to you personally with my comment, however, most of the publics I know and I know a lot of them in one way or another do not save anything for their future retirement and are stuck in dead end jobs with no where to go hence hanging onto the promise of the big pay out in the end

        My comment was a general statement and if all works out for you then I’m happy for you…….


        • Posted by Tough Love on April 25, 2018 at 1:24 pm

          I too would be happy if it works out for El gaupo, but ONLY if that “working out” is the result of a roaring stack market and with it, an increase in Plan assets sufficient to pay the LUDICROUSLY excessive pensions that have been “promised”.

          With NJ Police “wages” far more likely to be HIGHER (than lower) than those of comparably educated, experience, skilled, and knowledgeable Private Sector workers, there is no justification for NJ’s Taxpayers to contribute MORE towards Police pensions (AND benefits) than what THEY typically get from their employers…………. and NJ’s Taxpayers have ALREADY contributed WAY more than what we typically get in retirement security contributions from our employers.

          If a roaring stock market makes Police pensions whole, that’s great, but if not, rather than than Nj’s Taxpayers being forced to UNJUSTLY pony up even MORE in taxes, NJ’s Police pensions should be reduced to the amount than can be provided by existing ass wets ………. and NO MORE.


          • Posted by Tough Love on April 25, 2018 at 1:55 pm

            LOL ………… Spell-check wouldn’t have caught THAT:

            “ass wets” should be “assets”

          • Posted by Stephen Douglas on April 25, 2018 at 8:03 pm

            Come again?

            Tough Love on May 14, 2015 at 2:48 pm

            “The upshot is EVEN IF WE HAD THE MONEY to fund these grossly excessive promises (the direct result of your Unions’ BUYING the favorable votes of our elected officials) we should NOT do so. Not only should “promises” so clearly the result of underhanded deal-making NOT be honored, but NJ has FAR FAR more important needs than unnecessarily OVERCOMPENSATING it’s employees, not the least of which include:

            * infrastructure repairs and Capital improvements (Transportation Trust fund)
            * assistance for the poor-elderly and infirm
            * affordable housing
            * education support, especially for the less financially fortunate”.

            Will the real Mr. Love please stand up?


          • Posted by Tough Love on April 25, 2018 at 9:21 pm


            Ireally haven’t moved much from that position ……… still believing it to be fair & just, but “realistically” if the market were to roar, there is no way our Elected Officials would return those profits to Taxpayers rather than topping up the now underfunded pensions ………… no matter how justifiable.

          • Posted by Stephen Douglas on April 25, 2018 at 9:24 pm

            And rightly so.

  3. Posted by Tough Love on April 24, 2018 at 10:16 am

    Quoting ………..

    “Now, if you want to talk about ridiculous building regulations, and the impact on property values of C1 stream building restrictions, I can go back and forth all day on that. Ridiculous. Talk about legalized theft.”

    Doesn’t hold a candler to the financial “mugging” perpetrated upon NJ’s taxpayers from the LUDICROUSLY excessive Public Sector pensions & benefits. Hopefully we’ll get to re-set them to no more than HALF of these unnecessary/unjust/unaffordable/absurd “promises”.


    • Posted by El gaupo on April 24, 2018 at 10:44 am

      Unless you own some property with a C1 stream running through it. A fair amount of old people wanting to sell now have their property values cut by 80% or more because of this law. 300 ft buffer on either side for devolopment. Used to be 30 or so. Talk about a financial raping. At least with eminent domain you would get “fair” market value from the govt. this is worse. They get to pass a law that prohibits you from developing your land and gives you NOTHING in return for making your land worthless.


      • Posted by El gaupo on April 24, 2018 at 10:46 am

        Your gonna get a sprinkling of that from time to time. I’m not a one trick Pony. Like you commenting on Trump(which a agree with everything u say on that topic)


      • Posted by Tough Love on April 24, 2018 at 11:40 am

        This Blog focuses on NJ Public Sector pension/benefit problems.

        Trying to divert attention from THAT problem to others issues, while interesting, doesn’t lesson the pressing need to reform (meaning VERY materially REDUCE) pension accruals for the future service of all CURRENT workers.


        • Posted by El gaupo on April 24, 2018 at 12:19 pm

          Christ, TL you don’t give an inch do you. Lol.
          If you want to get technical, this blog routinely touches on private sector plans as well. As well as some other states. Same topic sure…but..
          We need to keep this site entertaining also. You know nothing will change during Murphy so why even come on here?? It is honestly for the back and forth in the comments section. Like I said, I know I find resistance to my benifits on his site. I come in and engage anyway. If I wanted to just post my opinion with folks who agree w me(or in many cases don’t care or are more militant about the pensions) I would post on the pba Facebook page. You know as well as I do, that for the most part people have an opinion on this issue but in the grand scheme of things most don’t even think about this stuff for more than a moment or two. In fact, most don’t give a shit and are not civic minded in the least. This allows those that do get into power to do what they want to do.


          • Posted by Tough Love on April 24, 2018 at 2:10 pm

            No El gaupo,

            NJ DESPERATELY needs PUBLIC “pension reform”, and that does NOT mean throwing MORE money into an endless pit to fully fund Public Sector pension “promises” that are LUDICROUSLY excessive by every and ant reasonable metric, and were BOUGHT from our Elected Officials with BRIBES disguised as campaign contributions.

            NJ DESPERATELY needs VERY material (AT LEAST 50%) reductions in the value of future service pension accruals for all CURRENT Public Sector workers.

  4. Posted by NJ2AZ on April 24, 2018 at 3:33 pm

    the report for the teachers fund has it hanging on until 2036….i’ll take the under..


  5. Posted by Tough Love on April 24, 2018 at 5:42 pm

    A few days ago there was a discussion on this Blog of the many pension “sweeteners” that add to pension costs and often create instantaneous unfunded liabilities. This nonsense takes place everywhere.

    Below is a link to an article with 119 pension sweetener Bills now floating around Albany NY and being pushed by NY’s Union-Ass-Kissing Legislators.



    There are very few things more GREEDY than a Public Sector Union/Worker.


    • Posted by Tough Love on April 24, 2018 at 5:50 pm

      Another article on the same subject this one even more appropriately titled:



    • Posted by PS Drone on April 24, 2018 at 7:37 pm

      I love how many of these bills are to INCREASE the number of/ease of obtaining disability pensions for LEO, corrections officers and various other uniformed public sector drones. Anyone with an IQ over 80 knows that “disability” pensions are the most scammed pension related ripoff in existence. One would think that civic minded legislators would be looking for ways to cut these scams back, but no. Since the scammers (and their votes) are organized, the private sector taxpayer gets it UTA again, per normal. What a sickening disgrace.


      • Posted by El gaupo on April 24, 2018 at 8:44 pm

        I am a police officer and I fully ageee with you that the disability pensions are out of control and have been for years. It should’ve been addressed years ago. In fact, the Supreme Court Of nj has allowed this nonsense to continue.


    • Posted by El gaupo on April 24, 2018 at 8:46 pm

      Yea that’s not an exaggeration—dope.


      • Posted by El gaupo on April 24, 2018 at 8:49 pm

        Meant for the TL comment above. I hear she can make cream sour just by looking at it.


        • Posted by Tough Love on April 24, 2018 at 9:56 pm

          Please tell us WHAT part of those article ……. was an “exaggeration”.

          It seems they were only reporting on all the Bills that the “moochers” rep (our BOUGHT Legislators) could conger up.


        • Posted by Tough Love on April 24, 2018 at 9:57 pm

          And no “sour cream” at all. Just looking to take a good part of the taxpayer-funded “icing” off your cake.


          • Posted by El gaupo on April 24, 2018 at 10:36 pm

            By posting your drivel on here? Not gonna happen w this gov.
            And I was referring to your comment on that there are very few things more GREEDY than public sector unions. What an exaggeration!!! How about your boy Christie and his minions?
            It’s comments like that will put an big smile on my face when I see my Pfrs check deposited in my account. Lol. Like I’ve always said, I don’t and never will apologize for any of the benifits and salary that I collect. And I will fight to keep those benifits and increase my salary. If that is your definition of greed so be it. I could give a flying fuck if you think I’m greedy. Not gonna change my mind. Haha. Should’ve become a cop if you wanted a six figure pension. Truth is like you said, if you were in my shoes you wouldn’t give up a fucking dime either. But your not. And if I was yours maybe I would think like you. But alas, I took this job. So, thank you for contributing to the Pfrs in whatever town you live in.

          • Posted by Tough Love on April 24, 2018 at 11:29 pm

            Christie certainly had a lot of “issues” (not the least of which was that awful/arrogant beach picture), but from a financial perspective, he was BY FAR the best Gov. NJ has had in a VERYlong time ………… finally, someone willing to stand up to the insatiably GREEDY Unions.

            He (yes HE) is singularly responsible for the COLA suspension.

            BRAVO, Mr. Christie !

            And nice quote ……….. “I could give a flying fuck if you think I’m greedy. “

  6. Posted by Matt on April 29, 2018 at 10:31 pm

    The most outrageous part of this pension ponzi is that the people are not outraged and collectively changing the laws that govern.


    • Posted by Tough Love on May 1, 2018 at 12:23 am

      Well Said.

      I believe 95+% of NJ’s Private Sector Taxpayers would be completely astonished if they knew that the DB pensions now granted Police Officer throughout the NJ ROUTINELY provides ……………. in ADDITION to heavily subsidized retiree medical care coverage for the whole family with a cost often exceeding $30K annually …………….. a pension that is ROUTINELY 3.5 to 4 times greater in value upon retirement than that typically granted Private Sector workers who retire at the SAME age, with the SAME wages, and the SAME years of service.


  7. […] funded ratio from July 1, 2016 to July 1, 2017 for the New Jersey system was primarily due to the dubious use of a 3.83% (from 3.11%) interest rate for valuing liabilities. Nothing has stabilized here except for the expanding role of prevarication and myopia in the […]


  8. […] Jersey may still be last (depending on how Kentucky plays it) but not for lack of assumption manipulation. Which got me to […]


  9. […] official GASB 67 unfunded liability for the New Jersey Retirement System as of July 1, 2017 is supposed to be $142 billion. The Economic and Fiscal Policy Working Group in a draft document included an entire category of […]


  10. […] Interestingly enough actuaries still have some discretion as to choosing rates under GASB and with the 2017 CAFR New Jersey actuaries predicted, on average, a 1% interest rate hike which will make the headline (assuming there will be a headline) unfunded liability number look lower: […]


  11. […] New Jersey gimmicked their public pension system out of the funded-ratio cellar, moving past Kentucky, and that passes […]


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