S5 NJLM Take

The conditional veto of the PFRS transfer bill went on for 14 pages in a format that made understanding what it really did difficult without cross-checking the original bill. Luckily the New Jersey State League of Municipalities (NJLM) took on the task and came up with this helpful summary (which included at least two other pimp slaps of the unions that I have not seen mentioned anywhere else):

  • Continues to have the rate of return determined by the State Treasurer, instead of the Board of Trustees;
  • Requires at least eight (8) votes of the 12-member board for any change in benefits;
  • Prohibits any enhancement or reduction of benefits, including cost of living adjustments and changes to employee contribution rates, unless an actuary certifies that it does not increase employer contribution in the current year, and that such a change will not impact the long term viability of the fund;
  • Removes the language permitting the actuary to be an employee of the Board of Trustees;
  • Requires the actuary to be a fellow with the Society of Actuaries & an active member of the American Academy of Actuaries;
  • Removes the Board of Trustees’ authority to investment and reinvest the fund’s monies, as the power remains with the State Investment Council and Division of Investments;
  • The State retains 100% control over the Common Pension Fund L, which is the fund that includes the revenue from the State Lottery transfer;
  • State Treasurer remains the custodian of the funds;
  • Removes the mandated employer quarterly pension fund payments;
  • Removes the withholding of any property tax relief payments for non-payment of pension payments; and
  • Removes the Police and Fire Retirement System representatives from the State Investment Council.

 

10 responses to this post.

  1. Posted by marbs on May 13, 2018 at 10:46 am

    So after all the yelling and screaming. back slapping and back stabbing this bill does absolutely nothing.

    Reply

  2. Posted by Tough Love on May 13, 2018 at 12:09 pm

    Those changes are WONDERFUL, for the Taxpayers …. pimp slap of the unions INDEED.

    A few thoughts on those Bullet points:

    (1) In the one bullet that says:

    “Prohibits any enhancement or reduction of benefits, including cost of living adjustments and changes to employee contribution rates, unless an actuary certifies that it does not increase employer contribution in the current year, and that such a change will not impact the long term viability of the fund;”

    Why only the “current” year, vs 2, 3 or 5? And the words ….”and that such a change will not impact the long term viability of the fund” ….. are WAY too vague to be able to be meaningfully enforced.

    (2) GREAT move that the PFRS actuary CANNOT be an employee of the PFRS Board of Trustees. WHY? Less ability to influence and leaves in place the actuary’s personal liability for bad advise/assumptions, etc……… specifically pushing the envelope of assumptions/ methodology TOO FAR.

    (3) in the bullet that says:

    “State Treasurer remains the custodian of the funds”

    Gotta love that….. helps create a “trail” of the money disbursed. And how many times have we seen those who can get their hands on pension funds STEAL a portion.

    (4) In the Bullet that says:

    “Removes the mandated employer quarterly pension fund payments;”

    Good …………. move opportunity for the State to contribute LESS to the LUDICROUSLY EXCESSIVE and unjustifiable pension promises. Instead of fully funding these ridiculous promises, we should be exploring ways to REDUCE them

    (5) In the bullet that says:

    “Removes the withholding of any property tax relief payments for non-payment of pension payments;”

    (6) In the bullet that says:

    “Removes the Board of Trustees’ authority to investment and reinvest the fund’s monies, as the power remains with the State Investment Council and Division of Investments;”

    WONDERFUL …………. eliminates the UNNECESSARY extra fess of duplicated effort, AND eliminates the game-playing (and potential kickbacks ala NY’s SheldonSilverGate)

    (7) In the Bullet that says:

    “Continues to have the rate of return determined by the State Treasurer, instead of the Board of Trustees;”

    Good, the Trustees can’t increase the interest rate, thereby raising the funding ratio to try to justify COLA reinstatement, benefit increases, or employee contribution reductions.

    —————————————————————–

    Question. With all these changes/restrictions what authority (to do what) will remain with the Board ? Specifically, can they still SCREW the Taxpayers………… and I say “can” because, if they CAN, they eventually WILL.

    Reply

  3. Posted by rdquinn on May 13, 2018 at 12:50 pm

    Watch this one. WHO CARES ABOUT THE CURRENT YEAR? It’s the created liability that matters.

    “Prohibits any enhancement or reduction of benefits, including cost of living adjustments and changes to employee contribution rates, unless an actuary certifies that it does not increase employer contribution in the current year, and that such a change will not impact the long term viability of the fund;”

    Reply

    • Posted by El gaupo on May 13, 2018 at 3:00 pm

      Oh for Christ sake…enough with the gobbeldeygook. Obviously, Pfrs members wants cola reinstated. Raise the retirement age and be done with it. Instead of a confusing bill that may or may not allow some what ifs and maybes for a year. Etc.
      Follow the math and let me know if I’m in the ballpark.
      2017 data:
      Pfrs
      41,000 actives
      46000 retirees.
      Average retirement age is 52.5 from the valuation report.
      Raise the retirement age by 3 and this is the math I get.
      Assuming a 30 year career, I think it is safe to assume that at any given time 10% of actives would be within this 3 year extra time period.
      That would be 4,100 people. Assuming a $100000 pension(that number is still a little high statewide) that is $410 million dollars.
      Plus the pension contributions still being g out into the fund by this 10%. (I am not counting that because over the 3 years we can expect pensions to go up about 4 to 5 grand based on 2% raises per employee per year)
      That comes out to $8900 a year for every retiree in the system. This will happen every year and reduce the amount between actives and retirees because they will need to work longer. Give the retirees 60% of the CPI like the pre fatso days and throw the rest back into the system.
      Mr. Bury if the retirement age was increased by a few years would a cola be a net neutral event for the system? If I am missing something (other than moocher, light bulb changer comments from the peanut gallery) let me know.

      Reply

      • Posted by El gaupo on May 13, 2018 at 3:01 pm

        $8900 a year is $410m divided by 46000

        Reply

      • Posted by Tough Love on May 13, 2018 at 11:01 pm

        El gaupo,

        With NJ Police officer retirements usually under the “special Retirement” provision allowing retirement AT ANY AGE (i.e. NO MINIMUM AGE) after 25 years of service, what does it even mean to increase the age by 3 years?

        If the AVERAGE age is now 52.5, does it mean that NOBODY can begin collecting until age 53.3? Something else?

        Reply

        • Posted by Tough Love on May 13, 2018 at 11:25 pm

          ooophs …. the 53.3 should have been 52.5+3=55.5

          Reply

          • Posted by El gaupo on May 14, 2018 at 8:39 am

            Yes. Special retirement at 25 years will have another requirement of at least 55 years of age. Or 56.
            I’m not asking for opinion here. I’m asking is the math in the ballpark. I see that age requirement allowing for cola as it was under the old system and providing for additional monies to be put into the system therefore allowing the taxpayer portion to be reduced. If the math is correct, or close, I’m sure that I’m not the only person on either side of this that has thought of this. I’m sure the unions and the LOM wouldn’t be all patting him on the back if there wasn’t some agreement there. And as a taxpayer, if the math showed that less money would be take. Out of the system by retirees every year because of this and the funding percentage would go down, absent any other change and taken in its face alone, would you be in favor of this.

          • Posted by El gaupo on May 14, 2018 at 10:25 am

            I think that cola return was a huge reason for this bill. I don’t think the PBA would be praising Murphy if they felt it would never happen with the changes. I also don’t think the LOM would be okay with it either if there wasn’t some other giveback that made the cola return cost neutral at worst. They were slamming this bill as of a month before. As I said before, for weeks before the veto neither side said a word. I think Murphy brought both sides together to find a path to give both sides something here. If my math is in the balllpark, I see it happening down the road. Otherwise colligan would’ve been jumping up and down, and the league would’ve been screaming for weeks before the veto.

          • Posted by PS Drone on May 14, 2018 at 8:31 pm

            To be realistic going forward it should be 52.5 plus 13.5.

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