NJ Stress Test Study

The Pew Charitable Trust (Pew) put out a 147-page paper summarizing the “results of a stress test simulation analysis on the largest government pension plans in 10 states under different economic scenarios and assumptions for policymaker behavior.”

Coincidentally, New Jersey just got a law requiring stress tests so Pew may have done some of the state’s work (had the results turned out a lot rosier).

The Pew study only looks at New Jersey plans for teachers (TPAF) and the State portion of the Public Employee Retirement System (both seriously shorted by the state in recent decades) so the results look slightly worse then if the rest of the system (all PFRS and the local portion of PERS) were included.

51 responses to this post.

  1. Posted by PS Drone on May 29, 2018 at 12:52 pm

    Heaven forbid NJ raids the locally funded pension plan(s) to stave off terminal liquidation of the various state plans. What on earth would all of the affected employees do?

    Reply

    • Posted by Anonymous on May 29, 2018 at 1:01 pm

      Seniors command top dollar in the workplace ….know for their dedication ,I’m sure they’ll have no problem keeping on keeping on …

      Reply

  2. Posted by Tough Love on May 29, 2018 at 12:59 pm

    Parts of this analysis seems unrealistic. For example, under the indented paragraph starting with New Jersey, it states:

    “Once insolvent, future benefit payments for the plans would be directly paid out of employee contributions, lottery revenues ……”

    Do they think current “actives” would stand by while ALL of their own contributions go right out the door to pay current retirees …….. leaving NOTHING to accumulate for their own retirements? While those nearing retirement or with long-service (and therefore with few good pension-wise options) might do so, younger/shorter-service employees would be inclined to quit seek employment elsewhere.. And forget about attracting new hires under such a DB Plan..

    Reply

    • Posted by Anonymous on May 29, 2018 at 2:48 pm

      From the Teachers valuation report…market value of assets: $24.5B (p 26), actuarial value of assets: $26.5B (p 27), liability for currently receiving benefits: $39.2B (p 29).

      That leaves less than $0 set aside for current actives. Their contributions are already funding the benefits of current retirees.

      Reply

      • Posted by Tough Love on May 29, 2018 at 2:55 pm

        You have a rather large lack of understanding of how Public Sector Plan finances operate.

        Reply

  3. Posted by Tough Love on May 29, 2018 at 1:18 pm

    Anyone who has been following NJ’s pension/benefit mess knows that the State is in a VERY dire place and with ZERO good options. There is no doubt that the Taxpayers and/or the Plan participants are going to take a BIG hit in the not too distant future.

    That said, it is eminently clear that ……. at the VERY LEAST …. we should stop digging the financial hole we are in deeper every day by CONTINUING to allow CURRENT workers to accrue additional service credits under formulas & provisions (e.g., high formula-factors, VERY young retirement ages, heavily under-priced early retirement reduction factors, and absurdly easy to satisfy Disability retirements) that are WAY too generous, unsustainable, and unaffordable.

    The workers want “what they were promised”, but by now we all know that those “promises” (many “retroactively” applied) were too generous, likely cannot be met even for PAST service accruals, and certainly should not be continued under anywhere near as generous terms for tier future service.

    The Taxpayers will likely need to bite the bullet (so to speak) and heavily contribute towards those unfunded PAST service liabilities, but I see little to zero Taxpayer willingness to do so without FIRST freezing the current DB Plans or very substantively reducing the VALUE of future service accruals for all CURRENT workers.

    Reply

    • Posted by El gaupo on May 29, 2018 at 2:28 pm

      If I was a teacher I’d be worried. But I’m not so….not as much. Ultimately, they will change the formula for tpaf and Pers. Maybe even Pfrs one day. If these plans can last another ten years or so, the majority of employees will be staying until 65. They can always up that to 67 for new hires.

      Reply

    • Posted by El gaupo on May 29, 2018 at 2:28 pm

      If I was a teacher I’d be worried. But I’m not so….not as much. Ultimately, they will change the formula for tpaf and Pers. Maybe even Pfrs one day. If these plans can last another ten years or so, the majority of employees will be staying until 65. They can always up that to 67 for new hires.

      Reply

      • Posted by Tough Love on May 29, 2018 at 2:59 pm

        It’s making changes only for “new hires” that IS the problem, because very little savings emerge for 20 years. ALL changes should equally apply to the future service of CURRENT workers to have a meaningful financial impact.

        Reply

        • Posted by PS Drone on May 29, 2018 at 3:30 pm

          And retirees too. Haircuts to future payments in order to bring the benefit age up to 62 (with penalty) and to bring the annual amount down to reality. Anyone receiving over $50 – $60K cut back to that level.

          Reply

          • Posted by Tough Love on May 29, 2018 at 3:33 pm

            Taxpayers should be so lucky ………….. REALLY !

          • Quoting PS Drone May 29, 2018 at 3:30

            Anyone receiving over $50 – $60K cut back to that level.
            ————————————————-

            Average pensions for NJ state workers from PERS is $27,000 plus (2016)

            How much would a cutback to $50,000 actually save?

          • Posted by Tough Love on May 29, 2018 at 5:22 pm

            A BOATLOAD for cops, MANY of the newly retired getting 100K pensions ….. as El gaupo confirmed.

          • Posted by PS Drone on May 29, 2018 at 5:25 pm

            Stephen Douglas – you should ask El gaupo. It is he and his fellow 24×7 life riskers how many drones get more than $60K. Also, your “average” includes many drones who worked a whole 5 years that brings the number down. There are thousands and thousands who get a whole lot more than your average.

          • Posted by El gaupo on May 29, 2018 at 5:59 pm

            I do confirm that the $100,000 pension for police officers is no longer the exception and within 10 years will be the norm

          • Posted by El gaupo on May 29, 2018 at 6:38 pm

            I should clarify and say that it Bergen County and other “wealthy” counties, officers retiring with 30 yrs on at sgt and above are above or just under $100,000. Patrolman are below that. In many areas of the state, $100,000 pension may only be for chiefs at the higher end of the pay scale. Statewide, maybe 15% of those retiring in 2018 will hit that mark. In Bergen county it is probably pushing 40%. In ten years just about all in Bergen will be above $100,000.

          • Posted by Tough Love on May 29, 2018 at 8:07 pm

            Quoting Stephen Douglas ………….

            “Average pensions for NJ state workers from PERS is $27,000 plus (2016)”

            Yeah, at least NJ isn’t as dumb-ass as CA, giving $50K annual pensions to light-bulb-changers (like yourself).

    • Posted by Stanley on May 30, 2018 at 11:30 am

      “Anyone who has been following NJ’s pension/benefit mess knows that the State is in a VERY dire place and with ZERO good options.”
      I don’t know if that is correct. I would argue that there are a number of very good options: dieting, tightening the ol’ belt, reducing government. Stop bargaining with public employee bargaining units. Discern what legitimate services state and local government should be responsible for and advertise for the necessary manpower to provide such services. Trying out the outdated practice of living within one’s means.

      Reply

      • Posted by Tough Love on May 30, 2018 at 12:30 pm

        Agreed, I should have said “politically acceptable” instead of “good” ……… as you enumerated, there ARE plenty of “good” options.

        Reply

        • Posted by El gaupo on May 30, 2018 at 3:16 pm

          Take a stroll thru the Bergen county police academy. Look at the photos on the wall of the graduating classes. All about the same size for years then Pay close attention to the years 2010 and 2011. You will notice the class size at about 25% of the Norm. The guys look huge cause there is like 15 of them instead of 50 or so. That’s when Christie has his layoffs. Then take a look at 2012 and 2013. Class sizes are much larger than before. About 80 or so. Leads me to beleive that the towns were sucking wind with fewer cops. Most dept were staffed about right. Where I work we can have as little as 2 people in town. Short of merging(not opposed) how the hell are you supposed to cut staff??
          I personally made over $32000 in overtime in 2010 because our m and c didn’t replace two guys who retired.
          Another interesting read, nj com today had article stating that nj was best place in country to raise a kid. Top 10 all northeastern liberal states. As one can expect the worst were the red states of the southeast and AZ and NM. Part of being able to raise kids well is being able to provide for them. Higher per capita income allows that. Don’t take my word for it. Read the article. Takes into account, hospitals, schools, etc.

          Reply

          • Posted by El gaupo on May 30, 2018 at 3:18 pm

            $32000 didn’t even include the wonderful road jobs that aggravate TL so much. Prob made another $15000 there.

          • Posted by Tough Love on May 30, 2018 at 3:26 pm

            And what does anything you stated have to do with the current VERY material over-compensation of NJ Police Officers, somewhat in “wages”, but primarily in pensions & benefits that are MULTIPLES greater in value than what is necessary, reasonable, fair to Taxpayers, or affordable?

          • Posted by Stanley on May 30, 2018 at 5:39 pm

            ” Top 10 all northeastern liberal states. As one can expect the worst were the red states of the southeast and AZ and NM.”
            —————————————
            You have to take a claim like that with a grain of salt. If it is such a great place, why are so many policemen needed? I know illegals who are doing a wonderful job of caring for and raising their children, but there are places in Phoenix where I wouldn’t leave my bicycle unattended for two minutes. I’m sure that there are some very troubled places in NJ; what about Newark or Camden? Do you think that conditions can’t change in northern NJ? In case you haven’t noticed all is not well in the health care sector; trouble is brewing and it can filter down to NJ.
            NJ pensions are 31% funded which means that due to grossly overvalued financial markets, NJ pensions might be about 15% funded. People are being taxed out of their houses and you think everything is cool.

          • Posted by Stanley on May 30, 2018 at 5:43 pm

            ” As one can expect the worst were the red states of the southeast and AZ and NM.”
            Comparing an area that is largely homogeneous and well established with areas that have large numbers of barely literate illegals is just plain stupid. It means nothing. Besides that, reality in case you haven’t noticed, DOES NOT grade on a curve.

          • Posted by El gaupo on May 30, 2018 at 7:07 pm

            NJ has the highest population density. Stands to reason we would have a lot of policemen. I’m just stating what the article said. Lowest infant mortality rate, low rate of crimes against children, etc. good schools. Both private and public sector workforce is more educated. True of other northern states too.
            I’ve long said NJ is a great place to raise a family and not set up for low income retirees.
            If the red states are so good to raise a family, why do the schools suck so much?? God, guns, grits and gravy.
            Fools that donate to some sly preacher who says God told him to raise money for a $54 million plane. Lol. Dopes. You don’t see that in NJ. Quite candidly, we trail other countries in areas like crime(school shootings), health care, etc. without our liberal states that gap would be FAR more pronounced.

          • $32,000 in “overtime” for sitting in a car and taking naps. I know it is cheaper to pay overtime than to hire new employees, but really? 32K? You would have done it for $10K or less. Cops get paid WAY too much for the little work they do. Sorry, El Guapo, you’re a leach and a blood sucking festering wound on the middle class.

          • Posted by Tough Love on May 30, 2018 at 10:52 pm

            Ouch, that must have hurt.

          • Posted by El gaupo on May 30, 2018 at 11:46 pm

            Pat,
            I worked over 500 hours of overtime that year. That’s 13 extra weeks of full time work. And I guarantee you it was exhausting. And there were plenty of calls during the shifts I worked. And no, I would not have done that much work for $10,000. That would come out to about $20 an hour. The town hired two guys jan 1 2011 after their ot budget was blown outta sight.
            I thought you were a cop, guess not. As far as a leech and blood sucking festering wound?? I didnt make the rule for time and a half for overtime. You would’ve given some of it back? Give me a break. I have a family to feed and kids to put through college, so you bet your ass I’m gonna take overtime when it comes my way. Leach?? Go fuck yourself. Probably a jealous bitch in tpaf or Pers who wanted to commingle our pension so you won’t lose yours. And have security while the cops carry your fund. I never ripped you so kinda shocked you would come after me. Even TL understands federal overtime rules.

          • Posted by El gaupo on May 30, 2018 at 11:52 pm

            And as the regulars on here(all 6 of us) can attest to, if you are a teacher I’ve always supported you. In fact any public employee I have. Ripping me for taking ot shifts (13 weeks worth). You got some set of balls, my friend.

          • Posted by Tough Love on May 31, 2018 at 9:29 am

            El gaupo,

            Speaking of Federal overtime rules ………..

            There is a cutoff $ wages above which the employer does not have to pay overtime. Few in the Office I’m associated with get overtime while MOST put in 10 extra hrs/wk and get a 20+. They do it to “get their work does” … i.e., things that MUST be accomplished to run the business.

            I “get it” that highly paid police get overtime because you are “shift workers”, but there is something wrong with the $60K-$70 officer work who manages a few people NOT being entitled to overtime while the $100k , or $125K, or $150K Police Officer does.

          • Posted by Tough Love on May 31, 2018 at 9:31 am

            Ooophs ……..

            “MOST put in 10 extra hrs/wk and get a 20+.”

            should be

            “MOST put in 10 extra hrs/wk and quite a few regularly put in 20+.”

          • Posted by El gaupo on May 31, 2018 at 10:09 am

            I think it has to do with management positions. Chiefs and in most cases captains are not eligible for overtime. I do know from old timers when I first started that in the old days(1950/60) you didn’t get ot for staying late etc. you finished the call and went home and didn’t get any extra money. I don’t think that police unions in particular were responsible for the general rule on Ot. And I don’t think (with the exception of the road details which I know u hate) that u really have a problem with cops getting time and a half for more than 40 hrs etc.

          • Posted by Tough Love on May 31, 2018 at 10:42 am

            Yup, just the other day, I passed a Police car …. behind the cones on a completely blocked off street …… with the Officer just sitting in the car. I was only passing by, but it’s ridiculous what you get paid (and hence what taxpayers/Ratepayers PAY), often for doing NOTHING.

  4. Posted by skip3house on May 29, 2018 at 4:02 pm

    i keep remembering that ‘retired 2yrs’ teacher comment of a couple months back. Worked 25-30 years, contributed $100K, got that back in the 2 years, now all the rest of life on NJ taxpayers.

    Reply

    • Quoting Tough Love on May 29, 2018 at 2:55 pm

      You have a rather large lack of understanding of how Public Sector Plan finances operate.

      Reply

      • Posted by El gaupo on May 29, 2018 at 6:40 pm

        Generally speaking it will take me 4-5 years to get back what I put into the fund.

        Reply

        • I got my 30-years of contributions back after 2 years.

          Reply

        • Posted by Tough Love on May 29, 2018 at 8:11 pm

          Check that calc El gaupo………. should take less than 10 minutes using an EXCEL spreadsheet inputting each year’s actual (or est.) wages and your %-of-pay contributions applicable to each year. I highly doubt that it will take 4-5 years to get back ALL of your own contributions.

          Reply

          • Posted by El gaupo on May 29, 2018 at 10:50 pm

            Maybe it is less. I honestly don’t remember what my base salary was in the late nineties and early 2000’s. It may be closer to 3. I’ll take your word Pat, it is probably the same for me.

          • Posted by Tough Love on May 30, 2018 at 12:08 am

            Yeah El gaupo, and like Pat’s ……. maybe it’s only 2 years.

            The Taxpayers are being SWINDLED and should renege on no less than HALF of your ludicrously excessive pension (AND retiree healthcare benefits)!

          • Posted by El gaupo on May 30, 2018 at 7:50 am

            You can renege on all of it…..move outta joisey.

          • Posted by Tough Love on May 30, 2018 at 9:35 am

            If/when they do try to raise taxes enough to pay for these ludicrously excessive promises, the wealthy will assuredly be doing so …….. ADVANCING the date of your Plan’s failure.

  5. Posted by Tough Love on May 30, 2018 at 9:54 am

    Part of a great comment I just saw on another website ……….

    “politicians are lying thieves who never saw a tax dollar they could not redirect to increase their reelection chances.”

    THAT’S why DB Plan’s can never work in the Public Sector.

    Reply

    • Posted by PS Drone on May 30, 2018 at 1:51 pm

      Every politician who ever “served” the public is/was a liar. They lie to get elected, to get re-elected, to themselves, to their consituents, to their fellow politicians. It is part of the job description. That is why term limits have always been required. But the liars in office do everything in their lying power to see that limits are never enacted.

      Reply

    • Posted by El gaupo on May 30, 2018 at 7:10 pm

      That’s why Pfrs members wanted separation from the politicians. I am in FULL agreement w you on that topic.

      Reply

  6. Posted by Tough Love on May 30, 2018 at 10:00 am

    Here’s another good quote, from Novato CA Mayor Fryday ………….

    “…cut to the heart of the issue — political bribery. Politicians have been bought off by special interests … It’s killing our democracy… ” Vote against all candidates that take govt employee union contributions. We must follow the special interest money

    Reply

  7. Posted by Tough Love on May 30, 2018 at 12:54 pm

    El gaupo,

    Thought you might find this interesting reading………….

    https://patch.com/new-jersey/wayne/nj-cop-pushed-suicide-victim-ground-authorities-say

    No mention of their pensions being at risk.

    Reply

    • Posted by El gaupo on May 30, 2018 at 3:25 pm

      Won’t get one if they fired. They are presumed innocent until they’re not. If found guilty, they should be punished. I’ve never advocated on this site or elsewhere that bad cops should get away with stuff. They shouldn’t. But I’ll also say that this is a rarity when taken into account all th police/citizens contacts. And with a few notable exceptions like this, despite what the media portrays, most cops do a pretty good job. We are also human beings and make mistakes. Doesn’t mean we shouldn’t be held accountable.
      But back to pensions, as long as NJ ranks #1 place to raise a family, I wouldn’t worry about wealthy people leaving here. That’s why the state is number 1 to raise a kid. Because the state is high income. If you dropped a ton of rich folk in WV, within a year or two the school tax would triple so little Johnny would get a good education.

      Reply

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