S5 False Alarm

Andrew Sidamon-Eristoff, former New Jersey state treasurer under governor Chris Christie, is warning that a 58-page bill (S-5) that transfers management of the $27 billion Police and Firemen’s Retirement System (PFRS) from the State Investment Council and the Treasury Department to the PFRS board of trustees is “one terrible piece of legislation” for taxpayers.

In sum, Gov. Murphy’s much-hyped taxpayer protections amount to little more than a leap of faith: that all five nonunion appointees to the PFRS board will always defend the interests of public employers; that the PFRS board will not vote to increase benefits prospectively; that the Murphy administration will produce a credible and objective definition of “long term viability”; that removing the current law’s 80 percent target funded ratio won’t weaken pension-funding standards; that the PFRS board will not use future employer-contribution increases to fund future benefit increases; or that the PFRS’s actuaries will always act independent of their client paymasters. That’s a lot of faith to place in one “terrible” piece of legislation.

He needn’t worry.

This bill was vetoed to maintain the status quo, however dysfunctional, while providing the appearance of transferring control to PFRS without actually allowing them to do anything with it. In addition:

  1. The PFRS actuary will be restricted in their choice of a discount rate to what the rest of the plan is using, and
  2. Has any public plan actuary in New Jersey (or anywhere else) EVER gotten to “act independent of their client paymasters”?

 

20 responses to this post.

  1. Posted by Tough Love on June 6, 2018 at 11:36 am

    While under the proposed changes to S5 the trustees are indeed limited, that may not always be the case. Combine that with only needing ONE of the five Gov’t appointees to approve benefit increases or contribution decreases, and the Taxpayers could be put in an untenable (and grossly unjust/unfair) situation.

    And given the HUGE amount of $$ in play, what stops the Unions from outright BRIBING one of the 5 Gov’t appointees with a briefcase filled with $500K or even $1 Million in cash?

    Reply

  2. Posted by Stanley on June 6, 2018 at 1:16 pm

    “Taxpayers could be put in an untenable (and grossly unjust/unfair) situation.”

    They are already there. Besides that, it’s hard to spend cash. But there are other ways to acquire agreement. Favoritism for a relative’s job application and so on. There are highly valued shovel leaner jobs to be awarded. Excuse me for saying this, but folks in NJ probably wrote the book on these types of transactions.

    Reply

    • Posted by Tough Love on June 6, 2018 at 1:27 pm

      Of course “we’re already there” ………… simply BECAUSE NJ’s Public Sector pensions & benefits are ludicrously excessive by every and any reasonable metric, and the unfunded liability will likely get much WORSE because we continue to grant NEW accruals every day under the same unsustainable Plans, and with a Union-ass-kissing Governor/Legislature that refuses confront the Unions and put a stop to it.

      But S5 MIGHT indeed make it worse.

      Reply

      • Posted by El gaupo on June 6, 2018 at 2:01 pm

        Maybe. I think that this whole bill was about 2 things:
        1)
        Pba and fmba wanting the Pfrs to be exempt from any future reforms coming to Pers and tpaf. Especially since Sweeney will be coming after them this fall more than likely. This will be the case with Pfrs funds not being commingled like the Healey plan provides. And:
        2) the restoration of COLA, which in my opinion will not (and should not) happen without a 55 year age minimum on receiving pensions. At all the pba meetings I’ve attended, the delegates have stressed that it Will not be what it was and be more modest and only apply to retirees who retired before 1990 at first.

        Reply

        • Posted by Tough Love on June 6, 2018 at 2:10 pm

          And you think this ……………….. “which in my opinion will not (and should not) happen without a 55 year age minimum on receiving pensions.” …………… because you don’t understand both the math and the many OTHER factors that would result in a minimum age considerably HIGHER than 55 for a cost-neutral trade-off with a reinstatement of COLA increases.

          Reply

          • Posted by El gaupo on June 6, 2018 at 3:00 pm

            Prove it. I gave you my numbers.

          • Posted by Tough Love on June 6, 2018 at 3:55 pm

            El gaupo,

            I can’t calculate and hence prove something as thoroughly undefined as your proposal ……………. as I explained more fully in previous comments.

            And how come you freaked when I opined that such a trade-off should include an automatically triggered reduction in the COLA if “cost-neutrality” is not realized? Afraid of NOT being able to hoodwink the Taxpayers …….. as is usually the case?

          • Posted by El gaupo on June 6, 2018 at 5:09 pm

            Never freaked and would be open to insisting that the age requirement stay and COLA be “re-suspended” if costs to the mucipalities increased as a result of cola along w the min age requirement. It doesnt really matter what I think or propose here. I am in no way able to make or influence policy on this. Unfortunately.
            Anyway, I always states the my numbers were rough estimates. I honestly don’t have the time to to a detailed analysis down to the penny. I’m just saying that the average age is 52.5 at retirement, if we increased that to 55, with no cost to taxpayer we could re institute cola.
            You have no show that my numbers are off base(because I think you are as surprised as I am at how much more money the fund keeps w a 55 age limit).

          • Posted by Tough Love on June 6, 2018 at 5:35 pm

            Quoting El gaupo ………………..

            ” I honestly don’t have the time to to a detailed analysis down to the penny.”

            Nor the know-how.

          • Posted by El gaupo on June 6, 2018 at 7:05 pm

            Yea. I have a full time job.

            “Nor the know how…”. Pretty balsy statement. You still have not refuted my calculations with actual numbers!!!! Which leads me to beleive you can’t. You do the workup on the numbers. While doing whatever the fuck it is that you do…won’t tell us. In finance….bank teller maybe?? Ohh…you mean you have a full time job too? Ahh….got it. You don’t have the time for it either.
            “Nor the know how”….condescending bitch are we??? Don’t have your fingers type checks that you can’t cash. I truly beleive that you can’t/won’t refute my numbers.
            And I’ll still be on the receiving end of all those checks in a few years. 🤑

          • Posted by Tough Love on June 6, 2018 at 7:58 pm

            El gaupo,

            If you had no job and plenty of time, you still don’t have the know-how to make such calculations.

            Quoting …………… ““Nor the know how…”. Pretty balsy statement.”

            Not at all. You don’t even know what you don’t know.

          • Posted by Tough Love on June 6, 2018 at 8:01 pm

            quoting El Gaupo ………………

            “And I’ll still be on the receiving end of all those checks in a few years”

            Change “in” to “for” and for got it PERFECT

          • Posted by Tough Love on June 6, 2018 at 8:02 pm

            Ooophs, should have been……….

            “Change “in” to “for” and you’ve got it PERFECT

          • Posted by El gaupo on June 6, 2018 at 9:06 pm

            Lol….then show me where my math is wrong!! You still haven’t. Sounds like you don’t know either.
            And as the drop dead date of Pfrs is in the late 2050s, what are you implying? That you wish to see me drop dead after a few years of retirement? Wow. Perfect? Unreal. You would rather see me dead than collecting a pension. Thanks.

          • Posted by Tough Love on June 6, 2018 at 10:04 pm

            El gaupo, Reading comprehension problem ?

            As I stated above …….

            “I can’t calculate and hence prove something as thoroughly undefined as your proposal ……………. as I explained more fully in previous comments.”

            ————————————

            Quoting …………… “And as the drop dead date of Pfrs is in the late 2050s, what are you implying?”

            lol ………. if if makes you happy, keep believing a drop dead date based on your Plan’s absurdly optimistic “official” #s.

  3. Posted by geo8rge on June 7, 2018 at 9:51 am

    “The PFRS actuary will be restricted in their choice of a discount rate to what the rest of the plan is using”

    The actuary could publish estimates using other different assumptions. The actuary could even make the underlying data publically available in an accessible format that would allow people outside government make their own judgments. The actuary could also publish details about what the hedge funds are doing.

    They should also get a liquidation plan from each hedge fund just to see what would need to be done to sell a specific hedge fund.

    So there is a lot they could do.

    Reply

    • Posted by Tough Love on June 7, 2018 at 10:01 am

      An actuary suggesting such transparency to the PFRS trustees would assuredly NOT be hired.

      Clearly, the Union (majority) trustees will be looking to use every possible option to make their Plan look as rosy as possible simply to justify reinstating COLAs, increasing benefits (as well as MANY less obvious provisions), and lowering employee contributions ……………. and with the usual “to hell with the Taxpayers” mentality.

      Reply

      • Posted by El gaupo on June 7, 2018 at 2:31 pm

        Of course they will…. I have written the state and told them to remove me from the pension roles. I have decided that much like the clergy, I will become abstinent. Oops, I mean I will take a vow of poverty. I don’t even want my contributions back.
        TL has made me realize the error of my ways. I will squeeze my family into a one bedroom apartment and forgo my six figure salary. Lol
        Whaddya really want from me TL? I ain’t given any of it back. Will you settle for me saying that I got a good deal?? Stop w the sour grapes. I’m sure your doing rather well in life. Are you? Lighten up. When I retire, if they ever make weed legal, I’ll meet up w ya and we can smoke together while we bet on a sports event. After all, that’ll help us both, especially me the Pfrs pension receipient.

        Reply

        • Posted by Tough Love on June 7, 2018 at 6:11 pm

          Quoting ………….”I ain’t given any of it back.”

          What you really mean is that you’re not agreeing to forgo all that has been
          ‘promised’ but not yet paid …….. and payable slowly over a long period in the future.

          Well, hopefully the taxpayers will get to have a say in that ………. given the Union/Elected-Officiial COLLUSION that led to your absurdly generous and unjustifiable pension and benefits……………. and RENEGE on the 50+% share that was never necessary, just, fair to taxpayers, or affordable, and assuredly would NOT have been granted in the absence of that COLLUSION.
          ————————————————–

          P.S. ………. your Platinum+ retiree healthcare benefits will likely be the first to go.

          Reply

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