Sweeney Pension Path Ends With Hiring an Actuary

New Jersey Senate President Stephen Sweeney visited Tom Moran at the Star Ledger to explain the pension reform recommendations that his Economic and Fiscal Policy Workgroup came up with. First question, how much would it save?
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First off, a 401(k) is not a Cash Balance Plan. Two completely different animals that a lot of lay people are confused about*.

What we have here is another instance of a bunch of bureaucrats proposing ‘solutions’ they ran across on the internet or that are palatable to their campaign-donor constituency and then looking for an ‘expert’ to validate their whims.

Though, when asked to finger a villain, Sweeney did not hesitate.



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Full interview:
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* Again we have the interviewer and interviewee not knowing enough about their subject to enlighten their audience though when it comes to Cash Balance plans it has become something of an honest mistake. There is an article causing some buzz on the ACOPA message board about small-employer DB plans where the author assumes every DB plan out there is a Cash Balance Plan whereas a Cash Balance Plan is a type of DB plan – with PBGC coverage for most and DB funding rules for all – being used by mostly small professional groups to keep down pension costs for their younger rank-and-file employees. However, if it weren’t for that misunderstanding (and the author calling these plans tax dodges) the article would be a wonderful marketing piece for our business here.

17 responses to this post.

  1. Posted by skip3house on August 16, 2018 at 12:20 pm

    Sweeney and Moran may be ready to learn from you,..,..,… actual facts of basic arithmetic (math). Why not try? Not surprised Gov Whitman went along with her posse, but Di Francesco caught me off-guard. Why not have Donnie explain to just you the forces with which he had to contended? (..if not already known)
    A simple approach using existing funding, and all formula/system/acceptance of members to solutions in 8th grade arithmetic level of understanding will bring us all to a more viable future. Better than false hopes and beliefs now!

    Reply

  2. Posted by Theodore Munice on August 16, 2018 at 1:18 pm

    Total BS. The NJ state annual funding requirement looks like the proverbial hockey stick because they have not made the required contributions for DECADES! Unlike employees who have made increasingly larger contributions year after year.

    Reply

    • Posted by Tough Love on August 16, 2018 at 1:36 pm

      But …… conveniently ……… you are ignoring that if you took all of the employee’s own contributions (INCLUDING the investment gains thereon) rarely would the accumulated sum upon retirement be sufficient to buy more than 10% to 20% of their VERY generous pensions.

      Why? Because the ROOT CAUSE of the problem is that Public Sector pensions are ludicrously excessive by any and every reasonable metric.

      Reply

  3. Posted by Tough Love on August 16, 2018 at 1:29 pm

    The 2-nd video was interesting.

    While everything Sweeney stated is true, it was ultimately NJ’s legislature that succumb to those Union demands. Self-interest (getting re-elected by NOT pissing off their Union masters) on the part of our Elected Officials is the real “cause”.

    But don’t misunderstand me……………… while the primary “blame” for this mess lies NOT with the workers, but with our self-interested Elected Officials (and secondarily with the Public Sector Unions for being such pigs), the FINANCIAL BENEFICIARIES of this largess are indeed the DB Plan Participants (the workers), so THAT is where Taxpayers must look to right-this-wrong ………. by RENEGING on the 50% to 75% share of these LUDICROUSLY EXCESSIVE pension (AND benefit) “promises” that assuredly would NOT have been granted in the absence of the Public Sector Union/Elected-Official COLLUSION.

    Reply

  4. Posted by R U Kidding on August 16, 2018 at 2:44 pm

    State reneged on contributions; legislators reneged on responsible management of contracts and investments. All residents benefitted from the funding not placed in pension funds, yet only public workers pay the price in withheld COLAS and diminished medical benefits. When Sweeney says ‘let’s make a deal’ you can be assured it eon’t Be in the best interest of public workers.

    Reply

    • Posted by Tough Love on August 16, 2018 at 4:01 pm

      Quoting ………………

      “All residents benefitted from the funding not placed in pension funds, yet only public workers pay the price in withheld COLAS and diminished medical benefits.”

      All BS………….

      NJ’s Public Sector workers were never “entitled” the ludicrously excessive pensions that your Unions BOUGHT from our Elected Officials with BRIBES disguised as campaign contributions and election support. You were ONLY “entitled” to pensions no greater than those typically granted comparable Private Sector workers ……. which have a value TYPICALLY 1/4 to 1/3 as generous as the ludicrously excessive one that you have been “promised”.

      Taxpayer contributions toward your pensions have likely ALREADY been sufficient to FULLY fund pensions EQUAL TO WHAT WE GET ………….. and rightfully owe you NOTHING.

      Reply

    • Posted by PS Drone on August 16, 2018 at 6:33 pm

      “You can be assured it won’t be in the best interest of public workers”. Good, great and ABOUT TIME!!

      Reply

  5. Posted by boscoe on August 16, 2018 at 4:16 pm

    Sweeney’s not a fool. But this “history” of how we got here is a bunch of disingenuous crap. We elect governors and legislators to provide responsible leadership. The past 26 years of gimmicks and benefit giveaways are on them. Don’t blame union leadership for doing what they are supposed to do. Blame those who connived or caved. The unions didn’t come up with Whitman’s pension bond sale; she and her brain-dead advisors thought they could outplay the market. They lost. Sure the unions supported it, the $2.8 billion deposited in the pension system is the bird in the hand, why wouldn’t they? The 9 percent benefit increase under DiFrancesco? Election year, buying public employee votes. The magic that made it look like it could be paid for out of “excess assets?” That’s on the R’s in the administration and the legislature. Blaming union leadership for destroying the pension systems is a bald transference of responsibility.

    Reply

    • Posted by skip3house on August 16, 2018 at 4:45 pm

      boscoe,… Good.

      Reply

    • Posted by Tough Love on August 16, 2018 at 5:12 pm

      Boscoe,

      You are correct, BUT ………….. repeating what I stated above:
      ———————————————————————

      While the primary “blame” for this mess lies NOT with the workers, but with our self-interested Elected Officials (and secondarily with the Public Sector Unions for being such pigs), the FINANCIAL BENEFICIARIES of this largess are indeed the DB Plan Participants (the workers), so THAT is where Taxpayers must look to right-this-wrong ………. by RENEGING on the 50% to 75% share of these LUDICROUSLY EXCESSIVE pension (AND benefit) “promises” that assuredly would NOT have been granted in the absence of the Public Sector Union/Elected-Official COLLUSION.

      Reply

  6. Posted by In God we trust. on August 16, 2018 at 7:56 pm

    The state of things as they actually exist, as opposed to an idealistic or notional idea of them.
    As always the worker who has contributed his or share is the one who will be screwed.
    Had the State been made to contribute their share we wouldn’t be having this conversation. However, we now must play the blame game which is nothing more than political demagoguery. Let’s face it it’s always easy to take from the little people. I wonder if the politicians pension has or will be affected or their COLA.?
    How very sad it has come to this. Let us pray God allows cooler heads to prevail and this debacle is resolved fairly.

    Reply

    • Posted by Tough Love on August 16, 2018 at 8:49 pm

      his “share” has ALWAYS been a VERY VERY VERY small piece of a VERY VERY VERY rich and hence expensive promise.

      And the Plans’ ludicrously excessive richness has always been the ROOT CAUSE of the problem, and as you stated ……… “we wouldn’t be having this conversation” ……… if your Plans were only EQUAL in generosity to the retirement security promised comparable Private Sector workers.

      P.S. You’re NOT “special” and deserving of a better deal ….. on the Taxpayers’ dime.

      Reply

    • Posted by skip3house on August 17, 2018 at 6:15 am

      “… it’s always easy to take from the little people….” Whenever I see/read similar, it brings to mind a Leona Helmsley comment in her defense. Something like…’We rich have so much money left after taxes, why would we try to cheat?..’

      Reply

    • Posted by PS Drone on August 17, 2018 at 12:20 pm

      The crooked politicians and greedy public unions have been “taking from the little people” (aka taxpayers who do not share in the theft) for decades now. It is high time the drones start taking the well deserved hit to THEIR pocketbook.

      Reply

  7. Posted by Tough Love on August 17, 2018 at 9:00 am

    Another informative article from blogger and consulting actuary Elizabeth Bauer. While it’s focus is in Chicago’s huge Public Sector pension mess, in many of it’s paragraphs we could easily (and appropriately) substitute NJ for Chicago).

    https://www.forbes.com/sites/ebauer/2018/08/15/public-pensions-and-public-trust/#278afd0a2e19

    A few excerpts………………..
    ————————————-
    A recent analysis by the Illinois Policy Institute documented the degree to which pension spending is sucking up property tax revenue that would otherwise go to providing services. And the reason is not simply deferred contributions, but benefits which far exceed the private sector in their generosity after multiple increases in benefit levels, reductions in retirement age, increases in COLA
    ————————————–

    This is a violation of public trust.

    In order to gain the short-term benefits of public approval for their spending initiatives without the pain of taxes, in order to get union support for their re-election campaigns, in order to promise everything now, without regard to the impact of their actions on future generations, politicians in Chicago and in Illinois happily increase benefits and defer funding. And, again, the Democratic candidate for governor, and likely next governor, has no intention of remedying the situation.
    —————————————–

    The bottom line is that I simply don’t see any path forward other than removing states and municipalities from the business of running pension plans. If unions don’t want their members subject to the risks of individual accounts, let them run plans for their members and take on the risk themselves, negotiating with employers for fair contribution levels in line with the private sector and educating their membership on the need for additional voluntary contributions. But we can’t keep the system as it is.

    Reply

  8. Posted by geo8rge on August 18, 2018 at 9:32 am

    “Sweeney Pension Path Ends With Hiring an Actuary” In the bible didn’t Pharoh try that? In fairness to Pharoh, who get’s a lot of bad press for disregarding the prophet’s advice, he did actually hire a legit prophet. If one extrapolates, perhaps foolishly, this ends with a mass exodus of productive citizens from NJ.

    In particular, I do not believe that combining school systems will result in any long term benefit or even savings. Public enterprises are government mandated monopolies, expanding them just makes them more costly as their monopoly pricing power increases. An idea, I believe from Elizabeth Warren, is allowing parents to pay local school districts to accept their child. If parents could do this then a sort of free market might force mergers or some districts and breaking up of others.

    Warren wants a voucher system, but that creates the possibility of endless legal challenges. While waiting for a voucher system to be made possible, just allowing parents a buy-in to other districts is probably less legally problematic. While a parents property tax money would still go to the district they are geographically located in, their state money would follow their kid. Perhaps a tax rebate for parents that send their children to another district. It is not common but I think smaller districts already allow ‘buy-ins’.

    Elizabeth Warren wants to kill the neighborhood school
    https://www.vox.com/2014/4/16/5621630/elizabeth-warren-wants-to-kill-the-neighborhood-school

    Reply

    • Posted by skip3house on August 18, 2018 at 11:29 am

      Systems making school compete in results/costs should be goal of all ‘conservatives’. How can State enable this w/o full funding powers from fair income tax, not cruel regressive school residential property tax?…. Can’t….. State must pressure ‘local’ schools with facts of results/costs or power to demand better, or lose funding, with no backup from eliminated school property tax on homes. Competition, not same old same old.

      Reply

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