Time for a Pension Reckoning in New Jersey

That is the title of a City Journal article that advocates for public employees being put into a Cash Balance Plan noting a $186 billion deficit in the current Defined Benefit Plan. But what Thomas J. Healey and Andrew G. Biggs fail to mention:

  1. The $186 billion deficit will remain and likely grow with no plan for paying it off;
  2. A Cash Balance Plan IS a Defined Benefit Plan with hypothetical account balance translated into monthly benefits instead of defining those monthly benefits directly. In the private sector Cash Balance Plans are funded like Defined Benefit Plans which, for our purposes, means that they can be underfunded based on HATFA interest rates that the government provides. However, in the public sector interest rates for funding are chosen by politicians who will continue to underfund these plans; and, most importantly….
  3. In New Jersey, our politicians are more delusional (and innumerate) than most:

3 responses to this post.

  1. Posted by geoxrge on March 10, 2022 at 10:56 am

    LA has some new famous Tax-fugees, Ozzy and Sharon Osbourne. In 2020, Kiss icon Gene Simmons announced he was moving out of Beverly Hills. Surprisingly the Osbuornes are moving to the, thought to be high tax, UK.

    Read More: Ozzy and Sharon Osbourne Leaving Los Angeles Over Tax Rate | https://ultimateclassicrock.com/ozzy-sharon-osbourne-leaving-los-angeles-taxes/?utm_source=tsmclip&utm_medium=referral


  2. Posted by geoxrge on March 17, 2022 at 7:52 am

    Jersey City officials say they can’t help soften blow for school district’s massive tax hike

    last year the city was able to offset a $993 school tax increase when it used $69 million in coronavirus relief funds to cut $1,000 in taxes for the average homeowner,



  3. Posted by geoxrge on March 18, 2022 at 9:13 am

    Possibly interesting ‘alternative’ teachers pension site:

    Most observers of the current teacher pension plans focus their attention on the small minority of teachers who dedicate their careers to working in public schools in one pension system. For these teachers, the current system produces a positive result, one in which they can retire in their mid-to-late 50s and feel secure knowing they have a steady stream of income, adjusted for inflation, guaranteed to last their entire lifetime.

    However, this small group of winners ignores the much bigger pool of losers created by the current system. Those who remain in the system long enough to benefit—an ever-shrinking group of teachers—are the most organized politically via teachers unions and other stakeholder groups. The pension plans themselves are concerned only with providing members with a stable retirement. In fact, by withholding employer contributions and interest from teachers who withdraw before they reach retirement age, the plans are able to provide a larger benefit to those who do choose to stay.

    In other words, no one is watching out for the interests of young and mobile teachers.



Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: