Archive for the ‘New Jersesy Pension’ Category

CF6: Cash Balance No Cure-all

The pension commission suggested implementing a cash balance plan (per page 10 of the Roadmap):

Once the existing pension plans are frozen, new plans would be needed to provide employees with the means to earn future retirement benefits. The Commission believes that what is known as a “cash balance” plan provides the best model for the new plans. A cash balance plan is a hybrid defined benefit plan that expresses the employee’s benefit as an account balance that, as proposed by the Commission, grows by “pay credits” based on an employee’s salary, and by periodic “interest credits” based on the account’s balance and some defined measure of investment performance. Under the form of a cash balance plan envisioned by the Commission, an employee would be guaranteed both the contributions based on pay credits made to his or her account.

Design is all-important but if the idea is to have a flat percentage of salary as the  “pay credit” it would solve the equity problem of participants close to retirement accumulating massive benefits but the biggest problem and source of all the coming misery remains.

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CF5 – Ballot Question Hustle

For the Christie Freeze to work public employee pension and health care benefits must be cut significantly and the cleanest way to accomplish this is to put it into the New Jersey Constitution. However a ballot questions saying ‘benefits can be cut at any time to whatever level we damn well please’ probably won’t pass so they coupled it with a completely useless provision to ‘guarantee the certainty of a pension funding payment with a constitutional amendment’ and that is what Governor Christie emphasized:

But what good is a guarantee of a payment number that you get to pick?  The 2011 pension reform law also had a guarantee and that didn’t amount to much.

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CF4: COLAs A Footnote

A decision in Berg v. Christie might be moot if the entire Christie-Freeze plan gets enacted.  Page 9 of the Roadmap describes the freeze:

Freezing existing pension plans at the State and local levels means that the plans would be closed to new members and that existing members would no longer accrue additional benefits under those plans. Existing plan assets and future State contributions would be used fund the benefits of existing retirees and the benefits accrued by employees through the date of the freeze. The plan-funded 46 pension benefits of existing retirees would not be affected, and no one would lose a benefit credit for service before the freeze.

But what about the cost-of-lving-adjustments on pensions that were eliminated in 2011 and have been the subject of court action ever since?  As commenter truthnolie noticed when you follow that 46 next to the word ‘plan-funded’ to its footnote:

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CF3: Why a Ballot Question

For the proposed pension reforms to work the New Jersey State Constitution needs to be changed and the reasons are explained on page 12 of the pension commission’s report:

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CF2: NJEA On Board?

One of the downloads on the New Jersey Pension and Benefit Study Commission website is a Roadmap for Reform: An Agreement with the New Jersey Education Association (NJEA) but excerpts  from the 3-page Joint Memo do not show much in the way of agreement:

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CF1 – Christie Freeze: The Obvious Critics

A Roadmap to Resolution of New Jersey’s pension and benefit problems deserves its own series so here it is: my assessment of Christie-Freeze  (since I could not think of an apt acronym I went with a combination of the major proponent and major feature) .

donut christie

The next few blogs will examine aspects of the CF plan and we kick off with those who will be the biggest losers under it.

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Hard Freeze Proposed For New Jersey Public Pensions

The New Jersey Pension and Benefits Study Commission on their website came out with their proposal and some sort of working relationship with the teachers’ union.

Governor Christie took 20 of the 25 minutes of his budget address to focus on the proposed reform and here are the key two minutes:
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