Archive for the ‘New Jersesy Pension’ Category

Asking For It

S3040 passed the Assembly tonight 61-4, with 10 abstentions so, if Christie signs off, management of what will likely start off as a $20 billion pension fund for New Jersey Police and Firemen will be transferred to a panel controlled by the unions to oversee investments and benefits.

As with that quarterly contribution diversion the overwhelming support for this bill by politicians is rooted in its revenue neutrality. It is all about panels, committees, and procedures with no commitment to having to come up with any more money.  Otherwise, were the unions to go to government employers with a request for the real cost of benefits it would, with surprisingly few alterations, play out something like this:

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What Ed Donnelly Gets Wrong

Ed Donnelly is president of the New Jersey State Firefighters Mutual Benevolent Association who argues in an op-ed on njspotlight today in favor of Police and Firefighters managing their own pension system.

The state’s failure to meet its obligations and its willingness to give local employers a pass through “pension holidays” created a shortfall in the PFRS system of more than $11.1 billion. The state is on the hook for more than $2.7 billion and local employers owe $8.373 billion.

Shortfall numbers from the July 1, 2016 PFRS actuarial report and one of several points that Mr. Donnelly gets dangerously wrong.

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S-3040: Question Remains: Who Pays the Tab?

Opinion: Heads They Win, Tails You Lose

Police and fire unions’ power grab sticks New Jersey’s taxpayers with the pension bill.

That power grab is S-3040 which former New Jersey state treasurer Sidamon-Eristoff views as “demonstrably insane to give public employees unqualified power to set their own benefit levels and require that government employers (and taxpayers) pay the tab.”

One problem with that logic:

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NJ Actuarial Report Contributions

The July 1, 2016 actuarial reports for the New Jersey Retirement System plans are out and their main practical purpose is delineating the contributions for the fiscal year ended June 30, 2018. That total contribution amount would be $6,768,969,201 except we have laws that bring it down to $4,260,031,483 ($2,508,937,717 by the state and $1,751,093,766 by localities) with public workers expected to contribute another $1,977,904,061.

By far the largest portion of that total calculated contribution (84.6%) is the 30-year amortization of the underfunding which comes to $5,724,532,942 and develops through a combination of missed contributions and absurdly understated liability values.  Here are two worksheets taken from contribution exhibits with some observations:

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Sad State of NJ Pension Coverage

Their second program aired today and, to their credit, the pension question was put to the two gubernatorial candidates who guested. However, all we got as an answer was the disquieting conclusion that both are clueless as to the real breadth and depth of the problem, a primary component of which includes the willful naiveté of those debating for solutions. For example, this absurdly inane comment:

Perhaps Wisniewski means that most actuaries in the employ of New Jersey would sign off on defining 70% as full funding so that mini-contributions can continue but, per the American Academy of Actuaries, that there is even one actuary who will back up Wisniewski’s canard without substantial remuneration is a myth.
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NJ Police and Firemen Splitting


Under S3040, passed 37-0 on Monday, a newly expanded board of trustees would assume management of the Police and Firemen’s Retirement System, which has more than 85,000 members who are working or retired. The police and fire unions would also obtain broad discretion over both the size of members retirement benefits and the contributions needed to support them.

Here is what is in the law and what  the unions would get:

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NJ Pension Debt – Pick Your Number

nj101.5 reported on New Jersey’s long-term debt based on the annual Treasury Department debt report as of June 30, 2016 made public Friday with some telling observations:

The pension liability isn’t the number the state uses to decide how much to contribute – or rather, should contribute – to its pension funds.

The “unfunded actuarial accrued liability” for the state-administered pension funds is $49 billion. To help repay that, plus make the current payment, the state should put in a little over $5 billion in the upcoming fiscal year. Instead it plans to put in $2.5 billion.

The numbers look even more daunting if alternate accounting and actuarial methods are used.

The debt report discloses those in supplemental information at the back of the publication, because they’re not required in official financial disclosures and don’t impact state budget decisions.

Those analyses peg the liabilities as high as $136 billion for pensions and $68 billion for health benefits.

Just one problem here.
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