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.

Pandering for 2020

With the New Jersey budget debacle behind him our governor has some free time to commiserate with one of his constituencies that is also facing some hard times despite his best efforts.

Here are Governor Phil Murphy’s remarks at the AFSCME Convention including attacks on Christie, Trump, Oklahoma, the Koch Brothers, and the DeVos family. In reading this (if you so choose) keep in mind that this is the governor of the state with the highest taxes in the nation making it virtually impossible for ‘working’ people to live here.

Janus v. AFSCME Decision

Before speculating on what this will do to union membership and multiemployer plans let’s read the Supreme Court opinion. I see a basic flaw in both arguments that I will present in the next blog but, for now, here are some excerpts that I found pertinent:

Labor’s Last Best Weapon: Lying

From the front flap of The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon:

David Webber uses cases such as Safeway’s to shine a light on labor’s most potent remaining weapon: its multitrillion-dollar pension funds. Outmaneuvered at the bargaining table and under constant assault in Washington, state houses, and the courts, worker organizations are beginning to exercise muscle through markets. Shareholder activism has been used to divest from anti-labor companies, gun makers, and tobacco; diversify corporate boards; support Occupy Wall Street; force global warming onto the corporate agenda; create jobs; and challenge outlandish CEO pay. Webber argues that workers have found in labor’s capital a potent strategy against their exploiters. He explains the tactic’s surmountable difficulties even as he cautions that corporate interests are already working to deny labor’s access to this powerful and underused tool.

I can’t speak to the first seven chapters of the book but that last chapter (The Retirement “Crises” and the Future of Labor’s Capital) makes the case that the pension crisis is a fraud perpetrated on the public by “billionaire conservative activists Charles and David Koch and their organization Americans for Prosperity, as well as Enron billionaire John Arnold and his Laura and John Arnold Foundation (LJAF) and other allies [who] are determined to reform public pension funds in ways that would destroy labor’s shareholder activism.” (page 213).

To that claptrap of a chapter I can speak.

S5 Veto Reaction

After the last governor called him a ‘pension pig‘ Patrick Colligan, president of the New Jersey State Policemen’s Benevolent Association, laid into Christie after last year’s conditional veto of the PFRS pension transfer bill:

Governor Christie’s decision to conditionally veto Senate Bill 3040 is the final proof, if proof were needed, that he is intent on destroying the pension system before his term is complete.The legislation he vetoed represented the best practices of well-funded and professionally managed police and fire pension systems from throughout the United States. Its primary purpose was to remove the New Jersey Police and Firemen’s Retirement System (PFRS) from the political interference and blatant mismanagement of the State that has underfunded it for nearly 20 years. It would have placed PFRS into the hands of the employers and employees who fund and benefit from it by focusing primarily on fully funding the system. This would have been accomplished by hiring professionals and money managers who would focus only on PFRS with oversight from a new Board of Trustees who could direct the system outside of the political winds in Trenton.

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Chris Christie would rather play games and use poison pills in a veto than admit he has failed our members and give us a chance to do what he has proved he can’t do.

Thankfully he will no longer be Governor in 8 months and we look forward to moving this common sense proposal when his time in Trenton mercifully comes to an end.

Yet with this year’s conditional veto by a governor who was presumably bought and paid for by the unions the reaction bordered on ecstasy:

Withdrawal Liability Scam

Many participants in multiemployer plans are justifiably worried about the security of their pensions. In Bethlehem there are protests:

The Bakery and Confectionery Union and Industrial International Pension Fund has sued Just Born, alleging that its efforts to stop new employees from enrolling in the pension is improper and that the company is attempting to wrongly avoid the withdrawal fee.

Union officials fear that if Just Born’s request to withdraw goes through it would prompt other firms to do the same — jeopardizing the pensions of thousands.

“They’re trying to take from those who gave them so much,” McKay said.

But Just Born executives say they’re just trying to ensure the future of the plant in Bethlehem and contend the company wants what’s best for its employees.

Union officials too are justifiably worried about their own future security as well as about maintaining those arbitrary methods of calculating withdrawal liabilities that develop such massive walkaway costs that employers must choose between either remaining in the plan or going bankrupt.

Russian Roulette with NJ Pensions

A pension actuary for 35 years, Assemblyman Edward Thomson explains the dangers of not having safeguards that protect the state pension system during a hearing on legislation giving police and fire unions full control over their pensions.

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The amendment was not incorporated and today both the Assembly and Senate will pass the bill, against the advice of a few newspapers here.