New Jersey Governor Chris Christie is going to defer most of a $1.6 billion pension payment due next month into the next fiscal year to balance the budget for the current year. The announcement will be made this coming week and, to deflect from this fiscal chicanery, he will call out the legislature to get New Jersey public employees into 401(k) plans. The campaign kicked off this past week at the Peterson economic summit with a criticism of the “insanity of a defined benefit pension system”:
and continues with an article planted in the Wall Street Journal.
But going to a Defined Contribution (DC) system does not guarantee any savings to taxpayers since DC plans can be structured to be just as expensive as the current DB system.
Though what it would provide is transparency. The cabal currently manipulating costs downward will be out of business and there would be no surprises – for taxpayers having to pay for the underfundings of the past or retirees losing their COLAs.
The other advantage (or disadvantage to some) will be the elimination of those games played to pump up benefits without having them paid for. For example: