JOHN REITMEYER | FEBRUARY 21, 2017
As he nears end of second term, governor still struggling with state’s deeply troubled public-worker pension system, while some stakeholders look to a new administration for relief
Credit: Governor’s Office/Tim Larsen
Gov. Chris Christie once bragged about “fixing” New Jersey’s beleaguered public-employee pension system with a series of reforms that were enacted during his first two years in office.
But now, as the second-term Republican prepares to present a final state budget to lawmakers next week, the retirement funds for public workers remain a huge problem, and any long-term solution will likely not come from Christie, but from a successor who will be elected later this year.
Christie confirmed during a recent NJ 101.5 FM radio appearance that he’s planning to boost the annual state pension contribution up to $2.5 billion in the 2018 fiscal year spending plan. The increase would set a record for state pension funding in a single budget, but also fall well short of the full amount that actuaries say is needed to return the retirement system to overall good health. And it was Christie, in 2010, who signed a law that committed the state to fully funding the actuarial estimate by the 2018 fiscal year.
Christie, meanwhile, also left the door open during the radio interview to calling on lawmakers to approve new benefits cuts for public workers along with the next state budget. That comes even after he bragged in 2011 that benefits changes passed that year were “providing real, long-term fiscal stability for future generations.”
There is no ‘fix’ possible. We are well past the point where a ‘fix’ could be implemented.
The optimal path now (something that Christie intentionally/unintentionally followed) is to hasten the demise of the unsustainable pension liabilities. Restructuring is inevitable, the sooner it is done the better it will be for all sides – pensioners as well as taxpayers.
10:02 Well said. I like to call it “Blue State Blues.”
NJ’s public sector pension plans are expected to be mostly insolvent by 2027 as the pension demands of retirees far outweigh the capital appreciation and new contributions to the fund. That’s what happens when you assume 7.95% annual pension fund returns (not adjusted for inflation) and 1980s era mortality data to pay for “special” retirements after 25 years of service. The fact is people are living longer than they were in the 1980s. So NJ has public sector retirees who will earn more from their pension (plus health plan benefit cost savings before Medicare kicks in) than they did in their 25 years of service. For example, the average PFRS retirement age is 52. If that retiree lives to 84,the recent expected average male lifespan in the US, then they’ll draw a pension for 32 years vs. only 25 years of service. This is nothing more than a Ponzi scheme where retirees are taking out much more than the <10% they actually contributed from wages could ever earn in the pension funds. Simply, the pension math no longer works.
It is going to end really ugly, and the only objectives that any Governor wants is to not be the one who’s in office when ugly happens.
CC has done all he possibly could being up against a powerful Democrat Senate. He will probably be replaced by the usual rubber stamper and ugly will be here faster than you can say Jim MCgreedy.