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New Jersey Teachers’ Pension Fund Identified  as One of Eight Seriously Underfunded State and Local Pension systems that could soon Face a Crisis


the staff of the Ridgewood blog

Ridgewood NJ, , the New Jersey teacher pension system is paying out about $4.5 billion a year in retirement benefits and other kinds of payments to 104,000 beneficiaries. Yet contributions by active teachers and state government amount about $2.8 billion annually, leaving a $1.7 billion deficit. When the market is good, investment returns help make up the difference. For the fiscal year ended June 30, 2018, for instance, a nearly 10 percent market gain generated $2 billion, which the fund largely used to pay retirees. This year, however, market gains have largely evaporated for everyone.

Standard & Poor’s identified eight seriously underfunded state and local pension systems that could soon face a crisis—including the New Jersey state teachers’ fund, which has just 25 percent of the money it needs on hand to finance its future obligations.

In its last financial report, the New Jersey teachers’ pension fund had just $530 million in cash. Like most underfunded systems, it placed most of its assets in the market, eager for high returns. Now, its investments have almost certainly declined, and it will likely have to sell these shares at a low price just to raise cash. This kind of liquidity problem had a major effect on many pension systems after the 2008 market crash; CalPERS sold some 2.3 million shares of Apple to raise $370 million in cash that year. Five years later, those shares were worth $1.5 billion.

That kind of math illustrates why it becomes so hard for underfunded pensions to fix themselves, even when the market rallies. The New Jersey teachers’ fund has only about $20 billion invested in the market, so even when the state’s investment managers generate a nearly double-digit market return—as they did in fiscal 2018—the gains are barely enough to pay pensions. If it were fully funded, by contrast, the fund would earn enough in a good year to cover pensions and save billions of dollars more for a rainy day.

18 thoughts on “New Jersey Teachers’ Pension Fund Identified  as One of Eight Seriously Underfunded State and Local Pension systems that could soon Face a Crisis

  1. We are #1 on the list.
    It’s hard to be #1.
    It takes years of work.

  2. As Mitch McConnell so eloquently stated, this is not going to be a ‘blue state bailout’.
    Democrats in unionized red states such as NJ, MI, IL and NY have bent over for the union employees in order to buy votes and maintain power. With overly generous salaries, Cadillac medical benefits , and retirement packages, the day would come when this ponzi scheme is no longer sustainable. By kicking the can down the road, they left the eventual insolvency to the next political hack to pick up the ball.
    Think about this. WHY on earth would a voter in a red state, where teachers and cops make a THIRD of what NJ/NY workers do, and where they pay a large portion of their own basic medical care, agree to subsidize those who got that the financial golden goose & Cadillac medical plans here in NJ or NY. They won’t. The party is over. Time for NJ and NY to declare bankruptcy, renegotiate union contracts, cut the payroll bloated with politically connected employees. Just like the private sector.
    Murphy and Cuomo will be forced to act. Its about time.

  3. FYI, States can not declare Bankruptcy. Obviously you haven’t done your homework. Try doing a little research before you make utterly stupid statements and prove your ignorance.

  4. Ha ha ha, re-negotiate contracts. Sorry that isn’t gonna happen so you will have to dig deeper into your deep pockets my friend, you voted in the governors and legislatures that mismanaged the New Jersey budgets and you didn’t care about it so it’s Time to pay for your ignorance.

  5. HA ha ha : moving trucks you slobs

    Wont look back on the dead zone that was NJ

    Manufacturing is gone to south ( right to work ,Low cost States

    Bye …checks ( not ) in mail

  6. Well I guess the school systems going to go to shit. And then the real estate prices will drop, then people will just move away.

  7. To the anon dope thinking contracts cant be renegotiated.
    I never voted for a Dumbocrat in my life. and never will. I dont see myself sitting at the table with Sharpton, Pelosio, Schumer, pencil neck Shitt, AOC and the squad.
    The union slobs who feed at the trough will find that the food supply is gone.
    If the state cant go bankrupt, they can lay off all overpaid do-nothing workers.
    We will get along quite well without.
    So the greedy overpaid ones with seniority will have to get off their fat asses and pick up the slack to do the work the newly hired (and laid off) workers wont be there to do.

  8. Laugh all you want you union slobs.
    Less than 21 hours ago the Senate majority leader stated that he favors states declaring bankruptcy and that there will be no bailout to state pension plans.
    You starting to get it?
    Your not laughing anymore because we’re laughing at you.
    Your comeuppance has arrived and now all we hear is your blather about your knowledge of bankruptcy law. Your a shovel leaner who barely graduated high school. And now the day is here…and your toast.

  9. Go ahead and move, no one will miss a slob like you. Good riddance to useless trash.

  10. Ha Ha Ha, your gonna keep paying and paying you dumb ass. If the state goes bankrupt you lose too, your house will drop to 1/2 it’s value and your still gonna pay the same amount of property taxes so keep hoping that happens, I’m sure you will love that part of the Bankrupcy.

  11. To the person that described the pension as a Ponzi scheme, that is actually incorrect. A Ponzi scheme is not one where there are vast resources that are removed to benefit people not in the scheme. That is what happened to the pension. If it had been fully funded all along there would have been plenty of money to pay the pensions. The pension when funded appropriately all along would have been flush, but the money was used to benefit others and now is not there to pay the agreed pensions.
    Some of that money was used back in the day to support homeowner rebate checks. That’s right it was given to people like you.

  12. Good luck getting your early retirements, excessive defined benefit full pensions (instead of defined contribution 403(b) plans), and heavily subsidized platinum health benefits reinstated out of insolvency court… money doesn’t grow on trees in NJ, and unlike the federal government the state and municipalities can’t just print more money or forever borrow more. Your NJEA union masters pigged out big time, negotiating in bad faith by claiming “IMPASSE!” everytime you didn’t get what you wanted in your CBA negotiations. Your bad faith is about to be rewarded.

  13. States can’t file for bankruptcy only because it’s never been done…. yet. Your benefits will be diminished regardless. Money doesn’t grow on trees, and we already pay the highest state plus local taxes of any state in the country.

  14. The math doesn’t work. Public sector retirees are drawing their full defined benefit pensions for more years than they actually worked. There aren’t enough active employees contributing to the defined benefit pension plans to cover the checks being written for your excessive benefits. That, by definition, is a Ponzi scheme. The gravy train is heading off the rails though…

  15. the homeowner rebate program is a joke. lay off the overpaid union employees and sub the work out to contractors.

  16. But the new Garage will be empty but
    First Class

    HA HA

  17. Knudsen is happy. She got her garage and her sons all have easy, high paying municipal jobs

  18. If that happens the village will collapse.

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