N.J.’s public pension liability continues to grow
WEDNESDAY, FEBRUARY 26, 2014
BY JOHN REITMEYER
STATE HO– USE BUREAU
THE RECORD
Among the biggest numbers in Governor Christie’s budget address Tuesday was the $2.25 billion payment into the state’s public employee pension system, a record for New Jersey.
But Christie said more changes are needed, citing Detroit’s bankruptcy last year as a warning of what could come in New Jersey if officials are not proactive. He warned that as pension payments rise in future years, they will take resources from other priorities.
State’s pension problem: According to the latest projections, a $52 billion gap exists between resources and pension promises made to retired and current employees. That unfunded liability arose over the years as governors and lawmakers from both parties — including Christie in his first year — did not make the full payments that actuaries estimated were needed. Benefits were also enhanced at times without being properly funded. Recent investment-market gains — though strong — have not been enough to offset the funding shortfalls.
Benefits changes in 2011: Legislation enacted in 2011 raised pension contributions made by public employees and ended most cost-of-living adjustments for retirees. Christie and lawmakers — including many Democrats — agreed to start working toward making the full, actuarial required payments, phased in over seven years.
What Christie is saying: Along with budgeting a record $2.25 billion payment into the pension system — about four-sevenths of what the actuaries say is needed — Christie challenged lawmakers “to go further.” But he did not offer any specifics or say definitively what reforms he seeks; his new, $34.45 billion budget does not count on more worker givebacks.
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