Unfortunately the state pension fund operates like a Ponzi scheme – it requires new hire contributions to fund current liabilities. Putting new hires into 401K’s would bankrupt the funds almost immediately.
Reader says the state pension fund operates like a Ponzi scheme
3 thoughts on “Reader says the state pension fund operates like a Ponzi scheme”
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It is a pure Ponzi scheme of defined benefits, which depend upon growing contributions from active employees and ever state & local higher taxes to feed the greed. Those public pensions + platinum health coverage awarded to teachers, cops & firemen are just too generous when you realise they’re all retiring in their fifties and early sixties. The math doesn’t work when longer life expectancy means you have public sector retirees drawing a pension for more years than they worked! And as the boomers keep retiring, the Ponzi scheme will be fully exposed with less and less active workers putting money in to the already underfunded pension plans. In NJ, something like five out of the seven public sector funds are expected to be insolvent within the next ten years! And that’s in a state that already has the highest state + local taxes in the country… pure insanity!
If you think the state pension fund is a Ponti scheme you should take a look at the social security “trust fund” LOL
SALT are killing upper middle class communities like Ridgewood already, and will only get worse. With the new $10,000 deduction limits for SALT and property taxes, communities like Ridgewood will surely be affected. Good luck trying to get the unions to compromise on a mix of diminished benefits, delays in full pension benefits to age 60 or 65, along with tax increases. If you’re a public pensioner in this state, your benefits run out in 2027 and good luck negotiating then! Your excessive benefits are unsustainable, and the conservative judges Trump is appointing will take NJ’s pension system through bankruptcy which means benefits will eventually be diminished anyway. All new employees should be switched to defined contribution plans to protect their assets from state & municipal governments, as well as current Ponzi scheme pensioners. However, we can’t do that because, as the post points out above, if we moved to 401k-style plans, the current pensioners would lose their pension checks even sooner than 2027.