PENSION
REFORM
New
Jersey's pension plans are in bad shape. Really bad shape. According to
the latest accounting, the funds are underfunded by at least $54 billion.
Certainly, part of this problem rests with the fact that the state has
skipped more annual payments than it has made, even while rank-and-file
workers were contributing. However, even if the state had put in every
penny it owed, the system would still be underfunded by billions of dollars.
Benefit enhancements were put in without requiring anyone to pay any more
for them, even while employee contributions were cut. Also, there are
not only more retirees leaving active service, but they are living longer,
and the smaller number of active employees will never be able to put enough
into the system on their own to keep it balanced, given the investment
losses faced by the pension fund.
Something has to be done, and
fast. Unless we act now, the system will eventually run out of money.
If that happens, employees who have literally banked their futures on
a secure pension will be left with nothing.
The Sweeney Plan is a responsible
way to move forward, by taking politics out of the system once-and-for-all,
and letting real numbers direct changes in our pension system. The Sweeney
plan will provide over $120 billion in savings to New Jersey taxpayers
over the next 30 years and protect workers pensions in a fair manner.
Compromise
Legislation
|
|
Christie
Proposal
|
|
Original
Sweeney Proprosal
|
Includes contractual
guarantee that State make required pension payments, enforceable
by courts.
|
No payment guarantee.
|
Includes contractual
guarantee that State make required pension payments, enforceable
by courts.
|
Establishes new employee/employer
governance boards for any pension system that reaches 80 percent
funding. Board can modify contribution rates, re-establish COLA,
modify retirement age, N/X formula, and other pension factors.
|
Current governance
structure maintained. No opportunity to restore COLAs or other
pension reductions when pension reaches 80 percent funding.
|
Establishes new employee/employer
governance boards for all pension systems. Board can modify contribution
rates, re-establish COLA, modify retirement age, N/X formula,
and other pension factors.
|
Eliminates statutory
COLA but allows new pension boards to restore COLA when fund is
healthy.
|
Completely eliminates
the COLA for all current and future retirees.
|
Eliminates statutory
COLA but allows new pension boards to restore COLA or employee
to pay an additional amount to buy COLA.
|
Raises the retirement
age to 65 for all future employees.
|
Raises the retirement
age for all current employees to age 65.
|
No change to retirement
age.
|
No decrease in N/X
formula for any employees.
|
Decreases formula
from N/55 to N/65 for current and future employees.
|
Decreases formula from
N/55 to N/60 for current employees but allows employee to buy
back N/55.
|
For PERS and TPAF
systems, employee contribution increases by 1 percent immediately,
and an additional 1 percent over 7 years.
|
For PERS and TPAF systems,
employee contribution increases by 3 percent immediately.
|
New employer/employee
boards can raise or lower employee contribution rates.
|
State police and police
and fire retirement systems contribution rates increased 1.5 percent.
|
State police retirement
system contribution increased by 1 percent.
|
New employer/employee
boards can raise or lower employee contribution rates.
|
New employer/employee
boards can lower contribution rates when fund reaches healthy
level.
|
Higher employee contribution
rates are permanent.
|
New employer/employee
boards can lower contribution rates when fund reaches healthy
level.
|
No change to final
average salary calculation.
|
Increases number of
years used to calculate final average salary for current
employees.
|
No change to final
average salary calculation.
|
Changes early retirement
from 25 to 30 years for future employees.
|
Changes early retirement
from 25 to 30 years for current employees.
|
No change to early
retirement.
|
All
information Copyright 2011 Senate President Steve Sweeney. Web site produced
in-house by the Senate Majority Office.
|