NJ.com - TRENTON -New Jersey’s public employee pension plans ranked among the least generous of top public pension plans in the country, according to a report released today.
The study shows New Jersey’s pensions are more modest than 94 of the country’s 100 largest plans.
Gordon MacInnes, president of New Jersey Policy Perspective, a left-leaning think tank, said the results push back against the myth that New Jersey’s public workers enjoy lucrative pensions.
“It’s crucial that we not be misguided by… inflammatory statements that depict New Jersey’s benefits in a light that is inaccurate,” he said today.
The study considered whether pension plans protect retirees from rising inflation, how benefits are calculated and how much employees contribute to their plans.
New Jersey fell in the bottom half in all three fields, which Stephen Herzenberg, the Executive Director of the Keystone Research Center, who authored the report, called the three most important dimensions of generosity.
“New Jersey public employees face a triple-whammy that gives them among the worst pensions in the country,” he said today. "They contribute heavily to their own pensions, receive only modest pension increases with each additional year of service and get no inflation protection at all in their benefits.”
Workers kick in 6.93 percent of their pay — and that number is rising — while employees contribute less in more than half of the other systems, according to the findings.
New Jersey’s retirees do not receive yearly cost-of-living adjustments to offset inflation, unlike 69 other plans included in the study that offer some protection from inflation. Retirees are suing to restore the cost-of-living increases that Gov. Chris Christie suspended as part of a 2011 pension reform package.
The state’s formula for calculating pension payments also uses a low multiplier — 1.67 percent — that lands it in the bottom quarter of plans.
The report notes that Garden State workers also receive some of the lowest pension benefits, but those were not factored into the rankings.
On average, pension benefits are $26,000 a year. Local government employees receive less on average, $16,000, while teachers receive more, $40,000. State employees collect $25,000.
Because police and fire retirees do not participate in Social Security and receive higher payouts their plans were not considered.
“In addition to being some of the least generous pensions in the country, New Jersey’s pensions are modest in dollar amounts, even though the Garden State remains one of the highest-cost states in which to live,” according to the report.
The policy group argued public workers shouldn’t be saddled with blame for the state’s strapped pension system.
New Jersey has roughly $82.8 billion in unfunded pension liabilities (that figure more than doubled under new accounting rules). And the two largest pension plans, Public Employees Retirement System and the Teachers Pension and Annuity Fund, could run out of money by the end of 2024 and 2027, respectively, according to the Christie administration.
The pension system has been underfunded since 1996, with governors regularly deferring or skipping legally required payments in order to plug gaps in the state budget.
Gov. Chris Christie is on that list of governors. In June, he broke a promise to increase payments into the system in return for a reform package that raised the retirement age from 62 to 65, eliminated those cost-of-living increases and required workers to contribute more toward their pensions and health benefits.
Prior to those changes made in 2011, New Jersey’s generosity may have ranked in the middle of the heap, Herzenberg said.
“Employees’ sacrifices made in 2011 were huge,” he said. “In a situation where lots of states were walking backward in terms of the generosity of pensions, New Jersey walked a long way back.”
Christie has warned that overhaul wasn’t enough and additional changes are necessary to prevent the pension problem from crippling New Jersey’s finances.
Most observers expect a committee Christie commissioned to find solutions the pension crisis will recommend slashing health care benefits, which add another $53 billion to the unfunded liabilities.
A spokesman for Christie did not immediately respond to a request for comment.
This article appeared on NJ.com authored by Samantha Marcus.