New Jersey Education Association officials said today that without annual cost of living adjustments on pension payments, retirees could see a loss of more than a third of their pensions over the next 10 to 20 years.
Union officials say since the purchasing power of a pension goes down by the annual rate of inflation, without the COLA’s, as they are known, retirees lose as much as 3 percent per year.
Pension and health benefit reform legislation passed in the Senate earlier this week and headed for a vote by the Assembly Thursday would eliminate COLAs until the various public worker pensions are at least 80 percent funded. According to the union that could take as long as 30 years.
In a release the union cites the cases of four retired teachers ranging in age from 63 to 75. Absent the COLAs, each teacher’s pension would drop significantly with each year that passes.
“Legislators do not seem to understand the impact this legislation will have on retired school employees,” said NJEA President Barbara Keshishian. “Without a cost-of-living adjustment, the purchasing power of their pensions will erode to levels that will cause them terrible hardship at the most vulnerable time of their lives.”
The union has vehemently opposed the legislation, which would sharply increase health benefits and pension contributions for public workers. The bill eliminates the statutory COLAs but does not preclude the legislature from granting an increase. Once the pension funds are restored to 80 percent funded the governing board created by the law could reinstate the COLA.
The legislation is expected to pass in the Assembly Thursday and become law soon after.
NJEA Executive Director Vince Giordano earlier this week threatened a spate of costly lawsuits against the state should the legislation be enacted.