TRENTON –The Pension and Benefits Review Commission recommended Friday not to enact a bill that could lead to increased pensions for Newark employees because of unanswered questions about its fiscal impact.
Before S2942, sponsored by Sen. Ron Rice, (D-28), Newark, could be enacted, according to commission members, they would like to see several questions addressed: How many employees would be affected, what would be the total cost, is Newark’s fund healthy enough to support the increases, and how would it apply to a city whose population is 277,000 when the original law, according to the commission, was worded to apply to a city whose population was 400,000.
This bill would pave the way for a possible change in the law governing the employees’ retirement system in Newark, because it would be subject to passage by the city’s governing body of an ordinance adopting the provisions of the legislation.
The bill would do several things:
*Remove the $16,000 salary cap upon which a pension is calculated;
*Delete dollar caps on other retirement and survivor benefits;
*Provide that those provisions will be applicable to the retirement of employees who retire on or after six months from the effective date of the bill.
The commission was told today that in a 1990 referendum there was a change to transfer into the Public Employees Retirement System, and that all new employees became members of PERS.
The commission was told as an example of the bill’s possible effects that under the current statute, someone earning $50,000 as their final salary has their pension capped at $8,000, half of the $16,000 cap.
But under this bill, that cap would be removed and that person’s pension could increase to $25,000.
Commission member Mark Krane said that “We have no information on whether the (Newark) fund could actually afford this change.”
The city – not the state – administers this fund.
Commission member John Megariotis said, “I am uncomfortable voting on this without seeing what that fund looks like. I do agree that the benefit is extremely low. But we’ve only got one side of the equation.”
The commission is an advisory body, recommending to the Legislature whether a bill should or should not become law.