Pen/Ben Study Commission issues proposal to freeze existing pen plans

Budget Address

Appointed by Gov. Chris Christie last year, the New Jersey Pension and Health Benefits Study Commission today released its final report, which Christie this afternoon used as the touchstone of his budget speech, but which Democrats said is notable only insofar as no deal exists.

The report proposes overhauling the pension and health benefits systems for all public employees in the State of New Jersey.

“Given the gravity of the situation, no part of the status quo is acceptable,” Commission Coordinator Thomas Healey said.  “The Commission’s comprehensive proposal will solve this problem once and for all.  The accord with the NJEA on many elements of our proposal is a sign the will exists to make hard choices to solve the State’s problems.”

According to the governor’s office, the proposal involves the following steps:

  • Freeze the existing pension plans; benefits earned to date would not be affected, but taxpayers cannot afford additional benefits to be earned under the existing plans
  • Align future public employee retirement benefits with private-sector levels; this is the sensible thing to do on its own merits and the savings will make funding more secure for employees and less painful to taxpayers
  • Also align public employee health benefits with private-sector levels; get ahead of the curve in controlling these staggering costs before they crowd out retirement benefits from State and local budgets
  • Fairly realign State and local responsibility for new and sustainable pension and health benefits; this will produce the best results from the perspective of employees and the State’s taxpayers as a whole
  • Lock in fixed and certain pension funding with a constitutional amendment; this will protect employees and retirees from the vagaries of politics and the annual budget process, improve the State’s financial condition, and make clear to all that the people of New Jersey have taken ownership of the problem and the solution
  • Transfer the assets, liabilities and risks of the existing pension and new retirement plans to employee entities willing and able to assume this obligation; allow those who receive the benefits to have the power and assume the risk of managing the plans to ensure that the available funds are sufficient to pay for the provided benefits.

NJTV reporter David Cruz spoke with New Jersey Education Association President Wendell Steinhauer after the governor’s speech.

Steinhauer said “there is no deal,” but did indicate that there are some areas of agreement between his organization and the commission report.

In his critical response to the governor’s budget speech, Senate President Steve Sweeney (D-3) lingered on that piece.

“He announced a deal without a deal in place,” Sweeney said of the governor, complaining that the governor did the same thing when he announced his first term intentions to overhaul pensions and benefits.

Details of the report can be found here:

http://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf

http://www.state.nj.us/treasury/pdf/NJEA-CommissionRoadmap-Final_February2015.pdf

Pen/Ben Study Commission issues proposal to freeze existing pen plans