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5 things to know about Christie's pension report

Monday, March 2, 2015   (0 Comments)
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NJ Advance Media 02/25/2015

A special commission appointed by Gov. Chris Christie has released a pension plan that lays the groundwork for a massive overhaul of the system that provides health and retirement benefits to hundreds of thousands of active and retired public workers.

Broadly, the commission recommends slashing health care benefits to free up billions of dollars to to shore up an ailing and frozen pension system and to fund a new hybrid defined-benefit, defined-contribution plan.

Here are five things you need to know about the "Roadmap to Resolution":

1. Frozen plan?

The current pension plan would be frozen. Retirees would continue to receive their benefits, though without cost of living adjustments. Active employees would no longer accrue benefits under that plan.

2. "Cash balance" plan

The state would create a new "cash balance" plan, which is considered a hybrid between defined-contribution and defined-pension plans. Workers' benefits are shown as a cash balance, funded by employee and employer contributions and investment returns, but they can take their payout as a lifetime annuity.

3. Health care premium change

Employees would pick up a larger share of their health care premiums, and health care coverage would be less generous overall. On average, employees pay 18 percent of their health care premiums. Under the proposal, that would increase to 25 percent, though higher-paid employees pay more. State and local governments pay, on average, 95 percent of the total cost of health care coverage, but the proposal calls for new health care plans that reduce the employer cost to 80 percent.

4. School plans

Local school districts would take on local education employee retirement benefits, which are currently paid for by the state, and the cost of the new cash balance plan. The commission estimates the savings from the health care cuts would more than cover those new responsibilities.

5. Constitutional amendment

Lawmakers would be asked to pass a proposed constitutional amendment that would appear on the November ballot and guarantee public employees adequate pension contributions from the state.


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