Print Page   |   Sign In   |   Register
Search
News & Press: Pension

State Supreme Court ruling on public employee pensions could burden system

Friday, April 22, 2016   (0 Comments)
Share |

NJspotlight.com 4/21/2016

A decision from the New Jersey Supreme Court could come down at any time on a major case involving the health of the state’s public-employee pension system. The impact of the high court’s ruling will be felt at first only by retired workers, but voters statewide also have a reason to pay close attention to the outcome. At issue before the Supreme Court right now is whether Gov. Chris Christie and lawmakers had the legal standing in 2011 to suspend annual cost-of-living adjustments that retirees enrolled in the pension system had been receiving along with their regular benefit checks.

A loss in court by the state could heap billions more on to an unfunded pension liability that already totals at least $44 billion—adding as much as $13 billion, according to one estimate. And with a ballot question likely going before voters this fall that seeks to guarantee more substantial and regular state contributions to the pension system, the court ruling will also help determine exactly how big those future payments would have to be. In fact, some in Trenton have begun to wonder whether it makes sense for the sponsors of the proposed amendment, including state Senate President Stephen Sweeney (D- Gloucester) to sit back and wait for the court decision to come out before putting the ballot question up for the final legislative approval that’s needed to get the issue before voters this fall.

It’s already passed the Legislature once this year, in early January. Others want to see the proposed amendment shelved altogether, saying givebacks from employees are needed instead of more funding.  But a spokesman for Sweeney said yesterday that the Senate leader has no plans to delay a vote. The annual adjustments tied to inflation were put on hold as part of a broader, bipartisan reform law known as Chapter 78. Other changes required by that law included forcing employees to contribute more toward their pensions, hiking the retirement age for state workers, and calling for the state to put more money into the pension system. If the high court takes the side of the retired workers, it could add as much as $13 billion to the pension system’s unfunded liability, according to a report issued earlier this year by Moody’s Investors Service.

The unfunded liability, according to the state’s latest official accounting, already totals $44 billion. Under the proposed constitutional amendment sponsored by Sweeney, the state would accelerate its ramp up to the full contribution calculated by actuaries, reaching full payment by the 2022 fiscal year. Sweeney has argued the constitutional guarantee is the best way to ensure the pension problem gets fixed, given the record of underfunding that’s occurred under Christie and prior governors from both parties.


Sign In
Sign In securely
Latest News