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N.J. High Court Rules in Christie’s Favor in Pension Lawsuit

Friday, June 10, 2016   (0 Comments)
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WSJ.com 06/10/16

The New Jersey Supreme Court on Thursday affirmed the state’s authority to suspend cost-of-living increases in public-worker pensions, a victory for Gov. Chris Christie, who sought to rein in the pension system. The 6-1 ruling spared New Jersey a funding crisis. Moody’s Investors Service estimated in January that the state’s unfunded pension liability, which currently stands at more than $40 billion, would increase 33% if the court overturned the cost-of-living suspension. “The Legislature retained its inherent sovereign right to act in its best judgment of the public interest and to pass legislation suspending further” cost-of-living adjustments, according to the court’s majority opinion.

Union officials, who filed suit in 2011 to protect the cost-of-living adjustments, said the ruling hurts retirees who are living on fixed incomes and shows a constitutional amendment is needed to protect pensioners. New Jersey began offering cost-of-living adjustments to state retirees in 1969 to offset the effects of inflation. Charles Ouslander, the attorney who represented public workers in the case, said the court’s ruling should make employees “gravely concerned that their remaining pension benefits have any legal protections left.” The case stemmed from Mr. Christie’s 2011 pension overhaul, which was approved by the state’s Democratic-controlled Legislature. The bipartisan agreement, deeply controversial within New Jersey,helped elevate the governor to national prominence.

The lone dissenting justice, Democrat Barry Albin, wrote that the 1997 law “made a contractual promise” to public workers guaranteeing cost-of-living adjustments. Hetty Rosenstein, New Jersey director of the Communications Workers of America, a union that represents some public employees in the state, said she was disappointed but not surprised that the court didn’t reinstate cost-of-living adjustments.  Ms. Rosenstein said she was encouraged by other parts of the majority opinion, which she said reaffirmed that public workers have a non-forfeitable right to their underlying pension benefits. The decision thereby strengthened the argument for a proposed constitutional amendment that would require the state to make its public-pension payments on time, she said. “Those benefits have to be paid,” Ms. Rosenstein said.


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