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N.J. pension debt grew to $43.8B last year

Friday, April 1, 2016   (0 Comments)
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New Jersey's public pension shortfall, already one of the worst in the country, got even bigger in 2015, according to new actuarial reports. Unfunded liabilities in the state retirement system for government workers grew to $43.8 billion, as of July 2015. The state system had $85.2 billion in liabilities but just $41.4 billion in assets, 48.6 percent of the money needed to pay for promised benefits. The unfunded liability reported at the end of July 2014 was $40 billion, but Department of Treasury officials said that figure has since been revised. The up-to-date data was not immediately available.

For the fiscal year that ended in June, investments returned 4.16 percent, less than the 7.9 percent needed to avoid adding to the system's liabilities. And while local government employers are required to fully fund the system, the state's payment was much less than actuaries recommend. The combined state and local pension debt reached $59 billion, with $86.8 billion in assets and $145.8 billion in liabilities. Of the unfunded liabilities, $15.2 billion belonged to local government employers.

The local portion of the Public Employees Retirement System is funded at 73 percent, while the portion the state is responsible for is funded at 41 percent. Similarly, the local share of the Police and Firemen's Retirement System is funded at 76.7 percent, and the state share at 44.4 percent. The Teachers' Pension and Annuity Fund, which includes about 250,000 active and retired workers, had $28.3 billion on hand, which covers about half of its $55.4 billion in liabilities.

Porter warned that if the state pays less than promised in the future, the plan is at "significant risk of insolvency. And it can be within a relatively short period of time, it can be a long period of time. It's all really going to depend on what the contributions to the plan are, as well as the investment experience of the plan over the next decade or so." The system's liabilities look much worse when measured under a different accounting standard that requires the state to build its projections on a lower investment rate of return. Calculated that way, it has $81.4 billion in assets to $217 billion in liabilities. That leaves the system more than $135 billion short.

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