When New Jersey pension funds say no to pension cuts
New Jersey state pension funds have voted to stop paying some workers who have opted out of the state’s annual $7,000 contribution.
New Jersey’s pension fund board voted in favour of the move on Thursday, according to a statement from the state agency overseeing the state pension system.
“The board will consider and consider the best course of action to ensure that New Jersey retirees have the ability to maintain their current lifestyle while the state of New Jersey continues to provide a quality retirement plan for New Jerseyans,” the statement read.
“At this time, the board is not in a position to determine a specific pension payment level.”
“This is a very important decision and we’re confident the board will make a decision in the best interest of the pension funds.”
New Jersey, which has about 16 million retirees, has a $1.6 trillion pension liability, and about $500 million of that is tied up in its existing pension plans.
The New Jersey Pension Fund Investment Management Corporation has proposed a $2.2 billion cut to retirees’ retirement income over 10 years, and that would reduce New Jersey to the second-smallest state in the country behind California, according the New Jersey Department of Financial Services.
It has also proposed reducing pension payments to the state by $800 million over the next 10 years.
In its announcement, the New York State Pension Fund, which represents about 3 million retirees in New York, said it would “consider” a pension cut.
“While we are disappointed that New York pensioners will be without a substantial pension benefit in the coming year, we believe that there are a number of benefits that New Yorkers can take advantage of,” the state fund said.
“These include the ability for New York retirees to enjoy the state retirement benefits, a robust state workforce, and access to health care coverage.”
New York state pension plans have been grappling with a massive funding shortfall as the cost of state pensions have increased over the past decade, largely driven by the rising cost of healthcare, according a report by the New America Foundation.
The state has faced an increasing number of unfunded liabilities, with $14.7 billion tied up with pension liabilities and another $11.9 billion tied to pension liabilities in its finances, the report said.
New York has been considering cutting its pension contributions to $3.5 billion in the next decade, but it has also expressed support for a $3 billion cut, according with the New Republic.
New Brunswick is also considering cutting $3,000 in payments to its pension fund, according reports from the New Brunswick Star and the Associated Press.
In New Jersey a pension plan has been operating under a $4 billion state funding shortfall since 2007, according New Jersey Governor Chris Christie, according The New York Times.
The plan was shut down after the governor failed to raise enough revenue to keep the plan afloat.
Christie has said the plan was “a failed experiment” and a “failed experiment that is not working for New Brunswickers”.
New Jersey is also grappling with pension funding cuts, according Reuters, citing an estimate by a pension fund official.