New Jersey Pension System's Unfunded Liability Increases to $34.4 Billion

Discussion in 'Economics' started by ByLoSellHi, Apr 15, 2009.

  1. N.J. Pension System Deficit Rises to $34.4 Billion (Update2)
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    By Stacie Servetah

    April 15 (Bloomberg) --
    The funding deficit of New Jersey’s public pension system climbed to $34.4 billion as of June 30, from $28.4 billion in mid-2007.

    The pensions were 72.6 percent funded as of June 30. That compares to a funded ratio in June 2007 of 76 percent, according to state Treasury Department officials.

    New Jersey’s largest pension fund, the Public Employees’ Retirement System, had an unfunded liability of $10.82 billion as of June 30, up from $9.07 billion as of mid-2007. That combines state and local systems. The state PERS had a funded ratio of 65.6 percent, compared with 68.8 percent in June 2007.

    The state has less money than it owes for anticipated pension obligations because of investment losses earlier this decade, a lowering of the retirement eligibility age and a failure by past governors to make annual contributions. The value of the pension system’s assets dropped to $56.3 billion as of February, from more than $82 billion as of June 2007, after losses on investments.

    Governor Jon Corzine, a first-term Democrat seeking re- election in November, has tried to slow the deficit’s growth by making regular pension payments. His administration has contributed about $3 billion into the system since he took office, compared with $3.2 billion contributed in the previous 14 years, according to the treasurer’s office.

    Pension Reform

    Corzine’s administration also has enacted pension and benefit changes that are projected to reduce costs to the systems by more than $6 billion over the next 10 years. These include raising the retirement age and requiring newly appointed and elected officials to enroll in a less costly, defined- contribution plan, treasury spokesman Tom Vincz said.

    Around the U.S., many state plans are experiencing increases in unfunded liability, Vincz said. A recent report from Wilshire Consulting showed that 59 other state retirement systems reporting actuarial data from fiscal 2007 to fiscal 2008 had sharply reduced funding ratios, with the average state ratio falling by 11 percentage points, from 88 percent to 77 percent, he said.

    “All of this said, there are multiple factors that influence the liabilities of the system, not the least of which is investment returns, which have not kept pace with rising liabilities,” Vincz said in an e-mail.

    Helping the Cash-Strapped

    Corzine, the former chairman of Goldman, Sachs & Co., last month proposed reducing the state’s annual pension payment by $500 million, to $400 million, to help close a $7 billion state budget deficit for fiscal 2010, which begins July 1. The governor signed legislation allowing cash-strapped municipalities and school districts to defer half of their $1.1 billion in pension contributions due this month.

    The funding gap for the teachers’ and the police and firefighters’ funds also increased between 2007 and 2008, reports released this month show. The overall state pension system operates on behalf of more than 700,000 current and retired employees.
  2. Couldn't have happened to a nicer state.
  3. MattF


    wonder how many other states start doing this...or basically end up cutting it off to new hires after a certain period of time.
  4. That probably won't be enough. States will raise taxes until we "cry uncle", then they will have to lay off some employees.
  5. About 2 and a half years ago, someone was talking to me about all the pensions that would fail. I could barely grasp how that would happen. But he said, "do you have any idea what will happen when Mom and Pop go to retire, and they are told they can't?"

    That day is here.
  6. California and about a dozen other states will have state employees who won't receive pensions, ever, also.

    There is so much just now coming to light.

    People are going to grow angrier than they have in a long, long time in the United States. Young and old. Rich and poor.
  7. Tell me about it. I'm a cop on the job for 23 years. My employer froze my pension at today's dollars last year. When I'm 50 I can get 26% of today's salary, if staying to 55 I could get 33% of today's salary. Meanwhile I'm now in a defined contribution piece of crap with a 6% employer contribution. The magic of compounded earnings are going to kick in just swell (not) since I'm starting it at 43.

    Damn right there are pissed off people out there. Many are your public safety professionals who opted to work for lower pay for the security of a good pension. Instead we were promised a bill of goods only to have politicians step in and pull the rug out from under us. Doing it isn't enough for the bastards either, they must convince the public that somehow the cops and firefighters have been robbing them blind.

    Sorry for the rant... not dealing with my situation well I guess... :( :mad:
  8. Pissed off people with guns, not good :p

    Seriously, we should take all this stuff out of the hands of politicians and give it to professional managers.

    Corzine dropped his proposal to remove all state income tax deductions for property taxes. They would have stormed his office and lynched him had he gone ahead with it. Or at least run his car off the road (and since he doesn't wear seat belts that would be the end for him).
  9. I'm with you 100%. But that isn't gonna do you a damn bit of good.

    For years, we've had double dippers, guys who retired at 41, and we just can't afford it. It was going to break the system eventually, and this is "eventually".

    They just made promises to you we (and You) the taxpayers can't keep.

    The next thing is this "tax everything" mentality. So, you'll be on one side of city hall with a torch, and we'll be on the other.

    what a mess.
    #10     Apr 15, 2009