New Jersey has seen a “more precipitous financial decline” in its pension system since 2001 than other states’ plans.
That’s according to a new Garden State Initiative (GSI) report titled “The Looming Tipping Point of New Jersey’s Pension System: the impact of more retirees than employees.” The analysis explored the Public Employees Retirement System (PERS), New Jersey Teachers pension plan (TPAF) and New Jersey Police and Fire (PFRS) pension plan.
“New Jersey remains an affluent state with high average incomes but even in that context, New Jersey’s pension funding requirement is concerning,” the report noted.
The report recommends the state begin “increased risk-sharing between the government and public employees.” New Jersey should also consider increasing contributions, lowering benefits or reducing additional compensation, such as health benefits.
“For years, our pension system has hovered like a dark cloud looming over our economy, escalating pressure for taxpayers, for financial analysts, and our public employees themselves, yet we continue to kick the can and make little to no progress implementing solutions,” GSI President Regina M. Egea said in a news release.
“…Deciding to acknowledge and address our pension crisis is not a conservative or liberal policy issue,” Egea added. “We must all work together to strengthen our local economy and ensure economic equity in the entire State – and we cannot achieve this goal when we ignore our single most pressing issue.”
The report found the state’s aging public workforce is accelerating pressure on the system, making it “less able to handle investment risk and other risks.” It also concluded that the state’s pension system is more generous than typical 401(k) plans and that New Jersey’s taxpayers have shouldered the bulk of the pension cost increases.
“We can first begin addressing New Jersey’s pension crisis by ensuring more people understand how it affects all of us,” Andrew G. Biggs, a senior fellow at the American Enterprise Institute (AEI) and author of the report, said in a news release.
“Often, the discussion about the New Jersey pension debacle focuses on the mistakes New Jersey has made in the past, and not enough on how it is curtailing our everyday services with our schools, municipal services and law enforcement,” Biggs added. “This report provides both a clear historical perspective, why it matters to everyone who lives or works in New Jersey, as well as defines reasonable, common-sense solutions to improve all of our futures.”
This article was originally posted on New Jersey’s pension system hovering ‘like a dark cloud looming over our economy’