Policy makers in Trenton and in capitals around the country have been loath to take on the root of the problem: unrealistic assumptions about returns that have created a fiscal time bomb for the states. Only significant reform can circumvent the pending meltdown.
In The Crisis in Public Sector Pension Plans: A Blueprint for Reform in New Jersey, Eileen Norcross and Andrew Biggs suggest a menu of options for New Jersey and other state policy makers -- and project the costs of doing nothing.
Specifically, the paper recommends that policy makers:
• Extend the defined contribution plan already available to state university faculty and staff and the state's Defined Contribution Retirement Program to all state employees.
• Reduce or freeze cost of living adjustments (COLAs) to reduce the state's unfunded liability.
• Transition non-vested workers to defined contribution plans.
Many states face underfunded public sector pensions, and the hole that New Jersey has dug for itself is one of the worst. This paper represents a step forward in understanding how state policy makers can address public pension reform in a meaningful, sustainable, and honest fashion.
For more information about the Mercatus Center, click here.
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to those in the private sector, nobody deseves their public pension.. to unions everywhere, they deserve their pension.. to those unions who get to work on public projects,they deserve prevailing wages and their pensions..to over-spending legislators with eyes on 2011 legis. elections, and suddenly wanting "quick-fixes," let's now "get" the public employees, for votes!.. it is patently unfair, at this point in time,to balance budgets that have been overspent for far too long, on the backs of regular workers who have chosen their careers and done their jobs for many years, and contributed toward ONE pension!.. perhaps if the legislators would grow a set, and finally,realistically, STOP all CURRENT and future double/triple dipping by themselves and their friends,take the lobbyists and outside boards and org's. out of the system, reduce pensions for part-time workers, switch new employees into the 401K type of fund that we GOP's have suggested for many years,maybe the bleeding will eventually be lessened..and, they still need to STOP throwing all our money at their special-interest groups/voting blocks, to keep re-electing themselves: they won't admit they do it....I'd now fully support a binding voter referendum on the next Nov.ballot, to institute term-limits for ALL legislators,as many states have..if the Gov.'s limited to 8 yrs., so should Senators and Assemblypeople be!..next, a nation-wide referendum to limit the Congress' terms. too!.. they all have become pigs, and the elite, "ruling-class," who set separate rules for US, and one better one, for themselves!!.. this would drastically cut down on wasted programs, lessen these "giveaways" that cost so much every single year, and bring the public pension system more into an affordable line!!..
As a public employee who has had enough of the whiners in public employment here are two suggestions.
1. Currently PERS (State and local workers) members and TPAF (teachers)pay only 5.5% of their base salary into their pension plan. Police and Fire pay 8.5% into the PFRS (a much more lucrative plan). Raise all contributions to 11%. These are pre tax (federal) dollars and will provide approximately $5 billion more into the system over 15 years.
2. In return for this jump in contributions, the state would need to agree to fully fund pensions; however it will be a lower amount as employees would pay more.
Other suggestions - Increase retirement age to 65 or 66; change the pension calculation that DiFrancesco stupidly gave away to all employees AND retirees (the 9% increase) - unfortunately that will probably only be able to be done for future service credit.
Health benefits - 1.5% of salary is not enough, nor is it fair. There must be tiered rates to coverage cost - employee only (single), employee plus spouse, emoployee plus child(ren), employee plus family. A single employee should not pay the same amount as an employee with a family. There should be a percentage of the actual cost (15% - 20%) charged, so it increases with the health care inflationary spiral. Also, spouses who are employed MUST take their employer's health benefits for their primary coverage. Public entities should not be subsidizing private enterprise. (Also, many private employers pay a stipend to employees for not taking their health plan!)
Under the new tier 4 PERS rules (effective May 21, 2010), only an employee who works a minimum of 32 hours (local) and 35 hours (state) is eligible for PERS membership. Part-timers now no longer eligible for a defined benefit pension.
Art - you know some people - pass this up the chain.
well, there's whiners and there's real whiners..appears it's the unions, especially the NJEA, who are the biggest whiners.. again, until this down economy, and ridiculous stimulus and bank/industry takeovers, the public sector employees, by and large, took lower-paying jobs to get better benefits as trade-off.. again, over many years,thanks to the "pigs" in the upper tiers, like union bosses, superintendents, and double-dipping officials,it got too big to handle.. here's a thought: HOW ABOUT stopping completely free charity care to the illegals, and institute an ablity to pay type of sliding scale at the emergency room door?..in just 20 yrs., those costs went form $125. million to BILLIONS.. it's disgusting..many many public employees have taken freezes, cut hours, dropped titles, all in the name of "helping out" and "saving", while being able to remain working..I maintain "sacrifice" in tough times at the lower ends, needs to be matched at the highest ends!....
will someone please tell unions there are NO guarantees in a capitalist society ,none ,zero ....if they find on let the world know before it defaults !
then maybe someone needs to put that thought into the "Newly Elected Officials" Rutgers class, (that most of them think they're too smart to attend), because it's the various governing bodies, who for so many years have voted for and APPROVED these union contracts, with all the perks and raises,which led the all the workers to assume and receive the "guarantees," which no one now wants to pay for!!..it's called:decades of spending tax dollars to make voting blocks happy, so you get re-elected-period!.. anyone who doesn't acknowledge this is totally naive and is kidding themselves!!..self-inflicted wounds are tough to fix, and now they are trying to do it all in one year, because the whole legislature's up in 2011,and it's just not gonna fly as quickly as they want it to! ..
If you are looking to purchase any pension plan to secure your retirement life, then rather routinely paying the premium amount you should get involved in it interestingly. If you invest properly in real estate, the property has necessarily been purchased with the investment purpose.
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