In response to today’s announcement that legislation will be introduced to end defined benefit pensions for new hires and current employees with less than five years of service by creating a “hybrid” pension, New Jersey State AFL-CIO President Charles Wowkanech released the following statement:
“Our pension funds are at risk for one reason and one reason only: 25 years of State Government’s failure to pay their annual required contribution. In fact, New Jersey has underfunded its pension worse than any state in the nation,” Wowkanech said. “Look no further than New Jersey’s pension plans funded by local government (such as PFRS) and you will see that when all parties actually pay their fair share, the fund is healthy.”
According to a November 2018 report by S&P Global, one of the top Wall Street credit-rating firms, New Jersey is the biggest pension cheat in the nation, ranking its funding ratio as second-to-last among all U.S. states and also placing New Jersey dead last for funding even the bare minimum of its pension costs.*
“Over the past ten years, multiple reforms have been signed into law that reduced the amount of workers’ pensions, removed the cost of living adjustments for workers, increase the retirement age and significantly increase worker contributions. This was done in exchange for a commitment from the Legislature and various Governors to fund their fair share. Time and time again, workers have sacrificed while the Legislature has walked away from its commitment,” Wowkanech added. “Further, it is a misconception that public workers have ‘gold plated’ pensions. In fact, the typical state or local government worker in PERS, after 30 years of service, receives a $31,600 annual pension.”
Research conducted as recently as December 2017 found that New Jersey’s largest two state funds (for state workers and for teachers) rank in the bottom 10 for overall pension benefit generosity, at 60th and 61st out of 69 largest pension plans in the nation.**
“The Legislature and Administration must continue to honor the phase-in schedule and ultimately pay the full contribution as required by law. Data from the New Jersey Division of Investments shows we are turning the corner and are starting to make real progress.*** This problem was created over 25 years of underfunding and it requires a long term commitment from our elected officials to stay the course,” Wowkanech said.
“The New Jersey State AFL-CIO urges Governor Murphy and Legislative leaders to meet with the leadership of our public employee unions to discuss the chronic pension underfunding and to not further erode the retirement security that workers have earned.”