Inflation increases for NJ pensions suddenly gaining sponsors
TRENTON – A proposal first made 11 years ago to restore cost-of-living adjustments to the pensions of retired public workers in New Jersey may be finally picking up speed.
Sen. Shirley Turner, D-Mercer, first introduced the bill in June 2011, one day after then-Gov. Chris Christie signed a pension reform bill into law that suspended COLAs until the retirement systems are restored to better financial health.
"Without the annual adjustment, retirees and beneficiaries will gradually see significant reductions in their purchasing power," says the bill statement. "The loss of COLAs will impact their everyday lives, and, over time, make it harder to afford more necessary elements of living, such as out-of-pocket medical costs, groceries, and utility bills. Retirees and beneficiaries will find it more prudent, or perhaps necessary, to leave this State for other states with a comparably lower cost of living."
Turner introduced it each session, but it went nowhere. It was joined a few years later by Sen. Brian Stack, D-Hudson, but nobody else – until last month. It has now added more 24 sponsors and co-sponsors between the Senate and a companion Assembly bill, including 11 Democrats and 13 Republicans.
Here’s a recap of the sponsors added in the Senate – last names only, color-coded by party with Democrats in blue and Republicans in red:
1/11: Turner and Stack reintroduce bill, now S260
2/10: Adds Polistina
2/28: Adds Bucco, Cryan, Cunningham, Thompson, Diegnan
3/20: Adds Codey, Cruz-Perez
3/24: Adds Bramnick, Holzapfel, Singer
Here’s a similar recap of the bill’s sponsorship in the Assembly:
2/28: Reynolds-Jackson, Wimberly introduce companion bill A2758
2/28: Adds Benson, Speight, Dancer
3/7: Adds Swift, Clifton, Caputo, Mukherji
3/14: Adds Kean
3/17: Adds DeFuccio
3/24: Adds Catalano, McGuckin
The bill still hasn’t gotten a hearing. The Legislature will be mostly idle, except for hearings on the state budget proposal, until early May.
The 2011 pension law says the committees that oversee the individual pension funds can consider reinstating the COLA when the system’s target funded ratio – the value of its assets compared to its liabilities – reaches 80%.
That ratio has not been met. The state’s last calculations, as of mid-2020, showed the Police and Firemen’s Retirement System (Local) at 71%; the Public Employees Retirement System (Local) at 67%; the Teachers’ Pension and Annuity Fund at 54%; the State Police Retirement System at 54%; PERS (State) at 41%; PFRS (State) at 38%; and the Judicial Retirement System at 27%.
The pension fund investments were valued at $99.3 billion as of Dec. 31, up by more than $15 billion since the funding ratios were last published. However, the stock markets are down notably since the end of 2021 – a nearly 4% drop for the Dow and S&P 500 and 8% for the Nasdaq.
The overall unfunded pension obligation was nearly $91 billion as of mid-2020, according to the most recent debt report published by the Treasury Department. A new debt report should be published soon.
In the current state budget, the state is making the full contribution to the pension funds recommended by actuaries for the first time since 1997. It is around $6.9 billion, mostly to cover deficits from underfunding in past years. A similar amount is proposed for the upcoming budget.