FOR IMMEDIATE RELEASE: December 13, 2017

Contact: Jon Whiten, NJPP: 917-655-3313 (cell) | whiten@njpp.org; Stephen Herzenberg, KRC: 717-805-2318 (cell) | herzenberg@keystoneresearch.org

Setting the Record Straight:How Generous Are New Jersey’s Public Pension Benefits?

They Rank in the Bottom 10 of 69 Large Plans in U.S.

Governor Chris Christie and the Healey commission are right: The state faces a significant pension system problem. But those who blame overly generous benefits for these woes are far off base, according to ananalysis of 69 public pension plans in the country released today by New JerseyPolicy Perspective and the Keystone Research Center.

In fact, New Jersey’s two main pension plans (for state workers and for teachers) rank in the bottom 10 for overall pension benefit generosity, at 60th and 61st out of 69 pension plans, in part because of cuts enacted in the pension reforms of 2011.

“Retirement benefits are clearly not to blame for New Jersey’s pension mess,” says New Jersey Policy Perspective president Gordon MacInnes. “The culprit, it turns out, is much simpler, though harder for politicians to demonize than teachers and government workers: chronic state underfunding.”

The pension plans’ overall generosity was measured with three factors: whether the plans offer inflation protection to retirees, how benefits are calculated and the amount employees contribute to their own retirement plans. On all three, New Jersey ranks in the bottom half of 69 plans on which the National Association of State Retirement Administrators provides recent data. The state’s plans ranked lowest on inflation protection (its plans have none) and on the calculation of benefits (because of low multipliers) and closer to the middle on employee contributions (its employees still contribute more than in most states).

“New Jersey public employees face a triple whammy that gives them among the worst pensions in the country: they contribute heavily to their own pensions, receive only modest pension increases with each additional year of service, and get no inflation protection at all in their benefits.”

The brief also finds that New Jersey’s pensions are modest in dollar amounts. “Given that the Garden State remains one of the highest-cost states in which to live, Gov. Christie’s claim that New Jersey public sector workers have gold-plated pensions is simply false.”

Due to modest benefits and high employee contributions, the cost of additional pension benefits earned each year by current New Jersey public sector workers is also low. This “normal cost” equals only 2.4% of payroll for state and local government workers, and 4.2% of payroll for teachers.

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