Thomson criticizes Murphy accounting change

to lower scheduled pension payments

WALL, NJ – Assemblyman Edward Thomson criticized acting-Treasurer Elizabeth Muoio’s decision Thursday to use a 7.5 percent assumed rate for New Jersey’s pension systems, rather than 7 percent.  The accounting change is expected to lower the state’s pension payments by more than $235 million for the upcoming fiscal year.

“It’s incredibly hypocritical for the Murphy Administration to say it will fully fund the pension system and then lower the bar with rosy predictions on its health,” said Thomson (R-Monmouth). “The Murphy administration is already breaking its promises to the state’s pension holders.”

On the campaign trail, Murphy promised to increase pension payments well above those made by Gov. Chris Christie, and criticized a slower, more modest ramp up to the full payment recommended by actuaries.

“The new rate of return is higher than most other pension systems and is completely baseless,” concluded Thomson.  “The goal is to fully fund the pension system as quickly as possible, not kick the can farther down the road.”

Assuming the investments will earn a high rate makes the pension fund look healthier than it really is and doesn’t reflect the reality of the state’s investment outcomes.  The higher the actual rate of return is over the assumed rate, the better funded the pension system will be.

According to the latest rankings from George Mason University, there isn’t a single state in the country in worse financial shape than New Jersey.