Hole in pension fund grew $8B this year
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New Jersey state treasurer Andrew Sidamon-Eristoff speaks at a luncheon during the New Jersey State League of Municipalities annual conference in Atlantic City. TRENTON — The hole in the state’s pension fund grew again this year, by more than $8 billion, a trend that continues after a decade of skipped payments and increased benefits.
The unfunded piece of the state’s pension liability — the estimated total amount needed to pay current and future state, county and municipal employees — grew by $8.05 billion between June 2009 and June 2010, according to a report released today by the Department of Treasury which indicted the state has a $53.9 billion unfunded promise.
Additionally, the state has a $66.8 billion unfunded promise to future and current employees for lifetime health benefits, the report found.
Gov. Chris Christie has said reforming the pension and health system is a priority for the new year and leaders in the Legislature have agreed to discuss reforms.
"If all the required contributions to the pension funds had been made over the last decade, New Jersey would still not have enough money to pay all the benefits state and local governments have promised to public employees," Treasury Spokesman Andy Pratt said in an e-mail.
In reporting the increase, the administration included a summary of the proposals Christie has made to reform the pension and health systems. They include rolling back a 9 percent increase that was granted for 2011, raising the retirement age to 65 and requiring all employees pay 8.5 percent of their salary to the pension. The plan would also require employees to pay 66 percent of their health costs.
Hetty Rosenstein, New Jersey director of the Communications Workers of America — the largest state workers’ union — said her members are aware of how serious the problem is.
"We want to be sure that our members’ pensions are secure. So we would never just ignore such a thing… And we want to help to figure out how best to address it," Rosenstein said. "And the governor has to share in the responsibility by discussing how the state is going to fund the pension and making a commitment to fund the pensions."
This year, Christie skipped a $3.1 billion pension payment — continuing a decade of gubernatorial administrations shortchanging the system. Christie has said he will not contribute funds until the system is changed.
Rosenstein said the lowest paid government workers should not have to pay 8.5 percent of their salaries towards pensions, as the governor proposed.
"How are you going to say they should pay 8.5 percent, the same as police and fire, when those pensions are worth three times as much?" she said.
By Matt Friedman and Ginger Gibson/Statehouse Bureau
Related coverage:
• N.J. towns must contribute 22 percent more to pension fund
• Proposed New Jersey public employees pensions, benefits changes
• Changes to N.J. pension system improve state's credit rating, report says
