The idea, not yet written in bill form, would give public employee unions more say in how their pensions are administered while making workers give concessions
Senate President Stephen Sweeney, left, talks during the press conference while sitting next to Assembly Speaker Sheila Oliver, in this November 2010 photo.TRENTON — Democrats say in order to save the state’s troubled pension system, they need to take it out of the hands of elected officials.
In a proposal released today, Senate President Stephen Sweeney and Assembly Speaker Sheila Oliver called for a fundamental restructuring of the system, modeling it after private sector funds. The idea, not yet written in bill form, would give public employee unions more say in how their pensions are administered while making workers give concessions.
"It’s creating a whole new pension system," said Sweeney (D-Gloucester). "We’re blowing up the system that exists to create one that’s going to eliminate politics."
The state’s pension system is underfunded by $53.9 billion, up $8 billion from one year ago, according to the Department of Treasury. That’s partly because the state has either skipped payments or only paid partially into the system over the last decade.
"We'll have better planning, more accountability, more affordability for taxpayers and a system that's based on economic reality," said Oliver (D-Essex).
The announcement comes just days in advance of Gov. Chris Christie’s Tuesday State of the State address, in which he’s expected to push his own proposals to reform the pension system.
The major changes the Democrats proposed:
• Replace the current oversight boards with joint labor/management boards for each of the pension systems. The boards would be made up of an equal number of union and state officials, who would decide who would manage the fund’s investments and determine the rate employees and employers pay into the fund.
• Employees and employers would have to pay more into the pension system if its fiscal health declines. Sweeney, a general organizer for the International Association of Ironworkers, said his union members agreed to pay $2 more per hour to keep their pension system going.
• Workers would either forgo a 9 percent pension boost they got 10 years ago, or keep it but pay more into the system.
"To put it simply, if public workers want a higher pension, then they'll have to pay more for it," said Oliver.
• Those with less than five years of service at the time of the new law’s enactment would no longer get cost of living adjustments. Workers with more than five years would be eligible, but would have to pay a higher rate to get them.
Sweeney said the governor and Legislature should not be trusted to determine the specifics about what benefits should be. He noted the 9 percent pension bump workers got in 2001.
"When Acting Gov. (Donald) DiFrancesco did this enhancement, it was with an eye towards being elected governor. Let’s get everyone out of it and make pensions be managed the way they’re supposed to be," he said.
In September, Christie proposed rolling back the increase, changing the formula on how pensions are calculated to make them less lucrative, and raising the retirement age.
Public workers unions briefed on the plan said they were willing to make sacrifices, but stressed that the state needs to start contributing to the system again.
"The bottom line is that we understand and acknowledge that something has to be done to deal with the pension system in New Jersey," said New Jersey Education Association spokesman Steve Baker. "We cannot continue with the status quo of no funding, no funding, no funding, and expect that the system will recover."