'We have to deal with these issues now so that we can set the stage for a different budget process in the spring,' Sidamon-Eristoff said
State Treasurer Andrew Sidamon-Eristoff at the State House in this May 2010 photo.NEW YORK — Proposed changes to public worker pensions will not fully fund the system — but they’ll come close in the coming decades, New Jersey Treasurer Andrew Sidamon-Eristoff said today.
Gov. Chris Christie’s plan — which, among other changes, would require workers to kick in more money for their pensions and retire later in life — will provide the system with more than 90 percent of what it needs to meet its pension promises within 30 years, according to estimates from the governor’s office.
“That is, I think by any measure, a level that ... is considered well within the guideline for what is appropriately funded,” Sidamon-Eristoff said after speaking at a conference on municipal finance at the 92YTribeca. “My understanding is that 80 to 90 percent is considered well-funded.”
The U.S. Government Accountability Office said experts and officials put an acceptable funding rate at 80 percent. At last count in June 2009, New Jersey’s pension investments would only cover 66 percent of what was needed for about 780,000 current and retired public workers. That number, after a year of stock-market losses and a skipped state payment, fell from a level of 73 percent the year before, according to state Treasury department reports.
An analysis by the Bloomberg media company, which sponsored the conference, said New Jersey’s pensions were the 11th most underfunded in the country, placing Illinois in the uncomfortable No. 1 spot with a 51 percent funding level.
The state saves money to pay for retirees’ pensions by investing funds contributed by the state, local governments and employees. But if the fund were to run out of money, New Jersey would have to pay the pension bills as they come due.
Andrew Biggs, a scholar at the American Enterprise Institute think tank, said his calculations say New Jersey would run out of money in 2020 using current investment assumptions.
“The danger isn’t imminent. The problem is that once these funds run out, the costs are so high that it will be very difficult for the states to absorb those costs,” he said today.
“Even though you’ve got probably a decade before things really hit the fan, once they do, you’re in a real fix.”
New Jersey can be viewed as an “excellent credit risk,” Sidamon-Eristoff said during the conference. He also said the administration is keeping the budget in check going forward.
“We will not allow small problems early in the fiscal year to metastasize into large, unmanageable problems,” he said.
Christie also was out today stumping for his changes, holding a town hall meeting in Edison, where he stressed the changes are needed to keep the pension system afloat.
“We need to step up to the plate collectively as a society and fix this problem, because if we don’t, we will careen and land in disaster,” he said.
Staff writer Matt Friedman contributed to this report.
Previous coverage:
• N.J. unemployment rate drops to 9.6 percent, officials say
• U.S. Senate approves extending unemployment benefits to those without jobs for more than 6 months
• Sussex County man joins President Obama at press conference on unemployment benefits
• N.J.'s unemployment numbers spike is surprise to economists
• N.J. unemployment rate drops to 9.6 percent
| Governor Christie proposes pension and health benefit reform |