Did Gov Christies Pension System reform go far enough? (salary, costs)

[tahiti]

Originally Posted by JERSEY MAN

Police and Fire pay 8.5% of their salary to pension. It is automatically deducted. Only if the state ponied up their share it wouldn't have been as bad as it is. Christie stiffed it again. They should put him in jail because the state is required to pay. SHOW ME THE MONEY.

you want the savior Christie in jail? What did I miss?

[elflord1973]

Originally Posted by marc515

While Gov Christie has made great strides towards NJ pension reform, I do not understand why he did not replace the current defined pension system with a contributory "401K" pension system, as the current Pension System is unsustainable.

We also need to limit pensions for all employees to the average of "High 3" VS the current system which as I understand it still permits certain employee groups to use overtime in the computation “Spiking” which can significantly increase the pension to more than one was making while working.

NJ needs to get serious and institute a system that works.

Marc -- 401k would cost more in the short term because it brings forward the funding gap on the existing defined benefit obligations instead of funding them from the contributions of current workers. It's politically easier to kick the can down the road.

Spiking is a big problem in NY but AFAIK, this kind of abuse is not common in NJ.

No one is going to go "far enough" in terms of addressing the pension time bomb because it is not politically feasible. Voters aren't willing to pay for the promises already made, let alone those they continue to make every day the current system remains in effect. Yet no-one in office is willing to make substantial changes partly because that would require bringing forward existing funding gaps, and partly because they lack the resolve to take on the unions who would fight a 401k system to the bitter end. Even "fiscally conservative" Christie is skipping payments into the pension fund, which means that for yet another year, it is woefully underfunded.

Simply put, there is a serious mismatch between the level of the promises made, and the willingness to fund those promises. When it comes time to pay for those promises (e.g. when the fund is close to depleted) that the voters were not prepared to fund, it will be an ugly wake up call for everyone involved.

[marc515]

This is a painful fiscal mess we are in, and we need to fix it ASAP.

Simply put: the current pension system is unsustainable. The average retiree gets back what he contributed to the pension system in 2-3 years, and the state has to fund the remainder for the outyears- UNSUSTAINABLE.

The 401B contributory type pension system is the future, and we better implement the future now.

[JERSEY MAN]

Originally Posted by tahiti

you want the savior Christie in jail? What did I miss?

He might turn me into a dem., I'll let u know tomorrow.

[tom1944]

Simply put: the current pension system is unsustainable. The average retiree gets back what he contributed to the pension system in 2-3 years, and the state has to fund the remainder for the outyears- UNSUSTAINABLE.

marc- that statement is misleading because you assume that the contributions an employee made have had no earnings over a 30-40 year time frame. I will illustrate it for you using real world examples. So far I have contributed $100,000 into the pension plan the State using the required 4% match of my salary should have contributed $80k for a total in my account of $180,000. Now for a 10 year period I contributed an extra $22k into a 401k type plan this $22k is now $110,000. It grew to $110k even though I did not initially invest when I started contributing to the pension. In effect a shorter period of growth. Using similar investment returns the $180k contributed between the State and me should be worth approximately $900,000. Since my pension would be $45,000 now and a conservative return over a 20 year period going forward would be 3% there should be enough in my "individual" account to fund my pension for more than 30 years. The problem is the State never made their contribution as required instead they bought votes.

[marc515]

Tom,

First, let me complement you on your investing savy, as the S&P 500 is down 0.11 for the 10 year period.

I agree the state has not been contributing their part, and while that's the issue on the surface, the real/underlying is the state does not have the $$ to contribute.

Where is the money they should have contributed? Who knows, but when the state has to fund a premier health plan, it diverts money away from other things; I say premier as compared to federal and one other state I looked at- NC.

Oh yes, the administrators who took advantage of the state diverted money also, but with any budget, the cost savings are always associated with the mass. In order to get the budget under some control, NJ needs to institute a 401K type contributory pension system, and bring health benefit costs in line with the rest of the nation.

Again, I say the current state benefits are unsustainable because there's no more money; unless we want to tax everyone out of house and home.

[ironmike7]

Why even entertain this clown? I could tell from from the first post he was clueless. People pretending to care about the pension system don't help the situation. Keep drinking the Christie Kool-aid.

[tom1944]

marc- you should not cherry pick a flat 10 year period.
Try this-[SIZE=2].from 1/1/80 to 12/31/09, the market had an average annual return of 12.88%, 9.03% when adjusted for inflation.
That means $180 becomes $900k easy. So your argument that workers get their money back in 2-3 years is not factual.
[/SIZE]

[marc515]

Tom,

We are both correct; I was just trying to point out that like my federal pension, NJ pensioners get back what they contributed within 2-3 years.

You are correct when you add in the value of money if properly invested or if the state had put their share in.

However, as we both know, the state robbed Peter to Pay Paul, and apparently never had the funds to put their fair share in anyway; just like they robbed the unemployment and transportation funds to pay the bills.

[tom1944]

marc- the federal government is running a deficit and has for years. That indicates they really could not afford to pay the match into your retirement plan. Is it okay if they took back all the money the put into your plan?