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I have been giving much thought to the modern day problem with pensions recently and it is certainly a perplexing issue. The Governor had only recently claimed it fixed only to declare the system bankrupt again a few years later. Pensions, originally created to draw people to otherwise low paying jobs and provide security upon retirement to those who served the citizens of the state. Since then two things have happened; first, wages for many of these positions have increased dramatically, making public service a sought after and often lucrative job, and second, pensions have increased exponentially to the point many now retire with large six-figure pensions paid in perpetuity.
The inherent problem with the pension system in New Jersey is pensions, while paid for by the state, are based off final compensation set by the local municipality. These towns has no incentive to control labor costs and are often even set by long time friends or even family members, creating a situation of inflated wages and leaving the state to pay an inflated pension total. Putting aside the overall high level of police pay in this state (and I will focus on police but this can be extrapolated to Fire, Educations, Municipal, and state employees alike) the system of pension based upon final compensation is the root of the pension system’s woes in NJ.
All too often state employees will work to get a promotion near the end of their career, work in that job for only a year or two to increase his/her pension payout before stepping aside to let the next man do the same thing. These chiefs are often not interested in public safety but rather in increasing their personal pensions at the end of a long career. Once this inflated figure is reached, public employees often retire to allow the next employee to achieve the same, elevated pension. Take for instance the Bayonne Police Chief who recently retired and was in the news for his $440K sick/vacation day payout. His pension, in perpetutity, will be roughly $163,000. (If someone can reasonably tell me how in any sane world he should be retiring with such a pension I'd love to hear it)
This practice must be curtailed through a system based upon uniform compensation tied to number of years served at each position and simultaneously eliminating the practice of collecting multiple pensions and collecting pensions while publicly employed. If an officer only serves as chief for two years it should be only recognized as two years in the pension system’s calculation, not thirty as is the case today. (I won't post the actually very rough sketch of a system I made but If you're interested you can find it here)
the real solution is a 401k based pension. then, you have no problem of multiple pensions, no problem of unfunded liabilities and no risk to the financial situation of the employer.
I have been giving much thought to the modern day problem with pensions
Good for you! It seems as if NJ's governors never gave much thought to it. Starting with the first Christie (Whitman), through to the current one (Chris), every governor has failed to fully fund the state's contributions to the pension systems. This may not seem like a big deal to some, but if the state's share (usually half, matching that of the worker) had been made, the various pension plans would by almost completely funded, and there would be no crisis. Think how much the unpaid billions would have multiplied.
Their actions are similar to one of those interest-only mortgages, where you wind up owing the entire principal, after 30 years!
Current Christie promised to pay the state's share, and then reneged. Now, he's trying to blow the entire system up. Many politicians created loopholes in the system, where they received full pensions for part-time work as legislators, or similar work. They spend a few years on a own council, some in the state senate or assembly, then a no-show or little-work political hand-out, before retiring on a pension that as much, if not more, than their former salary!
I do agree that buyouts for allegedly unused sick or vacation days are ludicrous. Use it or lose it! That money, however, does not come from the pension fund, just the unfortunate taxpayers of the municipalities handing out these golden parachutes.
I also think that NJ pensions are generally based on an average salary of the 3 or 5 highest-paid years, and there is supposedly a procedure where pension boards are able to review salaries & discount final balloon raises. Overtime is not included, as it is in NY. Whether they do so or not, is another question.
Most sick day buyouts are not 1-1, more like 3-1. I know that doesn't please anyone, but let's at least get some facts straight. I defer most of these discussions to tom1944, he knows what he's talking about.
BTW, I get paid for unused vacation if I were to leave/retire in my company.
I get paid for unused vacation if I were to leave/retire in my company.
Are you allowed to compile years worth of unused vacation, for a massive retirement gift? At some point, did you or a compliant co-worker control your personnel records, so that dozens, if not hundreds, of used vacation days could conveniently disappear, thus inflating your buy-out?
Last edited by bigjake54; 07-31-2014 at 09:02 AM..
FYI, I'm in the public sector (not the state, though) and we don't get paid for sick time if we don't use it. We can only get paid for one year's worth of vacation time when we retire, which is why most people retire in January, and I'm betting anything they are going to take that away before I get to retire and pro-rate our vacation based on the quarter in which one retires. In non-retirement years, you are only allowed to carry over 10 days from one year to the next. Anything over that is lost. I work with a guy who sometimes put in sixteen-hour days last year, going to meetings at night and being called on weekends. End of the year came and he had 17 days he hadn't been able to take because of his workload--he was told too bad, so sad, you lose them.
Are you allowed to compile years worth of unused vacation, for a massive retirement gift? At some point, did you or a compliant co-worker control your personnel records, so that dozens, if not hundreds, of used vacation days could conveniently disappear, thus inflating your buy-out?
Me? No. I'm no-one. I'm sure those with connections can get those golden parachutes though - just like the majority of state employees who are like me and the chosen few like you mention above.
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