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TRENTON — The state Supreme Court on Thursday upheld a landmark 2011 law freezing cost-of-living adjustments for retired government workers, a decision that will slowly erode the value of pensions paid to 800,000 current and former public employees.
The 6-1 ruling is a major legal victory for Gov. Chris Christie's administration, which warned that restoring the annual increases would hurl a pension system already underfunded by $59 billion closer to insolvency.
The lawsuit filed by a group of retired prosecutors hinged on whether the legal promise not to reduce workers' pensions includes cost-of-living adjustments. Christie and state lawmakers suspended the regular increases in 2011 as part of a sweeping overhaul of employee benefits that also raised the retirement age and required workers to pay more for their pensions and health care.
Public workers sued, arguing before the court in March that their cost-of-living adjustments have the same protections as the pensions themselves and cannot be reduced, while a lawyer for the state said COLAs fall outside that "non-forfeitable," or absolute, right.
Assistant Deputy Attorney General Jean P. Reilly agued if there's any ambiguity in the language of the 1997 law, which granted a non-forfeitable right to the "benefits program," it should be interpreted narrowly and in the state's favor.
Writing for the majority, Justice Jaynee Lavecchia agreed, finding "In this instance, proof of unequivocal intent to create a non-forfeitable right to yet-unreceived COLAs is lacking. Although both plaintiff retirees and the state advance plausible arguments on that question, the lack of such unmistakable legislative intent dooms the plaintiffs' position."
The COLA suspension was part of a broader law requiring public employees and the state to pay more into the pension system. The overhaul was undertaken to reduce the state's massive pension debt by $140 billion over 30 years and preserve the fund. Freezing cost-of-living adjustments was projected to save more than $70 billion of that total.
Senate President Stephen Sweeney, who spearheaded the 2011 law, said he was confident it would withstand legal scrutiny
"We were trying to save the system," he said Thursday. "We suspended it until we could afford to pay it."
With this ruling, it could be decades before many public workers' COLAs can be restored. Under the law, they won't receive increases until the individual pension plans that make up the pension fund are much healthier, which the statute defines as at least 80 percent funded.
Probably an unfortunate necessity. It is true that practically no retirees in private industry have automatic cost of living increases. On the other hand, my mother-in-law (retired teacher) would have been in deep trouble without the increases over her 31 year retirement.
Funny the suspension of the COLA part of the deal Christie made in 2011 is OK but forcing the administration into paying the funding agreed to is "unconstitutional".
so then why should public employees receive something private sector employees do not?
Because compensation in the private sector is based on the free market laws of supply and demand. The compensation in the public sector is based on political power of labor unions. There are pluses and minuses to both sectors.
Because compensation in the private sector is based on the free market laws of supply and demand. The compensation in the public sector is based on political power of labor unions. There are pluses and minuses to both sectors.
to go a little further; in the private sector an employer is limited by how much it can charge for its product before people will no longer voluntarily hand over their money. in the public sector, the government can raise unlimited funds via taxpayers and debt to cover any obligations.
Probably an unfortunate necessity. It is true that practically no retirees in private industry have automatic cost of living increases. On the other hand, my mother-in-law (retired teacher) would have been in deep trouble without the increases over her 31 year retirement.
Sorry, but unless your mother-in-law is 96 years old, that's a big part of the problem in NJ.
No one should be allowed to collect a pension prior to being 65.
to go a little further; in the private sector an employer is limited by how much it can charge for its product before people will no longer voluntarily hand over their money. in the public sector, the government can raise unlimited funds via taxpayers and debt to cover any obligations.
Since the invention of a monetary system those with power have battled to collect and/or distribute that money as they see fit. Kings, noblemen, priests, shamans, congressmen, presidents, dictators, or CEOs of giant companies all the same but before you go screaming anarchy and power to the people take a look around and realize things really are not that bad, in fact from where I'm sitting they are pretty damn good...then again I try not to watch cable news, talk shows or read lengthy blogs by doomsday blowhards.
Sorry, but unless your mother-in-law is 96 years old, that's a big part of the problem in NJ.
No one should be allowed to collect a pension prior to being 65.
Well you nailed it. She would have been 97 this year, she retired at age 62 and lived to 93. She lived in Southern part of the state and her earnings were quite low over her career (she worked in the school system since age 20). I don't believe she made over 20K annually until shortly before retirement, if then. Inflation was fairly high in the early part of her retirement.
The situation seems different now. After the big push in the 1980's, teachers' pay has increased very substantially, and inflation has been muted. So I'm saying the COL increases aren't as critical (and Social Security benefits are indexed) so I think removing them is appropriate and necessary now.
to go a little further; in the private sector an employer is limited by how much it can charge for its product before people will no longer voluntarily hand over their money. in the public sector, the government can raise unlimited funds via taxpayers and debt to cover any obligations.
"Raise unlimited funds"?????? No the governor has limited municipal budgets increases to 2% if I recall. Any funds raised by debt is voted on either by elected officials or a public question on the general election ballots. The COLA raises were NEGOTIATED by either elected officials or people appointed by elected officials. Generally in a negotiation there is give and take, maybe a raise, day off, or other benefit is given up for some other benefit, either immediate or in the future. An example was the NEGOTIATIONS Gov. Christie made to increase state employees increased contributions to pensions and healthcare benefits with a promise the Gov would increase funding for the pension funds. We see how well that worked out.
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