U.S. State Pensions Face Overhaul in Bad Economy

Posted on August 21, 2009 by Donald Barbati

 

Recently, Karen Pierog and Jim Christie published an article addressing state pension overhauls during these tough economic times. Specifically, the article examines how Illinois, California, and other states have instituted reforms to combat increasing and debilitating unfunded pension liabilities. 

According to the article, the National Association of State Retirement Administrators found a nearly $443 billion collective unfunded liability for the 125 state, local government, and teacher pension funds in its most recent survey. The situation is likely to worsen as the recession punches holes in budgets nationwide and causes big investment losses for defined-benefit pension plans that pay out a fixed income. As a result, it is suggested that the economic downturn may also lead to more reforms as politicians and taxpayers realize they can no longer afford plush pensions compared to defined-contribution 401(k) plans in the private sector which pay income based on variable investment returns. 

This year, laws were enacted in Georgia, Louisiana, Nevada, New Mexico, Rhode Island, and Texas that reduced benefits for new employees. On the local level, New York City has repeatedly trimmed pension benefits for new hires by creating pension tiers. Illinois and California are among the states evaluating various reform suggestions and/or establishing pension commissions in order to adequately address the problem. In all, it is clear state pension systems are facing a major overhaul in response to the poor economic climate.

This article is of particular importance because the status of the New Jersey public pension system is vital to every resident of this state and especially crucial to public safety employees. Consequently, all current or retired New Jersey public safety officers should read this article in order to fully understand the measures being taken across the country to rectify the problems that have become prevalent in defined-benefit pension plans. To read the full article, click on the following link.

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Retired Cops Oppose Change in Terms of Benefits

Posted on July 1, 2009 by Donald Barbati

 

An association of retired cops has warned Hamilton Township to not tamper with their retirement package. The association alleges it would be illegal to change the terms of their benefits “in the middle of the stream.” The Mercer County Local 12 of the Retired Police and Firemen’s Association sent the warning to the Hamilton Township Business Administrator John Ricci this week in a letter.

Ricci confirmed he received the letter a letter from Trenton attorney Sid Lehman, saying the association “objected” to the Township’s plan to change retirees’ prescription drug co-pays to match the co-pay terms of active employees. “Sid sent a letter saying you can’t do that because they are retirees and they are entitled to the same benefit they had when they retired,” Ricci said. “He gave me the case law, and I agreed with him, and that was the end of that.”

Thomas Murphy,a retired Trenton cop and president of the 400-member Local 12, said there is nothing “adversarial” about the issue. “We want to sit down and see if we can come to an agreement at the table. We have precedent on our side, and we won’t hesitate to use it.”

“They’re not a union, they have no right negotiate,” Ricci said, “but they do have certain rights to continue receiving the same benefits they had when they retired, and that’s what this is about.” 

Both Ricci and Murphy expressed optimism that the issue would be resolved without any legal action.

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