On May 12, 2009, Kate Benner published an article entitled “The Public Pension Bomb” in Fortune Magazine. The article addresses how states all across the country, for many years, have been starving their retirement plans. More importantly, however, the article focuses upon how the crisis is playing out in New Jersey, where the bill is coming due and the State does not have the money to pay it.
According to Benner, the New Jersey public pension situation is dire. In June 2008, the State estimated that the plan, one of the nation’s largest covering teachers, state employees, firefighters, and police officers, had $34 billion less than it needed to meet its obligations. Since then the market value of the plan has dropped from $82 billion to $56 billion. A new estimate of underfunding is due in July.
Benner also indicated that, overall, states nationwide have shortchanged the retirement programs that cover teachers, police, and other public employees. Now, the stock market plunge has wiped out billions of dollars from already underfunded plans. California, New York, and Illinois are among the states scrambling to plug multibillion dollar holes in their pension systems. As a result, these growing obligations raise the specter of higher taxes, diminished services, or even another round of costly federal bailouts.
Lastly, the article traces a 20 year time line to figure out how New Jersey dug itself into this hole. It also delineates the steps that have been and currently are being taken to address the problem. As such, any current or retired New Jersey public safety officer should read this article in order to fully understand the problems with the New Jersey public pension system. 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, one must be conscious of this in order to adequately prepare for its financial impact. To read the full article, click on the following link.