As reported by, a proposal to move some state and local employees to a new 401(k)-like pension system is gaining support because it has the potential to save billions of dollars. However, long before anything is adopted, it is likely to draw strenuous pushback from the public workers’ labor unions. The recommendation is to move new hires and employees with less than five (5) years of service out of the defined-benefit pension system and into a proposed defined-contribution retirement system. It is one of the many outcomes of a Legislature-led working group of fiscal policy experts gathered by Senate President Steve Sweeney last summer. Out of all its proposals, the panel singled out this move as the one to save the most dollars.

Such a move would substantially change the way public workers earn pension benefits. The last major effort was launched in 2011 and drew mass protests from public employees. Still, Sweeney, who is now the leading proponent of the panel’s findings, is trying to tap into public frustration with high taxes to get the new proposal to the finish line.

In all, the pension system covers the retirements of nearly 800,000 current and retired public employees in New Jersey.  While some of the individual funds for different worker groups are in better shape than others, the system itself has an unfunded liability estimated at $115 billion, making it one of the worst-funded state retirement plans in the country. While some benefits changes were enacted in 2011 after Sweeney worked with then-Republican Governor Chris Christie to adopt bipartisan reforms, that effort was not as effective as originally designed because Christie did not follow an aggressive schedule of state pension payments.

But, just as unions loudly opposed Christie when he sought to adopt benefit changes in 2015, the proposals are already getting pushback from labor. For example, the New Jersey Education Association, the State’s largest teachers’ union, has labeled the panel’s findings, which include plans to reduce the quality of public workers’ healthcare coverage to save more taxpayer money, “unfair, unreasonable and unconscionable.” Many have argued, and rightfully so, that public workers have good reason to be upset regarding additional proposals to cut their pension and health benefits. To this end, the main source of the pension-funding problem is the State’s long history under governors of both parties of not making a full, actuarially-required pension contribution even as the workers themselves have been making legally-mandated employee contributions the whole time.

Please continue to check this blog periodically to ascertain updates regarding the aforementioned proposals. As you can expect, if such proposals were ultimately passed, this could have a drastic impact upon all public employees, most notably public safety officers.