New Jersey Pensions
An actuarial adjustment to how New Jersey estimates the return on its pension investments is making local officials gasp, though financial professionals insist that the change is fiscally responsible. The adjustment will increase the amount that localities and the state must contribute to the pension system, which is good, because the system is dramatically underfunded. In fact, New Jersey has arguably the worst-funded public-employee pension system in the country, and pension costs are “crowding out” vital spending on education and other priorities.
The Facts You Need to Know
Bottom: New Jersey pensions have the worst “funded ratio” in the U.S., at 32%. Read more.
Tax: Increasing pension payments will gobble up all of New Jersey’s additional tax revenue in the coming years, even if tax collections accelerate. Read more.
Costs: As a proportion of state revenues, pension costs are expected to triple in the next five years, from 4% in 2018 to 12% by 2023.
“New Jersey legislators, often cheered on by the state’s powerful unions, promised big benefits based on unrealistic assumptions.”
While 56% of #NewJersey teachers will vest in the state’s retirement plan, just 48% will earn more than their own contributions plus interest, and only 4% will reach normal retirement age: https://t.co/7Ly7FpX0Tp pic.twitter.com/Zg75BzmOa6— TeacherPensions.org (@TeacherPension) December 28, 2017
The Past is Present
“The state’s leaders seem determined to drive it off a cliff.”
And in other news...
“When New York legalized daily fantasy sports in 2016, state officials boasted of the jobs and tax revenues that would be created. One legislative memo described “abundant” tax money that would flow into a state fund that helps pay for the state’s more than $25 billion education tab each year. Turns out, abundant was an exaggeration.”