There are “serious concerns” about New Jersey’s unfunded pension and benefit liabilities, a new Pew Center on the States analysis finds.
Released Monday, the report titled “The Widening Gap Update” continues Pew’s analysis of the alarming growth of states’ unfunded retirement benefit liabilities. States were assessed on their management of funds in two categories — pensions and retiree health care — and the report rated each state as “solid performer” (represented by a green piggy bank), “needs improvement” (yellow), or “serious concerns” (a red piggy bank). New Jersey was one of only eight states to be awarded a red piggy bank in both categories.
In fiscal year 2010, which the study was based on, New Jersey’s total pension liability was over $123 billion, and the Pew Center study estimates that only 71 percent of that amount could be funded by available state assets. New Jersey is not funding any of its $71 billion liability for retiree health benefits, according to the study. The report notes that nationwide, “the gap between states’ assets and their obligations for public sector retirement benefits was $1.38 trillion, up nearly 9 percent from fiscal year 2009.”
Since 2007, the Corzine and Christie administrations have acted to reduce New Jersey’s unfunded liabilities, providing more pension payments from 2006 to 2008 then the previous 14 years combined and committing the state to incremental annual increases in pension payments into 2018, as well as increasing retirement age from 55 to 62, capping pensionable salary, suspending cost-of-living increases and requiring public workers to pay for a larger share of their pension benefits.
However, it remains to be seen whether the changes will be enough to make a significant difference. Gov. Christie is not the first governor to use the strategy of pushing liabilities into the future: Gov. Whitman borrowed $2.8 billion for pension payments way back in 1997 – incidentally, NJPP president Gordon MacInnes was among the first to sound the alarm back then.
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