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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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@JP - the retiree has to deal with the consequences either way. The difference with a DC - the retiree has control of their cash.
Posted on: 2015/6/12 13:02
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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Funding an annuity requires the same decisions as contributing to a 401(k). Determine what's needed for retirement. Put enough $ in. Invest it in instruments that will generate the return you need. Of all the problems with NJ's pension fund, I haven't seen too many people say that the assets that were invested were mismanaged. They are subject to the booms and busts of the market, as are any investments. The problem in NJ is a) not funding sufficiently, and b) promising too much at the end (again, subject to debate). A defined contribution plan is no more efficient. The only difference is that if it is underfunded, the retiree, rather than the state, has to deal with the consequences.
Posted on: 2015/6/12 11:21
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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Think about your first sentence. With historically low interest rates, funding an annuity becomes outrageously expensive. And the biggest systemic choice to under-fund - was voting in politicians and union leaders. You still think it's wiser to let them manage your money?
Posted on: 2015/6/12 3:23
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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You think linking to a "study" performed by a liberal "think tank" means anything? Would you care if I posted a "study" by the Cato Institute? And if it's true that NJ's pensions are so modest, I guess it won't be so bad to lose them when they get converted to 401ks. And this is just a fancy way to try and obscure the truth: for decades NJ public employees have been receiving benefits that exponentially exceed the amount they actually contributed. Now that people are living longer, the gravy train is unsustainable, and people could see this coming for decades. It's true that a series of Democratic governors diverted pension money to other causes, but that merely hastened the inevitable. Also, there's really nothing to "argue" about. The fight's over, you lost. The NJ Supreme Court just told the union workers who their real bosses are: the taxpayers who have been funding this largesse. And since the pension system is utterly broken and unsustainable, it's time to grow up and present some actual feasible solutions that are fair for us all.
Posted on: 2015/6/12 3:17
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It's broken. What's your proposed fix?
Posted on: 2015/6/12 3:11
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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I'm not an NJ public employee. NJ public pensions are bankrupt, not because they are defined benefit plans, but because there were systematic choices made to underfund them. A defined benefit is nothing more than guaranteeing an annuity for a retiree. Unless you are saying it is impossible to fund an annuity (and that is is done all the time), what you are saying makes no sense. You need appropriate funding, a reasonable target, and prudent investment. In New Jersey's case the state absolutely failed on the first prong, and many people would argue that it failed on the second prong as well (though that's a policy choice and subjective).
Posted on: 2015/6/12 3:05
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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I don't know why I bother arguing with the right wing morons on this board but here I go :
N.J. public worker pensions not so generous after all, study says TRENTON ? New Jersey?s public employee pension plans ranked among the least generous of top public pension plans in the country, according to a report released today. The study shows New Jersey?s pensions are more modest than 94 of the country?s 100 largest plans. http://www.nj.com/politics/index.ssf/ ... after_all_study_says.html
Posted on: 2015/6/12 2:56
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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A great quote from Mulshine summarizing how we got into this mess.
"For decades now [unions] have been cozying up to the politicians to win benefits that are unaffordable in the real world. The reason private employees no longer have pensions is that we don't get to elect our bosses. Public workers do. But the court just told the workers who their real bosses are: the taxpayers. So it's back to the drawing board, union leaders. What plan will you present us?"
Posted on: 2015/6/12 2:22
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Sorry JP. You and other NJ public employees are idiots if you think DB schemes are not Ponzi schemes. Pols over-promise. Union leaders over-promise. Google it for youself - NJ public pensions are simply bankrupt. Go ahead. Keep funneling your wages into a bankrupt fund. And you're a bigger idiot if you think DB is more cost-efficient than DC. Economies of scale? Sorry mate - you are out of your tiny mind. DB plans get raped - a full percentage point less growth than DC on average. There's a reason for that. The idiocracy deserves their DB plans...
Posted on: 2015/6/12 2:16
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One thing to add. Remember that Whitman claimed that the state could afford its tax cuts by claiming, among other things, that the pension was overfunded and that the state could reduce its contributions. Later New Jersey gave municipalities funding relief for pension contributions. They were allowed to withhold their contributions, but pay them at a later date. Many never did.
One can acknowledge the above and also believe that public sector pensions are too generous (I'm not agreeing or disagreeing at this point, but one can argue it). The point is that a government employee's pension is not something that is inherently unsustainable. It took over 20 years of policy choices that were not inevitable. Whitman could have scaled back her tax cuts, the state could have demanded a modest cutback of benefits, and perhaps required a larger contribution earlier than Christie did. If that were the case, the pension could be adequately funded.
Posted on: 2015/6/12 2:09
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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Defined benefit pensions, whether operated by the government or by a private company, operate under the same principal. A sufficient amount of money has to be placed in trust to pay benefits, and invested and managed wisely. If the employer invests sufficiently and wisely up front, then the pension will be adequately funded. There are actually rules which restrict pension overfunding, which was considered a problem in the past because it was used as a tax dodge. So what is the role of current employees paying benefits for the current retirees? That obviously depends on how well the pension is funded, but actuarial principles will take into account that there is a stream of contributions coming in, and a likely future stream from future employees. In the case of a government pension fund, it is a lot more likely that there will be future employees to help "pay as you go." Although governments have to cut back sometimes, they rarely are faced with the situation private sector companies sometimes face, which is that the contributing workforce is completely eliminated. So no, it's not a "Ponzi Scheme." It is a situation where politicians overpromised. The 401(k) can or cannot be adequate. "It's your money" means nothing if the employer's plan is to contribute a dollar a year into your account. But if you are asking the question "how much do I need the employer to put in so I can retire at the level I need?" you are essentially asking the same question the employer asks when it establishes a defined benefit plan. The difference is that the defined benefit plan can use economies of scale, and the defined contribution plan also (usually) pays more in fees. The main difference is who is responsible. A defined contribution plan is a swell idea if the goal is to absolve government of responsibility down the road for inadequate retirement. That's not because the defined contribution plan is more efficient, it's because the whole point of a defined contribution plan is to place the risk on the retiree. I agree that many state governments, though not all, have failed to manage their defined benefit plans well. That's not because defined benefit plans are not feasible, it's because politicians overpromised and underfunded them.
Posted on: 2015/6/12 1:29
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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By posing a question for which I do know the answer, empowers others to research and find out why some decisions are made. As for knowing about other countries, I would like to think other countries do things better then we do and how it could be implemented here. Just like my construction work, I like to be informed on technology, practices and materials used elsewhere and how we can apply them here ... unfortunately it does appear we are caught up in our own vacuum on many issues and not looking outside the box to problem solving. New Zealand, Australia and many Scandinavian counties are doing great stuff in the area of solar energy. As for Supreme Court Judges, ALL commonwealth country supreme court judges are elected by their peers, thus eliminating any association with a particular political party or State leader.
Posted on: 2015/6/12 0:58
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My humor is for the silent blue collar majority - If my posts offend, slander or you deem inappropriate and seek deletion, contact the webmaster for jurisdiction.
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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When the NJ public pensions go bankrupt, the current set of pols and union leaders won't be around. And most of us taxpayers will simply move as most retirees do - who'd want to hang around to fund decades of incompetence?
Posted on: 2015/6/12 0:47
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I knew about Sweeney. I found it surprising when a machine politician actually showed good governance and future time orientation. Of course the union leadership gave him serious shit for doing so...
Posted on: 2015/6/11 23:54
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If you read the article I posted, it says that Democrat Steve Sweeney tried to do exactly this 10 years ago and it would have salvaged the pension program. Instead the unions called Sweeney a rat, the reform was abolished, and now the whole system will fail. http://www.nj.com/opinion/index.ssf/2 ... html#incart_most-comments
Posted on: 2015/6/11 23:30
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Apparently a 401k type plan is good enough for our Congress critters and other Federal Employees. Congress in a fit of (rare) good governance passed the Thrift Savings Plan, which allowed Federal workers a choice of plans to invest in.
There was more to it than that.. Thrift was part of an over-all plan to take the burden off the insolvent traditional pension programs. More info here: http://www.ebri.org/publications/ib/i ... fa=ibDisp&content_id=4837 If NJ had done something similar 20 years ago, the power that be couldn't have raided the pension plan to close budget gaps and NJ taxpayer wouldn't be on the hook for a bottomless pit of debt.. which is the current pension program.
Posted on: 2015/6/11 23:25
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Wrong in so many ways. An underfunded gov pension scheme is simply a Ponzi scheme - contributions from workers isn't growing and earning interest - it's simply going straight into retiree's pockets. Public workers throwing 10% of their earnings into this pension black hole is quite frankly staggering. A 401k is "your" money. The gov can't raid it, cut it, not pay out. The money stays invested. The interest earned belongs to you. Management fees are well publicised, and low-cost target date funds make investment a "no-brainer". Set your retirement date, contribution rate and you're done. If you belong to the idiocracy that thinks that government can manage your paycheck better than yourself, by all means - keep putting the food on retiree's table.
Posted on: 2015/6/11 22:34
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Re: N.J.’s Highest Court Favors Christie Administration on Pension Payments
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A 401(k) is not any more efficient or cheaper than a defined benefit plan. Generally defined benefit plans are more efficient because most 401(k) plans involve managers skimming off fees. The only advantage of the 401(k) is that it puts the risk of underinvestment or underperformance onto the retiree as opposed to the employer (in this case, the state).
The questions that we need to ask are, a) what is a reasonable amount for a public employee to expect for retirement, and b) how much can the state be reasonably responsible for contributing? Public employee pensions are often generous, though that's a subjective term. Certainly there is the temptation, when collective bargaining or legislating benefits, to offer more to the pension because it is not something that has to be paid immediately. So if that's the case, then offer lower pensions, at least going forward (because a deal's a deal, and when it comes to pensions, the employee in question has lived up to their part of the deal). Offer what we can pay for. New York has done this by offering different Tiers of pensions based on hire, each with less generous benefits than the prior. They are up to Tier 6. The argument for a 401(k) is not, I think, that they are more affordable, but that our government doesn't have the ability to make such rational decisions because of other pressures. But offering a 401(k) basically takes the responsibility out of the government's hands and places the impact of underfunding or poor fund management on the worker.
Posted on: 2015/6/11 22:10
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There's still plenty of money in the pension fund. The point of all this is it will run out soon unless there are drastic changes. So the money is there to give back to public workers, with the condition that their pensions are converted to 401ks, like everyone else.
Posted on: 2015/6/11 21:50
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The left love Obama-give all public employees Obamacare, change all new employees to 401K's with a 3% match, and use the healthcare savings to fund existing pensions.
Posted on: 2015/6/11 21:48
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From where?
Posted on: 2015/6/11 21:30
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Certainly that should be part of the eventual solution to all of this. It is not fair to deprive public workers of funds they actually contributed. At the same time, it is not fair for public workers to receive lifetime pensions and benefits that exponentially exceed their actual contributions. All covered by the taxpayer. I'm thinking the only sensible long term solution will involve converting these pensions to 401k plans, with the higher contributions making up a good part of the 401k account balances. People who are currently retired can keep the pensions but for everyone else, the gravy train is over.
Posted on: 2015/6/11 21:19
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If the state is relieved of the obligation to pay its debt, then the workers should get back the higher contributions they were required to pay as part of the "reform" package.
Posted on: 2015/6/11 21:10
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Everyone is going to share the pain on this, but the bleeding has to stop-now. The pendulum has swung really far, and needs to head back to the middle for NJ to have a shot at fiscal sanity.
Posted on: 2015/6/11 20:47
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Great article. The only way the unions can keep the pension gravy train rolling is if a majority of voters pass such a referendum.
Apparently there was bipartisan support to put this on the ballot 5 years ago, but the unions quickly backed out when they realized most voters would vote AGAINST the pensions. Now they've backed themselves into a corner. Pension decision: The union leaders got what they paid for http://www.nj.com/opinion/index.ssf/2 ... html#incart_most-comments
Posted on: 2015/6/11 20:34
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How come you like to play it like you know so much about the UK and Australia, but happen to know so little about your locality and state of residence?? Supreme Court judges in NJ are appointed by the governor, and confirmed by the State Senate. The same goes for all of the judges in the Superior Court system.
Posted on: 2015/6/10 3:04
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Who appoints Supreme Court Judges in NJ - Are they appointed by their peers or by the Governor?
Posted on: 2015/6/10 1:54
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My humor is for the silent blue collar majority - If my posts offend, slander or you deem inappropriate and seek deletion, contact the webmaster for jurisdiction.
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NJ taxpayers put 25K per year into the platinum healthcare plans of every teacher in the state-outside of their salaries and other benefits. Were NJ teachers folded into a plan that resembles what the average NJ resident has there would be plenty of money to fund the current pension obligations.
Posted on: 2015/6/9 21:05
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From what I have read, the contribution were a portion of projected revenues. Those additional revenues actually never materialized.
Posted on: 2015/6/9 21:03
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For decades, NJ public sector workers barely contributed anything into their pensions, yet received Cadillac benefits and a very generous pension for life. In short, they got out far, far, far more than they put in. That's a gravy train by anyone's definition. It's also ridiculously unsustainable. As it turns out, taxpayers can't be relied upon to fund this largesse in perpetuity. Times are tough for workers in every industry. The very idea of a pension is a relic from a simpler time. The future, whether unions and their shills choose to accept it or not, is a 401k style retirement plan for everyone. You get out what you put in, and hopefully your contributions appreciate over time. That's the fair thing.
Posted on: 2015/6/9 20:41
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