As noted in the Path to Progress Report, “the State’s combined pension and retiree health benefit liabilities of $151.5 billion are four times the size of the State’s annual budget; and more than three times the size of the State’s bonded debt. That public employer debt represents $16,772 for every one of New Jersey’s nine million residents. It will continue to grow every year. Without changes to the pension and benefit structure, the cost of pensions and benefits will rise by $4.1 billion over the next four years and eat up 26 percent of the state budget.”
To address the strain of rising pension and benefits cost, Senate President Sweeney and Senators Oroho and O’Scanlon have introduced S-3753, which establishes cash balance plans in PERS and TPAF for new public employees and employees with less than five years of service and makes various changes to PERS and TPAF retirement eligibility.
Besides increasing the retirement age to 67 years of age and increasing the years of creditable service from 25 years to 30 years, S-3753 creates a hybrid pension system for those employees hired on or after July 1, 2020, or for those with five years or less of creditable service as of July 1, 2020. Employees who have more than five years of creditable service as of July 1, 2020, will not be impacted by the changes proposed in S-3753. For more on S-3753 please see our recent blog post.
The bill is part of the Path to Progress bill package. In announcing the bill package Senate President Sweeney noted that “without pension & benefits reform we cannot invest in higher education or improving infrastructure. We cannot invest in the future of our state until we make long-overdue reforms.” S-3753 could lead to lower pension costs for local employers.
Contact: Lori Buckelew, Senior Legislative Analyst, email@example.com, 609-695-3481 x112.