14
PENSION AND BENEFITS REPORT
NEW JERSEY COPS ■ FEBRUARY 2015
State Actuary Report a mixed bag of results
I was fortunate to be at the recent PFRS
Board of Trustees meeting in January, listening to the presentation of the actuarial report
done by the State. The report in its totality
presents a mixed message. On one hand,
when viewed as a whole, the state-funded
pension systems look to be in deep debt. On
the other hand, PFRS, as mainly a member
PETER
and locally-funded pension system, is the
ANDREYEV healthiest of all the state pension funds.
The bad news unfortunately continues for
retirees, as the numbers aren’t adding up as required by
Chapter 78 to allow for a renewal of cost of living adjustments
or COLA anytime soon. The other glaring problem, especially
for the state pension funds (TPAF, State PERS) is that those
systems have an unfunded liability so large that the governor
has stated each family in New Jersey will have to write a check
in the amount of $12,000 to cover the unfunded liability.
Now think about that for a minute: $12,000 per family?
How much money could that be? When I Googled the state of
New Jersey’s population, it showed as of 2013, New Jersey has
a population of 8.899 million residents. I’m not sure how a
family of four or five is broken down from that figure, but
that’s a lot of money when you do the math. The governor
noted during his recent “State of the State” address that he
has been the only governor to make the payments toward the
pensions. Well, thanks, governor for actually obeying the law,
kind of. Even having said that his payments are just a fraction
of what is really needed, as such, the State-funded pension
plans are still in debt.
The governor has said he has made his contributions, but
when listening to the actuarial report, the 800-pound gorilla
in the room was the fact that the state of New Jersey has not
made payments. If the governor had made the full pension
payment last year instead of only making a fractional payment, the pension system would be a little better; not good,
not great, not awesome, but in a little better place, and we
would have less of an unfunded liability.
Still, the news isn’t all gloomy when PFRS is looked at by
itself. As of the most recent actuarial report by the state, the
PFRS is about 77-percent funded, and it is the healthiest of
the large state pension funds. Now in some circles (especially
actuaries who look at pensions for a living), some would say
that PFRS is in a pretty good spot, and that’s largely because
we, as law enforcement officers and firefighters, have consistently paid our share. Even the local governments, including
the municipal and county governments, have made their
payments. Just imagine where our pension system would be
if the state of New Jersey just made its payments? d