New Jersey committee recommends freezing state pension fund, creating cash balance plan
Published: February 24, 2015 - Pensions & Investments
The New Jersey Pension and Health Benefit Study Commission recommended
freezing the $76.8 billion New Jersey Pension Fund, Trenton, and creating a new
cash balance plan for current and future participants.
The commission was created Aug. 1 by an executive order from Gov. Chris
Christie to analyze the statefs system for providing both pension and health
benefits.
The report calls the statefs current pension funded status gdire,h noting the
unfunded liability for the statefs pension funds has risen to $83 billion in
2014 from $37 billion in 2013, and that the Teachersf Pension and Annuity Fund
will be completely unable to make its projected payments beginning in 2027.
As a result, the commission recommended freezing the statefs pension funds,
ending the accrual of new benefits and employee contributions, noting in the
report that the statefs taxpayers gwould be freed from having to fund accrual of
benefits at levels that have proven to be unsustainable.h
Employees would then be moved to a newly created cash balance plan, which the
commission cited as a better alternative than a pure defined contribution plan
because lifetime annuities would still be provided, and that the State
Investment Council and investment managers retain responsibility for investment
decisions.
The commission also recommended a potential state constitutional amendment to
circumvent challenges to the constitutionality of any changes in employee
benefits.
The final report is available on the state Treasury Departmentfs website.
Original Story Link: http://www.pionline.com/article/20150224/ONLINE/150229925/new-jersey-committee-recommends-freezing-state-pension-fund-creating-cash-balance-plan