NJ Lawmakers Propose Pension and Health Benefit Cuts
February 9, 2010 (PLANSPONSOR.com) – New Jersey
state senators have introduced a package of bills to cut government
pensions and health benefits.
The legislation, reported the Philadelphia Inquirer,
would roll back pension benefits for government workers and teachers, and make
public employees at all levels pay 1.5% of their salaries toward health
benefits, matching what state workers contribute. The proposals would, among
other changes, roll back a 9%-pension increase approved in 2001, require new
part-time workers to receive 401(k)-like plans rather than defined benefit
plans, and raise the threshold to qualify for a taxpayer-funded pension to
$5,000 in annual government pay, up from $1,500.
According to the Inquirer, to get a pension, new teachers
and state workers would have to work 35 hours a week. State workers would have
to work 35 hours a week to receive state health benefits; on the local level,
the minimum would be 25 hours.
Other changes are aimed at preventing late-career pension
boosts by calculating retirement payments on workers' top five years of salary,
rather than three. Those with multiple public jobs could choose just one for
calculating retirement benefits. Sick-day payouts would be capped at $15,000.
In addition, a proposed constitutional amendment would
require the state to make its full pension contributions. Full funding would be
phased in over seven years, starting, at the earliest in the 2011-12 state
budget.
Senator Stephen Sweeney indicated the plans are an
attempt to solve the state's long-term health-benefit and pension problems. At
a budget hearing last week, nonpartisan legislative analysts said long-range
pension and health-care liabilities had swollen to $112 billion, not counting
amounts owed by local governments, according to the news report.
It is unclear when the proposals will be introduced in
the state's Assembly.
The Inquirer noted the legislation will face stiff
opposition from labor unions, which argue that rank-and-file employees, from
teachers to aides for the disabled, have already made sacrifices for the
pension system and are being unfairly targeted.
The New Jersey Education
Association pointed out that in 2008, teachers agreed to increase their pension
contributions to 5.5% of their pay from 5%, while governors and lawmakers
skipped nearly $6 billion of required pension contributions in the last 15
years. The Communication Workers of America noted that state workers took 10
furlough days last year and deferred a 3.5% raise until this year.
Rebecca Moore
editors@plansponsor.com