NJ Lawmakers Sanction Benefit Reform Package

June 13, 2008 (PLANSPONSOR.com) - Despite a fierce battle by Garden State unions, a New Jersey state Senate committee has approved a package of six reform proposals for pensions and health care coverage for future government workers.

A news report by the Gannett News Service said the plans call for:

  • pensions for future workers based on the average of their five highest years’ pay, rather than the current three years;
  • raising the minimum salary to earn pension benefits to $5,000 from $1,500;
  • providing health benefits only to people working 35 hours a week;
  • basing pensions on one job only;
  • requiring workers with more than one public job to choose health coverage from one position only; and
  • banning the purchase of out-of-state pension credit to qualify for retirees’ health coverage.

According to the news report, the panel’s approval of the reform bills came after a contentious three-hour hearing during which the unions fought the proposals. Lawmakers backing the reform efforts insist the changes are needed to turn around the pension system, which has an unfunded liability of more than $25 billion.

“We need to reform the pension system in order to save it for current employees,” Senator Barbara Buono declared, according to the news service.

However,¬†reform critics — such as hundreds of New Jersey Education Association (NJEA) members blaring music at a rally in earshot outside the State House Annex — said the legislators are actually trying to convey that they are tackling pension abuses while they are actually slashing future public employees’ benefits.

Joyce Powell, the NJEA president, said lawmakers are using public workers as pawns and scapegoats for years of failure by the state to properly fund pensions. “The plan we’re seeing before us truly is not a plan. It’s a strategy, and we believe that it’s a strategy that’s undertaken by politicians to attack and to undermine the pensions of public employees,” Powell asserted.