Proposed Benefits Cuts in NJ Inch Closer to Approval

March 19, 2010 ( – A New Jersey Assembly panel has approved proposed cuts for pension and health benefits of public workers.

The Assembly Appropriations Committee approved the legislation that 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 (see NJ Senate Approves Pension and Health Benefits Cuts). The proposals would 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.       

In addition, under the legislation, 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 (see NJ Senate Takes on Pension Reform). Full funding would be phased in over seven years, starting at the earliest with the 2011-12 state budget.       

According to The Daily Journal, a newspaper serving Cumberland County, New Jersey, those opposing the legislation agree that the pension system needs to be fixed, but point to years of skipped or greatly reduced contributions by the state as the problem that needs to be addressed. Governor Chris Christie just this week announced the state won’t make a required $3.06 billion pension contribution for the fiscal year starting July 1 (see NJ Won’t Make Required Pension Contribution).