The deficit at the Teachers’ Pension Annuity Fund is now pegged at $5.8 billion – more than double last year’s figure, according to a Gannett News report. At the Public Employees Retirement System, the shortfall is now estimated at $2.7 billion.
According to the news report, to meet what state law requires for the teachers’ pension system, the state would have to pay $941 million in the next budget, an actuary told the annuity fund trustees.
Department of the Treasury spokesman Tom Vincz told Gannett that the state will continue its “phase-in” of pension costs, paying a portion of what it owes this year and increasing contributions over time. The state is also trying find ways to boost its investment returns and control benefit costs, Vincz said. Last year the state owed $674 million to the teachers’ fund but paid only 30% of that amount, according to Scott Porter, the actuary who prepared the latest report. That shortfall resulted in another $28.7 million of obligations this year, Porter said.
But New Jersey’s largest teachers union argued that such a phased approach will actually cost taxpayers more money in the long run. “When you don’t take responsibility up front for the costs, the costs don’t get lower. They continue to grow,” Steve Baker, a spokesman for the New Jersey Education Association, told Gannett.
Treasurer John McCormac has said the state could owe up to $30 billion to its seven retirement funds, but that number is based on a highly unlikely scenario that would play out if all state workers retired now and the state had to begin paying pensions immediately.
The Public Employees’ Retirement System, with about 430,000 members, and the Teachers’ Pension Annuity Fund, with around 214,000 members, account for more than 85% of active and retired workers in the state’s seven pension systems, according to the most recent annual report from the state Division of Pensions and Benefits.