By The Staff
A Thursday announcement by Acting State Treasurer Elizabeth Maher Muoio is raising eyebrows in Trenton, Save Jerseyans.
“We are moving in a direction that is consistent with not only the advice of actuarial experts, but also the nationwide trend among states. However, we are doing so in a responsible manner,” said Muoio, a reliable ally of public sector unions’ leadership during her time in the state legislature. “The path we’ve laid out takes into account the alarms that were sounded late last year when the state took the widely unprecedented step of lowering the rate so precipitously.”
But is that accurate? By way of background, the Christie Administration reduced assumed rates of return for the state’s pension funds on a regular basis.
The Murphy Administration, through Muoio, now plans to increase the assumed rate of return to 7.5 percent for FY2019 and, over a long period of time, bring the rate back down to 7.0 percent for FY2023.
What does it all mean?
More positive-looking assumptions mean lower required payments into the pension funds by both state and local governments.
“Our pension funds got into bad shape by making overly optimistic projections on the rate of return that we could expect,” said State Senator Anthony Bucco (R-25) in reaction to Thursday’s announcement. “An important part of the fiscal reforms instituted during the Christie Administration was reducing that assumed rate of return to a realistic level. It wasn’t an easy thing to do, but it was necessary. It’s disturbing that one of the Acting Treasurer’s first official announcements is to backtrack on such an important pension reform.”
New Jersey’s pension system is consistently ranked as one of America’s least stable.
“We spent the past eight years digging out of a massive pension hole left by previous administrations,” added Bucco. “We need to stay the course and keep making the biggest pension payments that we can. This move by the Murphy Administration to cut pension payments should serve as a warning sign to public employees. The gimmicks are back.”