Trouble ahead is nothing new for New Jersey’s dysfunctional pension system, Save Jerseyans, but a new analysis released Tuesday by the Garden State Initiative declares that the “tipping point” has arrived. Without immediate and systemic reforms? The damage may be irreversible – at least without catastrophic tax increases.
It’s a numbers game and the math is inescapable.
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“The reality of the demographics of plan participants has not been adequately reflected in current policy debates: the profile of participants in New Jersey’s main public plans have aged considerably since the turn of the 21st century but little has changed to reflect this reality,” GSI explained in its report summary. “A pension system with older demographics is less able to handle investment risk, and fewer active workers supporting a growing number of retirees is accelerating pressure for more, not less, government funding.”
Demographics are destiny and the future is already here. GSI noted that the police and firefighters fund (considered one of the better funded) nevertheless had more people collecting than paying into it as of 2019. Two other plans are following a similar course.
The numbers were already daunting: the state’s plans’ combined unfunded liability has exploded from $58 billion in 2000 to a whopping $186 billion two decades later (as of 2019). Despite increased investment by the public sector union-allied Murphy Administration, the numbers will remain daunting without major changes such as the implementation of a 401(k)-style alternative.
Click here to view the full report.
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