The Report of the NJ Pension and Health Benefits Study Commission was released on February 24, 2015. Below is a copy of it for you to review and download the PDF.
Report of the NJ Pension and Health Benefits Study Commission.pdf (971KB)
Within the report is the following letter from members of the Commission:
As members of the New Jersey Pension and Health Benefits Study Commission, we have worked diligently and collaboratively over the last several months as a nonpartisan Commission to discover a cure for the problems plaguing New Jersey’s public employee pension and health benefits system.
This Report proposes a solution. It requires shared sacrifice and the willingness to let go of a failed status quo. If adopted, it would stabilize the public employee pension system for at least 35 years—and longer if the lessons are learned from the past mistakes that caused this crisis.
The approach outlined in this Report involves the following steps:
- Freeze the existing pension plans; benefits earned to date would not be affected, but taxpayers cannot afford additional benefits to be earned under the existing plans
- Align future public employee retirement benefits with private-sector levels; this is the sensible thing to do on its own merits and the savings will make funding more secure for employees and less painful to taxpayers
- Also align public employee health benefits with private-sector levels; get ahead of the curve in controlling these staggering costs before they crowd out retirement benefits from State and local budgets
- Fairly realign State and local responsibility for new and sustainable pension and health benefits and health benefits; this will produce the best result from the perspective of employees and the State’s taxpayers as a whole
- Lock in fixed and certain pension funding with a constitutional amendment; this will protect employees and retirees from the vagaries of politics and the annual budget process, improve the State’s financial condition, and make clear to all that the people of New Jersey have taken ownership of the problem and the solution
- Transfer the assets, liabilities and risks of the existing pension and new retirement plans to employee entities willing and able to assume this obligation; allow those who receive the benefits to have the power and assume the risk of managing the plans to ensure that the available funds are sufficient to pay for the provided benefits.
As part of our effort, in addition to meeting with persons across the spectrum of interested stakeholders, Commission members engaged in extensive discussions with the leaders of the New Jersey Education Association, the public-sector union with the greatest impact on State finances. Those discussions led to a conceptual framework for moving forward and an accord on some but not all elements of the Commission’s proposal.
Most significantly, while there are details remaining to be worked out, there is agreement on the concept of “freezing” the existing pension plans, replacing them with new plans going forward, and transferring the existing and new plans to new entities in a form that will permit the greatest degree of employee control consistent with federal regulatory constraints for retirement plans for public employees. There is recognition that one of the key open issues, the nature and extent of health benefit reforms, has a role to play in making available funding for secure retirement benefits, and a shared commitment to a timetable for continuing to explore potential means of resolving the remaining open issues. Most importantly, the discussions have led to a consensus that meaningful, innovative and immediate measures must be taken to provide for the pension and health benefits for hundreds of thousands of hard-working public employees while preserving the State’s fiscal integrity.
We recognize that there are elements of this approach that are likely to be unpopular at first, but believe in time they will be viewed as the best way to move forward. Under the circumstances, continued inaction is the same as conceding failure, and failure should not be an option when the future of the State and its employees is on the line. The need for urgency in adopting a solution cannot be overstressed. The already narrow window for a reasonable solution is closing fast. Only decisive action now can preserve a solid foundation of public employee benefits before the ever-growing hole the State has dug itself into becomes too deep for the State to dig itself out of without crushing tax increases and deep cuts to employee benefits and public services. The citizens of our great State—public and private employees, employers, State and local officials, voters and taxpayers alike—need to join together to make this solution possible. Let’s secure the benefits for public employees and the financial future of the State of New Jersey.