If you’re a (long-enough serving) public employee and governments around the country are trying to claw back your pension and retiree health benefits (because they have to or otherwise they go broke), what do you do?
You retire. As soon as possible.
John Bury, whose “Burypensions Blog” is one of the “must reads” on the subject of unfunded pension liabilities bankrupting states and municipalities, details the wave of public employee retirements in New Jersey:
I know a lot of public employees in New Jersey who have retired or are seriously thinking of retiring. More than 20,000 police officers, firefighters, teachers and other public employees put in their retirement papers last year, a 60 per cent jump from 2009, as momentum was building for sweeping health and pension reform in Trenton. The worst is yet to come.
According to the July 1, 2010 actuarial reports for the three largest plans I estimate there being 65,000 out of 485,000 active participants with over 25 years of service who would be foolish not to retire and take out $3 billion annually.
Normally this would be cause for celebration. 65,000 older participants accruing higher benefits would exit the system to be replaced by younger, lower-paid employees with a fraction of the accruals. But these aren’t normal times. With about $8 billion being paid out annually already and $71.6 billion left in the plan (a substantial portion of that being the employees’ own contributions) New Jersey has been operating their pension plan on the assumption that these people would never retire since hardly any money was put aside for that eventuality.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.