This Is The Obvious Answer To New Jersey's Pension Mess

old man

Photo: Paul via Flickr

Scare the retirees to death.At least that’s what it looks like when New Jersey’s Senate president Stephen Sweeney tells retirees they could see their pensions cut by two-thirds without reforms.

The bizarre part is he’s absolutely right…..though I don’t think he really believes it.

If every retiree, current and future, had their benefits reduced by two-thirds it would indeed save the plan since the contributions are averaging about one-third of what they should be. 

But who would sign up for this solution?  Who is Sweeney’s audience for this warning:

“This is really serious — 2018 is the earliest we think the pensions will go broke, but they’re going broke before 2020,” he said. “That window is shrinking and that number is growing, and there’s got to be some drastic changes. My original bill, I don’t know if it’s enough.”

Of course it’s not enough but what else can be done?  If retiree pensions are sacrosanct based on the belief that:

“It’s not fair to the workers. The promises that were made are not going to be kept. How do we look someone in the eye who’s worked 30 or 35 years and in 2018, all of a sudden people’s pensions are cut by two-thirds and they can’t live anymore?”

then who is to pay for those pensions?  Is it fair to property owners to double their taxes?  Is it fair to new government employees to have 50% of their salaries transferred to retirees?  Is it fair to drivers to pay a $2-per-gallon gas tax to fund pensions?

There is no fair solution since for 20 years taxpayers, abetted by politicians and actuaries, shirked their obligations and there is no mechanism to recoup that money.  Someone must now pay and, if it’s not going to be retirees, then who?

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