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PENSION & LEGISLATIVE UPDATE....

Fire Fighters Union Says Pension Bill Veto Spares Damage to Police and Firemen’s Retirement System
For immediate release:  Monday, May 8, 2017

TRENTON – Professional Firefighters Association of New Jersey President Dominick Marino issued this statement after Governor Chris Christie conditionally vetoed S3040 - “Transfer Management of PFRS to Board of Trustees of PFRS":

“This veto comes as no surprise to the PFANJ."

"The PFANJ believed that with a “tweak” of the SIC and the PFRS Board of Trustees we can accomplish what this bill tried to do without leaving the larger New Jersey state system."

“Working together with the next governor, legislators, other public safety representatives along with local, state and national experts, we will be able to find solutions that help to shore up our pension system so the benefits are there after fire fighters finish a career protecting our communities and citizens.”


The PFANJ, in Conjunction with our Law Enforcement Partners at the NJFOP, Strongly Oppose the NJFMBA/PBA Notion that the “Unions” Should be in Control of the Administration of the Fire and Police Pension System.

The defined-benefit pension is the single most important benefit a fire fighter and police officer have



The PFANJ & IAFF release video that takes in-depth look at the proposed legislation allowing the "Unions" to take over the New Jersey Police and Fireman's Retirement System (PFRS).


PFANJ Statement on Pension Legislation


PFANJ Sends Opposition Letter to All NJ Senators Regarding Senate Bill 3040 - "Transfers Management of PFRS to Board of Trustees of PFRS"


Marino: Christie Has Smoke-and-Mirrors Approach to Pensions
Gov. Chris Christie continues to blame everyone for the state’s pension problems — previous governors, politicians, fire fighters and police officers — but he knowingly refuses to take responsibility for his own actions on the issue.

Apparently he wants the public to believe that when it comes to pensions, the buck stops elsewhere.

That’s wrong and he knows it.

It was Christie who in 2011 signed a law dramatically overhauling New Jersey’s public pension system, increasing the out-of-pocket contributions from workers and mandating a seven-year schedule of state payments to get the system back in the black.

Since the 2011 signing, everyone has been doing their part to follow the law, except Christie. He has decided the state simply cannot afford to live up to the terms of the law he signed and has cut $1.6 billion from the state’s obligation of $2.25 billion for the current fiscal year.

At the same time, Christie has found plenty of room in the budget for massive tax breaks for corporations and lining the pockets of the Republican Governors Association. The governor’s misplaced priorities are making the pension problem worse and doing nothing to improve New Jersey’s economy.

But Christie loves a scapegoat and wants the public to think firefighters, police officers and teachers are to blame for the pension problems, while he is the one shortchanging the bill. He wants the public to think these hard-working public employees don’t deserve a secure retirement.

The governor can point fingers all he wants, but it will likely be up to a court to sort through Christie’s smoke-and-mirrors approach to pensions. Three of the state’s largest pension funds are suing Christie and his administration for failing to make the legally required payments to the pensions.

According to Standard and Poor’s, the problem with the pension is not public employees and not the economy. It’s Christie not paying his bill. This from the ratings agency: “The long-term impact of continuation of a funding policy that allows the State to contribute less than the actuarially recommended contribution could impact, at some point, the Pension Plans’ ability to meet their obligations absent significant additional contributions by the State, increased investment returns, or actions or events resulting in reductions to liabilities of the Pension Plans.”

Firefighters and other public employees have been protesting the lack of required pension payments by the state for years. But we have always been told that the system was well managed and the strength of the markets would make up the difference. And, when dire predictions and alarms were issued by, among others, former State Treasurer Richard Leone in 1995, they too were dismissed.

Then in 1996 the Professional Firefighters Association of New Jersey, New Jersey Fraternal Order of Police and other public worker organizations filed a lawsuit on behalf of our workers concerning the default of pension payments required by the State and local municipalities. That lawsuit took many years to work its way through the court system, after many delays by the State of New Jersey. Finally the court ruled that although the proper pension payments were not being made, because no worker was yet denied a pension, there was no actual harm. The lawsuit was thus dismissed.

Currently, two of the three required contributors to the pension funds are fulfilling their obligations. Local governments have made their full required contributions, more than $1.4 billion according to the recent State bond filing. In fact, they’ve contributed twice as much as the state even though New Jersey owes more than twice as much as the local governments.

And of course, we fire fighters, police officers, and other state workers are contributing 100 percent of what we are required to. This is all that’s holding the pension system stable. That and the exponential increase of management fees also passed on to worker. The system boasts a net gain on the investments over the first 10 months of 2014 of 6.88 percent, right on target.

Clearly, if New Jersey had paid its full payments into its police and fire pension fund, instead of constantly skipping payments, the fund would be in substantially better shape. It should be obvious by now to everyone that Governor Christie is not interested in fixing the pension funding.

Any future schemes that include cutting benefits for firefighters and police officers are irresponsible. Firefighters and police officers are not eligible for Social Security Benefits; our pensions are all we have to retire on. Continually pointing fingers at firefighters and police officers and attempting to bully them will not solve the problems.

It is time for Christie to stop passing the buck and start paying his pension bill.

Dominick Marino is President of the Professional Firefighters Association of New Jersey.


IAFF Calls Out Looters Of Public Pensions
Across America, state budgets are being balanced on the backs of current and former public employees by breaking commitments to fund their defined-benefit retirement plans. Gov. Chris Christie (R-NJ) is the latest to go this route, recently warning his state’s fire fighters, police officers, teachers and other public employees that he’ll propose skipping a couple (more) yearly installments against the state’s pension liability due to an unexpected revenue shortfall.




NJ AFL-CIO Won’t Give Up Pension Funding Fight Despite Budget Vetoes

Governor Slashes Pension Payment to Protect Millionaires Again

Gov. Christie had the opportunity to put the people of New Jersey before his own political ambitions by signing a budget that protects working families, funds public pensions according to the law and raises taxes on the wealthiest.

Instead, he slashed pension funding, wrongly labeled benefits as ‘bloated’ and blamed ‘a broken system’ rather than his own refusal to fund it.

Despite the governor’s rhetoric, New Jersey pensioners are NOT getting something for nothing. The state’s average pension benefit is among the least generous in the country – PERS ranks 95th in generosity out of the country’s 100 largest pension systems, according to a joint analysis by Keystone Research and New Jersey Policy Perspective. A NJ Spotlight study shows government workers in New Jersey pay more for health insurance than anywhere else in the country.

Christie’s budget shields the wealthy and businesses from any shared sacrifice while again hurting working families.

Everyone is obeying the pension reform law – except the governor who signed it! Retirees forfeited their cost-of-living increases, active employees saw their pension contributions rise by 36 percent to 7.5 percent of their pay, local governments have never skipped a payment, and the Legislature again passed a budget that includes the required pension payment.

We thank Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto for sending the governor a responsible, balanced budget that fulfilled the pension obligation. We wonder how a would-be presidential candidate can keep breaking his own pension law by skipping legally required payments.

We won’t be fooled again by the governor’s broken promises! We will do whatever it takes for however long it takes fully fund pensions.






NJ State AFL-CIO to Gov. Christie: Fund Pensions

New Jersey State AFL-CIO leadership were joined by Senate President Stephen Sweeney, Assembly Speaker Vincent Prieto and the leaders of the largest public-sector unions on Thursday, June 25, 2015, to urge Gov. Christie to obey his own law by fully funding pensions.

Everyone is abiding by the pension reform law – except the governor who signed it. Retirees forfeited their cost-of-living increases, active employees are paying more, local governments have never skipped a payment and the Legislature has again drafted a budget that includes the entire amount of required pension funding. And now, while the governor continues to break his own pension law by skipping contractually required pension payments, he is calling for additional concessions for public workers.

Despite the governor’s rhetoric, New Jersey pensioners are NOT getting something for nothing. The state’s average pension benefit is among the least generous in the country (PERS ranks 95th in generosity out of the 100 largest pension systems), while government workers here pay more for health insurance than those in any other state.

The labor movement and the Democratic-led Legislature are united in their conviction that pensions must be funded according to the law. We commend Senate President Sweeney and Assembly Speaker Prieto for their continuing commitment to full pension funding. They not only drafted a budget that contains the full $3.1 billion pension payment, but also led the way on a supplemental appropriation that would pump $300 million in unanticipated additional revenue into the pension system for next year.

The results of the governor’s reckless disregard for the law and callous disrespect for pensioners are well-known: A record nine credit downgrades under his watch; a record $616 million in fees paid to Wall Street pension managers who performed no better than in-house money managers; his willingness to argue against his own law in the state’s highest court rather than honor the deal he signed and touted in a cross-country victory lap; and his total disregard for the long-term effects his selfish fiscal policies will have on the public and private sectors while he’s looking out only for his own future.

We will continue to fight for our pensioners and the future of the pension system – even if the governor who signed the law refuses to lead the way.



N.J. Supreme Court Sides With Christie In Billion Dollar Pension Dispute

NJ.COM - June 9, 2015 - The state Supreme Court ruled on Tuesday that Gov. Chris Christie can slash billions of dollars in contributions from New Jersey's troubled public employee pension system.

The court's ruling caps an intense fight for pension funding and deals a major blow to the state's labor unions, who challenged Christie's spending cuts. Christie had sought to dismantle the pension law, which he argued was unconstitutional.

Judges split 5-2 reversing the lower court's ruling that ordered Christie had broken his own landmark pension law and had to work with the Legislature to comply with it.
"That the state must get its financial house in order is plain. The need is compelling in respect of the state's ability to honor its compensation commitment to retired employees," the court said. "But this court cannot resolve that need in place of the political branches. They will have to deal with one another to forge a solution to the tenuous financial status of New Jersey's pension funding in a way that comports with the strictures of our constitution."

"That the state must get its financial house in order is plain. The need is compelling in respect of the state's ability to honor its compensation commitment to retired employees," the court said. "But this court cannot resolve that need in place of the political branches. They will have to deal with one another to forge a solution to the tenuous financial status of New Jersey's pension funding in a way that comports with the strictures of our constitution."

Tuesday's much-anticipated ruling spares Christie from trying to scrape together $1.57 billion before the end of the current fiscal year in three weeks and billions more in future budgets.

Christie is in New Hampshire ahead of a widely expected run for president. In a statement, Christie called the decision "an important victory not only for our taxpayers who simply cannot afford these unsustainably high costs, but for limited, constitutional government that recognizes the proper role of the executive and legislative branches of government."

Hetty Rosenstein, state director of the Communications Workers of America, the largest state worker union, said the decision will not deter workers from trying to secure full funding.

"We will never move from that position, and we will fight wherever we have to," she said.
The lawsuit turned on whether the pension law created a contractual right to pension funding.

The court stopped short of calling the pension law unconstitutional, but said the law does not create a "legally binding, enforceable obligation" for the state to make payments into the system.

The 2011 pension law, which the governor called his "biggest governmental victory" and a "model for America" won Christie national attention and acclaim. He boasted the cuts to health and retirement benefits would save tens of billions of dollars over the coming decades by suspending cost-of-living adjustments and requiring workers to pay more for their benefits.

Christie partnered with Democratic leaders from both legislative houses to defeat New Jersey's powerful unions, who protested the far-reaching plan by the thousands, and the majority of Democratic lawmakers.

The law also gave workers a contractual right to pension funding, which the state had agreed to ramp up over seven years until reaching the full amount recommended by actuaries.

The administration's hope for a robust economic recovery didn't shake out, and the state didn't take in enough tax revenue to meet the payment schedule in the 2014, 2015 and so far, 2016 budgets.

The Supreme Court's decision strikes down a trial court ruling that Christie had breached workers' contractual rights when he slashed $1.57 billion from this year's budget.

Labor leaders said that money was deferred compensation owed to public workers who'd toiled away at unglamorous jobs for public sector wages.

Prior to the 2011 pension overhaul, most workers had a nonforfeitable right to their benefits, but not to the state's contributions. The bipartisan pension law was drafted to close that hole, forcing the state to keep up with payments and right a feeble retirement system.

Christie's administration had argued the pension law clashed with the appropriations and debt limitations clauses in the state constitution, saying that creating a contractual right to pension funding would bind the hands of future lawmakers and burden New Jerseyans with debt without their consent.

The court said Tuesday that the state cannot be bound to future payments without voter approval.

"Although plaintiffs correctly assert that a promise was made by the legislative and executive branches when enacting (the law), and morally their argument is unassailable, we conclude that (the law) could not create the type of legally enforceable contract that plaintiffs argue," according to the decision.

In the dissent, Justice Barry Albin and Chief Justice Stuart Rabner fault Christie for impairing workers' contractual rights in violation of the U.S. constitution. In addition, the ruling leaves public workers, who have been contributing more into the system under the law, "holding the bag," Albin wrote.

"The decision unfairly requires public workers to uphold their end of the law's bargain — increased weekly deductions from their paychecks to fund their future pensions — while allowing the state to slip from its binding commitment to make commensurate contributions."

From the PFANJ:
Although you have faithfully made you pension payments pay check after paycheck, month after month, year after year, the Supreme Court ruled against you today with a vote of 5 – 2 to not force Governor Christie and the State of New Jersey to make their required payment.  We are disappointed with the disgraceful Supreme Court’s decision.  We will continue to work with the other unions and those legislator’s that put forth legislation to require the Governor and State of New Jersey to fully fund the Pension.


New Jersey State AFL-CIO Response to NJ Supreme Court Pension Decision


Chris Christie Caught Stealing $1 Billion From Pensions


IAFF General President Harold Shaitberger Discusses Pension Issues During The Ed Show on MSNBC


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Standing Up for America's Firefighters

Visit msnbc.com for breaking news, world news, and news about the economy


IAFF President on the Radio with ED

Visit msnbc.com for breaking news, world news, and news about the economy


Pension Attack 2010

We Risk Our Lives to Save Yours. Support your Fire Fighters and Paramedics

The IAFF Fights Back Against Political Attacks


UPDATE ON S2220

We have been advised that the Senate Democrat's will not adopt the changes called for in Governor Christie's CV of S-2220 that would limit payouts to local and school district employees for accrued sick and vacation days.

What this means, at this point in time, is that if the changes are not adopted, the current existing law regarding accrued sick leave and vacation days will remain unchanged.  So however you are currently being compensated under your existing contract remains in effect.

If anything changes with the legislature, we will notify our members via email and our website.


(**Note: all documents are in .pdf format - Acrobat Reader required)

The Division of Pensions and Benefits is implementing significant changes to retirement application procedures for members of the Police and Firemen’s Retirement System (PFRS). This memorandum consists of two sections: Section I addresses the new Terms and Conditions of Retirement members must read and agree to when applying for retirement; Section II explains their origins.

Click here for details, including the "Acknowledgement of Terms and Conditions of Retirement" agreement form.


PENSION FRAUD BY NEW JERSEY IS CITED BY S.E.C.

NEW YORK TIMES - August 19, 2010 - Federal regulators accused the State of New Jersey of securities fraud on Wednesday for claiming it had been properly funding public workers’ pensions when it was not.

The Securities and Exchange Commission said the action was its first ever against a state, and only its second against any government over the handling of a public pension fund. The first was the city of San Diego. More may be in store; the agency announced in January that it had a special unit looking into public pension disclosures. The S.E.C. has been trying to assume more authority over municipal securities.

The commission settled its suit with New Jersey by issuing a cease-and-desist order, which the state accepted without admitting or denying the findings. No penalties were imposed.

Nor did the S.E.C.’s order name any individual state officials, nor the bond underwriters and other professionals whose job it was to vouch for the state’s financial statements. New Jersey’s largest bond underwriters during the period in question include Citigroup, J. P. Morgan Securities, Morgan Stanley, Bank of America, Merrill Lynch, and Goldman Sachs.

The S.E.C. said its action was meant to dissuade other governments and their advisers from hiding bad fiscal news in a fog of pension numbers. Actuaries, for instance, have been raising questions about the framework Illinois has laid out for bolstering its pension funds. In New York, California and other places, financial advisers have told lawmakers that benefits could be sweetened at virtually no cost, only to be proved wrong once those benefits were adopted.

“Hopefully, it will send a message to other states or local governments,” Elaine C. Greenberg, chief of the S.E.C.’s municipal securities and public pensions unit, said in an interview.

The commission said that from 2001 to 2007, New Jersey claimed to have money set aside in a “benefit enhancement fund” as part of a “five-year plan” to pay for new benefits for teachers and general state employees. In fact, the fund was an accounting illusion and no such money was available.

The misstatements began during the Republican administration of Gov. Donald T. DiFrancesco and continued under Democratic administrations, including those of James McGreevey and Jon Corzine.

“The State of New Jersey didn’t give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation,” Robert Khuzami, director of the S.E.C.’s division of enforcement, said in a statement.

Because of New Jersey’s misrepresentations, the commission said, investors bought more than $26 billion worth of the state’s bonds over six years without understanding the severity of its financial troubles. New Jersey’s pension fund — actually a family of funds for different groups of workers — is one of the biggest in the country, and when a pension plan of that size gets into trouble, its problems can dominate the finances of the whole state.

By the time Gov. Chris Christie took office this year, the pension funds had been deprived of contributions for so long that it had become near impossible to catch up. The state needs to come up with billions of dollars every year, something it cannot do without raising taxes, cutting public services or going even deeper into debt. Governor Christie has been forcing cuts in education spending and other areas in hopes of improving the state’s finances.

If things get worse, those who bought New Jersey’s bonds in years past could find themselves fighting with public retirees for the same limited pool of dollars.

A spokesman for the New Jersey treasury, Andrew Pratt, said the state had “never failed to pay a bondholder.”

The S.E.C. said the fraud began in 2001, when New Jersey increased retirement benefits for teachers and general state employees. New Jersey did not have the money to put behind the new benefits, but every year after that, the state treasurer certified that the pensions were being funded according to the plan.

These statements continued until an article in The New York Times, in April 2007, described the accounting gimmick. New Jersey then brought in legal advisers and began correcting the six years of false statements.

Some commentators expressed disappointment that the S.E.C. had not named any of the treasurers who certified the misstatements or other professionals who helped New Jersey’s bonds go to market during the fraud.

“Yes, they charged the State of New Jersey with fraud, but there’s no price paid here,” said Lynn E. Turner, a former chief accountant for the S.E.C. who helped with the pension investigation in San Diego. “There’s no fine, and no accountability on the part of any individuals.”

This article has been revised to reflect the following correction:
Correction: August 20, 2010

An article on Thursday about a settlement between New Jersey and the Securities and Exchange Commission over accusations of securities fraud involving the state’s pension funds erroneously included one bond underwriter on a list of those that had underwritten New Jersey’s bonds during the period in question, from 2001 to 2007. Barclays Capital, which did not enter the municipal securities business until 2008, did not underwrite any New Jersey bonds during that time.


BEHIND FRAUD CHARGES, NEW JERSEY'S DEEP CRISIS

NEW YORK TIMES - August 18, 2010 - New Jersey got in trouble with federal regulators this week for misrepresenting the health of its pension funds. But the bigger problem may be what the state was trying to hide: a long-brewing crisis in its ability to pay retirees.

Experts say that governors and legislators, Republicans and Democrats, have all contributed to the problem by refusing to put state money into the funds as they should have. And even if benefits are cut and taxes raised, they said, there is no obvious fix in sight.

“The whole political culture evolved where the purpose in Trenton was to spend and defer the problems until later,” said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

The state’s most recent report said that as of June 2009, the pension funds should have had assets of $112 billion to meet their future obligations, but had only $66 billion — one of the largest shortfalls, known as unfunded liability, in the country.

The situation is probably worse today: The state is supposed to contribute about $3 billion a year to the funds, but amid huge budget deficits and spending cuts, it is in the second consecutive year of contributing nothing.

On Wednesday, New Jersey became the first state ever charged with fraud by the Securities and Exchange Commission, for illegally papering over the pension fund problems in pitches it made to bond investors. The case was simultaneously filed and settled with an order to the state to stop its deception.

The reaction from Trenton was muted. The office of Gov. Chris Christie, a Republican, declined to comment. The State Senate president, Stephen M. Sweeney, a Democrat, issued a statement that called for reform and a resumption of state contributions.

New Jersey has seven state-run funds that pay pensions to 244,000 former state and local government employees or their beneficiaries. Each year, the state uses a set of formulas to determine how much money it is required to contribute, based on factors like the funds’ balances and how well investments are expected to perform. And nearly every year, the state budget ignores those calculations.

The problem is that when the state puts in less than the required contribution, that increases the long-term deficit, which in turn raises the amount the formulas will tell the state to pay in future years. In 2002, the last year the funds had a small surplus, the state was supposed to pay $655 million into the system; in the fiscal year that started July 1, 2010, that figure is $3.06 billion. In other states, independently elected treasurers, comptrollers and attorneys general might serve as a check on such budgetary shenanigans, but in New Jersey those officials are appointees of the governor.

That the plans were headed for trouble is not new and not a secret; since the 1990s, financial analysts and a few legislators have been finding fault with the situation.

Deborah Howlett, a former journalist and aide to Gov. Jon S. Corzine who now leads a research group, New Jersey Policy Perspective, said the pension deficit became “like the closet that’s overstuffed, and everybody knows it but nobody wants to open it and get hit by what falls out.”

Christine Todd Whitman became governor in 1994, and to balance out her deep tax cuts, she reduced the payments to the state’s pension funds. That contributed to the growth of the unfunded liability.

In 1997, Ms. Whitman, a Republican, had the state borrow $2.75 billion to deposit in the pension funds, to address the liability and keep annual payments low. That infusion, plus the run-up in the stock market, gave the funds a surplus for a few years. But it also helped entrench the habit of paying little or nothing into the system from the state budget, and Ms. Whitman and her successors consistently paid a fraction of what was recommended.

From mid-1999 to mid-2006, the state contributed an average of about $23 million a year; keeping up with the formulas would have required more than $600 million a year.

In 2001, Gov. Donald DiFrancesco, a Republican, and the Republican-controlled Legislature raised pension benefits 9 percent and lowered the retirement age to 55, greatly increasing the future burden on the system. This came even as the stock market — and the value of the pension funds — was falling.

In 2002, James McGreevey, a Democrat, became governor and Democrats took control of the Legislature. As the pension surplus disappeared and state spending shot up, the imbalance between required and actual pension contributions continued.

Mr. Corzine, also a Democrat, presided over the first significant contributions to the system in a decade, almost $2.2 billion over two years, but even that fell far short of what the state was supposed to pay. He also increased the retirement age and curbed benefits, but the unfunded liability continued to grow. And in 2008, with the recession battering state finances, Mr. Corzine cut back on paying into the system.

This year, Mr. Christie signed legislation that will curb benefits for new employees, but the effects of that will not be seen for many years.

“There’s finally an admission in both parties that there’s a crisis,” Dr. Hughes, of Rutgers, said. “But we’ve dug ourselves such a deep hole over so many years that I don’t see a way out of it.”


(**Note: all documents are in .pdf format - Acrobat Reader required)

How did our elected officials vote with regard to the following bills?

S4/A2459 - Makes various changes concerning payments to public employees for unused sick leave, sick leave injury in State service, and PERS and TPAF disability retirement. Click here.

S3/A2460 - Makes various changes to SHBP and SEHBP concerning eligibility, cost sharing, plan choice, benefit change application, coverage waiver, multiple coverage; requires contributions toward health care benefits by public employees and certain retirees. Click here.

S2/A2461 - Makes various pension system changes concerning eligibility, retirement allowance formula, compensation definition, position eligible for service credit, non-forfeitable rights, prosecutors part, PFRS special retirement, employer contributions. Click here.

Click here for the Senate explanation of the three bills signed into law.

See legislation notices below for a summary of the recently enacted laws:

Chapter 3, P.L. 2010 (Formerly Senate Bill No. 4)

Chapter 2, P.L. 2010 (Formerly Senate Bill No. 3 (1R))

Chapter 1, P.L. 2010 (Formerly Senate Bill No. 2 (1R))


ATTENTION ALL MEMBERS!
Keep your PFRS beneficiary status up to date at all times
Click here for access to various PFRS forms and related information


Training Requirements for PFRS Eligibility and Enrollment
Click here for details.


The Police and Fireman's Pension Handbook
Has Been Updated
Click Here for an Online Updated Copy


Background and Summary of Complaint
Pension Protection Action
Professional Firefighters Association of New Jersey, IAFF, AFL-CIO
New Jersey State Fraternal Order of Police
Tuesday, October 4, 2005

Past PFANJ President Tom Canzanella with National Fraternal Order of Police Past Vice President Edward R. Brannigan announcing the filing of legal action in State Superior Court seeking the full funding of employer pension obligations.

The Police and Firemen’s Retirement System of New Jersey (PFRS) held a surplus of approximately $938,000,000 in FY2000 drawing down to a deficit of approximately $3,574,000,000 for FY2004. This $4.5 billion dollar deterioration is largely the result of legislation (S-2586 of 2003) that permitted municipal employers of law enforcement officers and firefighters to defer and discount employer required contributions to the PFRS, in association with the State of New Jersey’s own failure to make required contributions. During this same time frame, police officers and firefighters continued to make their own statutorily required contributions totaling 8.5% of their base annual salaries, one, if not the highest public safety employee pension contribution rate in the Nation.

The State of New Jersey and its municipalities were first relieved of their obligations make employer required contributions in 1997, when legislation was enacted that revised the method of accounting and valuing plan assets. Under this new and more creative method of accounting, the value of PFRS assets was purposely and substantially increased, resulting in intended excess or more accurately, inflated assets. Accordingly, the State and its municipalities used those enhanced assets as a manner in which to relieve themselves of their obligation to match employee contributions for the purpose of tax relief. Despite the “free ride” afforded to both the State and municipalities, police officers and firefighters remained obligated, and so did they continue, to contribute 8.5% of their base annual salaries for which they have neither sought nor been granted any similar relief.

In 2003, with those self-created inflated assets running dry, despite facing a growing PFRS deficit, and in order to provide continued budgetary relief to municipalities who had by their own admission made no provisions whatsoever to resume employer contributions, the State Treasurer proposed, and the Legislature adopted, an initiative (S-2586) permitting municipalities to pay only a discounted fraction of their required pension contributions. Adding insult to injury, despite the fact that the foregoing legislation in no way extended the State a like ability to skip or discount badly needed pension contributions, they did so nonetheless, paying only a fraction of their required obligation. Again, and to this day as we go forward, police officers and their firefighter counterparts remain obligated to contribute 8.5% of their base annual salaries serving as the sole and sustaining guaranteed plan income.

As a result of the aforementioned legislation, and in association with the States non-legislated failure to required contributions, the PFRS funding ratio, which indicates the financial soundness of the plan, has fallen from 105.65 % for FY2000, to 100.85% for FY2001, to 95.82% for FY2002, to 88.45% for FY2003 and to 83.95% for FY2004.

Enactment of the 2003 legislation, in association with the State’s failure to make their own proper contributions absent legal legislative authority, deprives the PFRS of the funds necessary to maintain it on a sound actuarial reserve basis. An undeniable consequence of this failed scheme is the alarmingly significant reduction in plan earnings from investments and interest that would have been derived from skipped and substandard contributions. The foregoing serving to jeopardize the financial soundness of the plan and its ability to make good on earned benefits as they come due in the future. In that regard, the complete and total lack of prudent fiscal judgment demonstrated by the strategy articulated in S-2586, relying upon the exclusive use of employee contributions to either sustain or accordingly grow the plan, that resulted in the type of significant funding losses sustained over the last several years represents an abdication of fiduciary responsibilities in its purest form.

The complaint seeks to declare the 2003 legislation (S-2586) unconstitutional, to end any conflict of interest that would allow the State Treasurer to determine type and variety of contributions aside from statutory law, and to direct defendants to make regular full payments to the PFRS for FY2004, FY2005, and beyond, in accordance with fiscally responsible actuarial calculations.

The plaintiffs, Professional Firefighters Association of New Jersey, I.A.F.F.-AFL-CIO, and the New Jersey State Fraternal Order of Police, along with representative active and retired members and widows of members of these two unions who have been affected by this failure to adequately fund the plan, are represented by the law firm of Greenberg, Dauber, Epstein & Tucker of Newark. The PFANJ/IAFF and NJFOP represent the majority of career professional firefighters and law enforcement officers throughout the State of New Jersey and this Nation.

Named as defendants in this action are the State of New Jersey,
John McCormac- Treasurer, the New Jersey State Senate and General Assembly.

The aforementioned action was filed this day in State Superior Court.

For additional information and commentary please contact:
Dominick Marino, President PFANJ 609/396-9766
Edward R. Brannigan, FOP National Vice President 609/599-1222

 

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