S-4297 provides an additional category of service retirement for Public Fire Retirement System (PFRS) employees. Under the bill, a PFRS employee who is enrolled before or after the bill’s effective date may retire, regardless of age, upon attaining 20 or more years of service credit and would receive a retirement allowance equal 50% of the member’s final compensation.
Under current law, a member must be 55 years of age or older to retire on a service retirement allowance of 50% of final compensation upon attaining 20 years or more of service. A 1999 law permitted retirement after 20 years of service regardless of age for those already enrolled in PFRS at that time. This bill extends the 1999 law benefit to all PFRS members regardless of enrollment date and retirement age.
The December 12 statement from the Assembly Appropriations Committee on the Assembly companion bill, A-6024 included a fiscal impact analysis, which was prepared by the non-partisan Office of Legislative Services (OLS).
While the public safety unions claim that the bill will not increase any cost, the OLS analysis stated that the bill "...will have a significant, indeterminate fiscal impact, likely in the hundreds of millions of dollars, on both the State and local portions of the PFRS pension funds and the unfunded liability costs that would be charged to the State and local government entities to fund the unfunded liability created by the bill.”
In addition, the analysis stated that “the bill will increase the annual actuarially determined (required) contribution to the PFRS in order to fund the actuarial liability created by the bill. As such, the early retirement allowances created by this bill and paid out of the pension fund are funded over time by increased State and local public employer normal contributions and unfunded liability contributions.”
Funded entirely by taxpayer dollars, county and municipal governments across the State will spend $1,038,351,129 in 2020 to subsidize the PFRS, while PFRS members will contribute approximately $348,439,976 to the defined benefit plan. In other words, property taxpayers will finance over 70% of PFRS in 2020, while PFRS members will pay 30%. Since these additional costs will be borne by taxpayers, the League opposes this legislation.
The recently introduced bill already passed the Assembly by a vote of 71-0-6 and now awaits consideration by the Senate Budget & Appropriations Committee.
The League is in process of reviewing information provided by the public safety unions and will advise you accordingly.
We anticipate that the bill may be considered by the Senate Budget and Appropriations Committee in early January. We suggest you discuss these concerns with your State Senator and the League will provide any analysis and updates in a timely manner.
Contact: Lori Buckelew, Senior Analyst. Lbuckelew@njlm.org, 609-695-3481 x112.