On Thursday, the full Assembly unanimously approved A-4498/S-3090, which provides police and fire a retirement allowance after 20 years of service, regardless of age. The bill is now before the Governor for his consideration.
The League joins the New Jersey Association of Counties in our continued opposition to enhanced benefits as the additional costs will be borne by taxpayers at a time when local governments can least afford it.
P.L. 2021, c. 52 permitted police and fire employees to retire after 20 years regardless of age and receive a retirement allowance equal to 50% of the member’s final compensation. However, the law was set to expire after two years in May. The purpose of the two-year expansion was to study the impact the enhanced benefit would have on the pension system. The Office of Legislative Services (OLS) noted in their fiscal impact that they “anticipate this bill will result in an indeterminate increase in the annual contributions required to be paid by the State and local governments to the PFRS.”
A-4498/S-3090 would eliminate the two-year window, providing a benefit enhancement at a time when the State and local governments can least afford it. The benefit provided in A-4498/S-3090 will impact the pension fund liability, leading to increased costs to taxpayers. The funding ratio for the PFRS fund has decreased from 76.7% to 68.5% for local employers and 35.5% to 32.9% for state employers. Over the past ten fiscal years, according to the latest GASB67/68 report, PFRS contributions as a percentage of covered payroll has increased from 24.50% to 39.84%. During the same time, the covered payroll has increased from $3,656,281,573 to $4,016,767,909. In addition, the number of retirees in the system outnumber the contributing active members by a ratio of 1.22, which has been increasing since 2013.
Before enhanced benefits are even considered we all have the responsibility to ensure that the pension fund is stable and healthy.
Contact: Lori Buckelew, Deputy Executive Director & Director of Government Affairs, email@example.com, 609-695-3481, x112.