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The total savings from pension reforms and reform-enabled revisions to assumptions on future salary growth and investments now amount to nearly $1.3 billion statewide, the governor’s office said.
“The tough decisions we made in 2011 to get our pension and benefit costs under control are paying dividends every year for New Jersey’s overburdened Bergen County property taxpayers,” Christie said.
“The combination of pension and benefit reform and other bipartisan reforms, such as the 2 percent cap on annual increases in local property taxes, the reform of interest arbitration and promoting shared services are all bringing well-deserved relief to middle-class taxpayers,” he said.
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The previous system “caused a precipitous increase in the cost of public employee pension and health benefit costs to New Jersey property taxpayers,” Christie’s office added.
Pension bills for Fiscal Year 2014, which are being conveyed this week to local governments and school districts throughout the state, will produce projected savings of $540 million statewide, compared to what these governments and school districts would have had to pay if pension and other reforms had not been enacted in 2011.
The total amount that local governments and school districts will have to contribute to PERS and PFRS in Fiscal Year 2014 will be $1.57 billion, compared to the $2.11 billion they would have had to pay without reform, the governor’s office said.
“This is a great example as to how bipartisan state-level reform can pay big dividends for Bergen County taxpayers.” said State Treasurer Andrew Sidamon-Eristoff. “Thanks to pension and other reforms under Governor Christie’s leadership, local governments will save approximately $540 million overall, an amount that is equivalent to 37 percent of total budgeted municipal aid in Fiscal 2014.”
Once the pension reforms of 2011 took effect and the initial $257 million in first-year savings produced, “it was anticipated that on a year-to-year basis there would be increases in required contributions from this new, lower starting point to reflect changes in actuarial experience and investment performance,” Christie’s office said.
“In Fiscal Year 2014 there will be a 11.15 percent increase in actuarially recommended contributions to the Public Employees Retirement System (PERS) and a .28 percent reduction in recommended contributions to the Police and Firemen’s Retirement System (PFRS), or an aggregate increase of 5.68 percent,” a release says.
Local governments throughout New Jersey make annual contributions to PERS and PFRS to fund pension benefits for their employees — one of the largest hunks of their budgets.
Christie based his numbers on actuarial calculations that weigh several factors, including what the governor’s office said are longer-than-anticipated life expectancies that plan participants are enjoying in retirement and a small reduction in the anticipated rate of return on the pension plans assets from 7.95% to 7.9% “to reflect current market realities and investment performance in Fiscal Year 2012 that fell short of the expected rate of return even though it exceeded that of many other large institutional funds.
“These factors were offset somewhat by reductions in anticipated wage increases for plan participants, increased contributions from individual plan participants and lower benefit levels for new hires adopted as part of the reforms in 2011 for many of the State’s pension systems.”
PHOTO, TOP: Courtesy of NJ Gov. Chris Christie’s Office
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