On Thursday, the Senate State Government Committee unanimously released S-1017, which permits a PFRS employee who is enrolled before or after the bill’s effective date to retire, regardless of age, upon attaining 20 or more years of service credit. It would also allow that employee to receive a retirement allowance equal to 50% of the member’s final compensation. The bill now awaits consideration by the Senate Budget and Appropriations Committee.
As we previously reported in our February 28 Weekly Roundup, the public safety unions are pushing this legislation in response to what they believe is a misinterpretation of the 1999 law. During their testimony, the public safety unions argued that the minimum increase cost incurred by this legislation will be offset by the healthcare savings.
The League along with the New Jersey Association of Counties testified in opposition to the bill noting that the benefits would impact the pension fund liability leading to increase costs and that before enhanced benefits are considered the pension fund must be stable and healthy.
While a 74% funding ratio for the local Police and Fire System (PFRS) is on the right track, the fund is not yet stable enough to consider enhanced benefits. This legislation does not account for the impact of the recent market downturn or the reduction of the assumed rate of return on the pension fund.
In addition, we question how healthcare benefits savings will offset the increase pension liability cost as not all municipalities and counties provide healthcare benefits in retirement and while the state will fund the liability the municipality or county pays for healthcare benefits if provided, in retirement.
Please contact your Senator and urge them to vote against providing an enhanced benefit before the pension fund is fully funded and stable. The bill could be before the Senate Budget and Appropriations Committee as early as March 16.
Contact: Lori Buckelew, Senior Legislative Analyst, email@example.com, 609-695-3481 x112.