A new report prepared for the nonpartisan Common Sense Institute of New Jersey says Gov. Chris Christie and the Legislature have made great strides in dealing with the state pension system now underfunded by $45 billion, but it’s not enough.
The pension fund could become insolvent in 15 to 20 years even if the state makes the increased pension contributions required by the reforms enacted in 2011, said Richard Dreyfuss, one of the report authors.
“It’s $45 billion of deficit, and we’re underfunding these plans. Even though these contributions are going up, liabilities are growing at a faster rate and, as a result of that. the deficits are ever increasing,” he said Tuesday. “And that assumes the plans earn 7.9 percent, which I think will be a challenge.”
Politics stands in the way of more pension reforms because there’s every incentive for elected officials and policy makers to keep benefits high to appease plan participants and keep the funding low because the money can be spent elsewhere, he said.
Also Tuesday, state Senate President Steve Sweeney said lawmakers will refuse to pass a budget, shutting down the government, if the governor does not include a promised contribution to the pension fund in the budget plan he’s expected to present in the coming weeks.