State Senator Barbara Buono and CWA union boss Rae Roeder have engaged in a written dispute over public employees pensions.
Buono is correct when she said that the current defined benefit pension plans are “unsustainable”. Roeder is also correct when she states that private sector employers are required by law to fund corporate pension plans.
Few private sector employers continue to offer defined benefit, instead switching to defined contribution plans (401K). Roeder and Buono should be talking about the state’s Alternate Benefit Program (ABP), a 401 type retirement program that is used by higher education.
There are 23,000 higher education employees, including college presidents, currently enrolled in ABP. The employee and the employer each make a defined contribution into an account managed by one of six financial companies that offer the plans.
The account is owned by the employee, not the state. The retirement account becomes part of the employee’s personal assets. The financial companies do offer the plans to other than higher education.
I would suggest that assigning new public employees, at every level, to ABP will slowly get the state out of the pension business. Buono and Roeder, in conjunction with Governor Christie, should be advocates for this change, as it will allow Buono to begin to fix a problem that she has identified, and allow Roeder to provide a much more viable source of income security for her union retirees.
Harold V. Kane
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!