STATE — A new George Mason University study on public pension systems across the USA says New Jersey’s system will go broke between three and nine years from now without massive reform.
“New Jersey’s defined pension systems are underfunded by more than $170 billion, an amount equivalent to 44 percent of gross state product and 328 percent of the state’s explicit government debt,” said George Mason University researchers who used private sector accounting methods instead of the overly optimistic government calculations.
State officials maintain that pension plans are underfunded by $44.7 billion, calculated based on an investment return of 8.25 percent.
“It is estimated if state pension assets average a return of 8 percent, New Jersey will run out of funds to meet its pension obligations in 2019. If asset returns are lower than 8 percent, they will run out of funds sooner,” the report says.
Earlier this year, Gov. Chris Christie implemented measures to reduce pension payouts for new hires. Since they don’t affect current workers, they won’t stave off the looming pension system disaster.
The report recommends:
- Extending a defined contribution plan to all state employees.
- Reducing or freezing cost of living adjustments to lower the state’s unfunded liability.
- Transitioning the 274,380 non-vested workers to defined contribution plans.
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