Christie Unveils Pension Reform Plan

Gov. Chris Christie

TRENTON – Monday, Gov. Chris Christie unveiled a sweeping package of reform measures aimed at making the state and local employee pension system sustainable for current and future retirees by reducing benefits and increasing employee contributions.

“I know these reforms will not be popular with everyone,” said Christie. “I also know that failure to follow through with dramatic pension reform will imperil the system for everyone, and that failure to control and share costs of health care benefits will continue to eat away at our state and local budgets. We must reverse the damage caused by fairy tale promises that have fattened benefits and pensions to unsustainable levels while ballooning unfunded liabilities to breathtaking levels.”


The governor’s proposal would roll back a 9 percent benefit increase that was authorized in 2001. For teachers and government workers with fewer than 25 years of service, the retirement age would be raised to 65. Employees with 30 years of service would be eligible for early retirement, but would suffer a 3 percent per year penalty. The employee’s average annual salary for the highest five years would be used to calculate their benefit rate, instead of the highest three years as under the current system.

Police and firefighters with less than 25 years of service would have their benefits calculated using the average annual salary over their highest three years, rather than the highest single year.

All current employees would be required to contribute 8.5 percent to their pensions. Some pay as little as 3 percent now. Cost of living adjustments would be eliminated for current and future retirees.

Workers would also be required to pay 30 percent of the cost of their health care coverage.

Details of the governor’s proposed changes to state worker pensions and benefits are available on his website.

Without meaningful reforms, New Jersey’s unfunded pension liability will spike from $46 billion today, to $181 billion by 2041.

Senate President Stephen M. Sweeney (D-Gloucester) said that he will not consider the governor’s reform plan unless New Jersey begins making its required payments into the pension system. Christie skipped this year’s payment of $3.1 billion because of the budget crunch, and has not committed to making next year’s $3.5 billion payment.

“The Governor must follow the law he signed only six months ago and put money into the pension system. I am more than ready to sit with the Governor and discuss needed reforms, but they will not move in the Senate until a check is cut, deposited and cleared,” Sweeney said.

“We can’t expect public workers to pay more and not hold up our end of the deal any longer. If the problem is as great as the Treasurer says, we can’t expect workers to shoulder the entire cost of fixing it.”

“We have to carefully consider the governor’s proposal,” said Richard Bozza, Ed.D., executive director of the New Jersey Association of School Administrators. “A proposal that requires workers to get less, and do more, also needs to address how the state is taking care of its responsibility.”

New Jersey Education Association President Barbara Keshishian was less diplomatic.

“Once again, Governor Christie is attacking middle class workers in New Jersey. His proposals for deep cuts in pensions and health benefits, combined with much higher costs taken out of the pockets of public employees, will hurt hundreds of thousands of working families,” she said.

“It’s impossible to take seriously the governor’s claims that he is trying to reform pensions while perpetuating the greatest abuse of all – the absolute failure of the state to do its part, even as public employees have paid their share of pension costs out of every paycheck.”

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