Fix the public Pension System and Control Costs
New Jersey's first public pension fund is set to go broke in 2021, with a cost of $26,000 per resident to cover the gap in unfunded liabilities. Today, 87 percent of New Jersey's pension contributions are going toward pension debt.
To lower cost and reduce risk to taxpayers:
End double-dipping. If you are collecting a state pension, you can’t also be collecting a state salary.
All new public employees would be enrolled in a defined-contribution retirement fund (e.g., a 401(k)).
Current employees age 45 and under would be transitioned from the traditional defined-benefit system to a defined-contribution retirement fund (e.g., a 401(k)). They would receive an initial deposit in their account, the amount based on their average salary and years of service.
Current employees over age 45 and current retirees would remain in the current defined-contribution system.
Use the savings from this fix to begin paying down New Jersey’s massive debt burden. As a result of reducing the debt, interest payments on the debt (currently 8% of the budget) will also be reduced in future budgets.