Pensions: Phil Murphy vs. Kim Guadagno
Phil Murphy campaigned on a promise to fully fund public worker pensions. (The Star Ledger, 9/26/2017)
Phil Murphy urged “sacrifice” to solve pension crisis when he led Governor Cody’s Pension Commission in 2005.
- Murphy: “Some sacrifices on the part of all stakeholders is reasonable as a way to shore up the finances of the system, ensuring that benefits continue to be available over the longer term.” (Source)
- Murphy: “The Task Force also recognizes and supports the policy goal and societal benefit of providing a secure retirement for its citizens. However, those goals must be consistent with a benefit structure that is affordable to the State and fair to the taxpayers who pay the pensions and the employees who contribute to their pensions.” (Source)
Phil Murphy’s running-mate Sheila Oliver worked hand in glove with Governor Christie to pass pension and health reforms. (The Star Ledger, 7/29/2017)
Phil Murphy urged lawmakers to use pension funds to make more risky wall street investments, threatening the retirement of public sector workers. In testimony, the following exchange occurred:
Assemblyman O’Toole: “Chair, before I go through the specific questions, I’m trying to understand — because I’m not an actuary. I don’t necessarily have a firm grasp on the tables that you have laid out in your report. Page 10 of the report, Table 1, says pension funded levels. And it cites the GASB — the Government Accounting Standards Board — funded ratios. And the funded ratio in 1995 was 93.6, and it goes throughout the years, topping out at 111 in 2000. It declines to 109 in 2001, and in 2002 and ’03, we start hitting a rapid decline, 101, 93, and 87, in terms of the funded ratio. Explain to me– Is that just a burp in the stock market? Is that a mismanagement? Is that an overloading of folks into the system? What causes that funding ratio to have this precipitous decline?”
Murphy: “I’m going to give you my answer, but I also want to reference Fred Beaver and his staff here, if they want to augment this. It’s a number of reasons. First of all, it is a stock market decline. Secondly, it is a — the demographics of the workforce. Thirdly, it is a phasing-in. Actuarially, when you get above a certain gain, or below a certain loss, you phase things in over time. And that’s a more complicated and more arcane reason. But that is a very significant reason. So I’d say it’s a combination of a dramatic trading off of the stock market, demographics, and the actuarial phasing-in of a combination of gains and, ultimately, unfortunately, losses. I don’t know that our performance, as an investment matter, was– I know there’s been a lot of press around this. It was okay, it was not — we had no assets in the alternative assets space; and I know that’s been a controversial discussion. And I think, absent that, we did not — is a — my guess would be we did not, on average, earn the return on the assets that we could have. It’s not because people didn’t do a good job. But our asset allocation was skewed almost completely toward liquid security, stocks and bonds. And that also hurt us.” (Murphy Testimony, 10/25/16)
Kim Guadagno, a member of the Fraternal Order of Police, would secure law enforcement and first responder pensions by allowing police and fire to manage their own. (Observer NJ, 8/23/2017)
Her plan acknowledges possible solutions, including:
- Honoring pension commitment to current retirees: Kim recognizes that we must protect current retirees who have responsibly planned for retirement. As governor, she will prioritize solutions that allow New Jersey to honor our commitments to current retirees.
- Bringing public health insurance plans in line with private sector offerings: The Pension and Health Benefit Commission found that by reducing ‘Cadillac’ health insurance plans for public workers and bringing healthcare in line with private sector plans, New Jersey can save up to $2.5 billion and cut property taxes by 8% while still delivering high quality care.
- Ending all pension abuse like imposing strict ‘1 public paycheck’ rule to stop double dipping: According to the Star-Ledger, hundreds of public employees still collect high salaries and retirement pay at the same time. A Guadagno administration would end this practice.
- Cutting Wall Street management fees: New Jersey currently pays hundreds of millions of dollars to Wall Street banks to manage pension funds, with mediocre returns on our investment. A Guadagno administration will work to strike new agreements to cut payments and incentivize better returns for pensioners.
- Moving more public employees into cash balance plans: The Pension Commission outlined a cash balance plan that would dramatically improve New Jersey’s ability to fund our current obligations. These plans provide for a generous retirement benefit to workers going forward while not reneging on benefits already earned by our current, dedicated public workers.