NJ Pension Panel Calls for DB Freeze; Less Generous Health Plans

A New Jersey pension commission, assembled by Chris Christie last year, issued a report on Thursday outlining the savings that would be realized if the state froze its defined-benefit pension plan and cut worker health benefits.

The panel’s mandate is to study ways to lower the state’s pension-related costs.

New Jersey Gov. Chris Christie may include the measure in his budget proposal next week.

More from NJ.com:

The proposal calls for freezing the pension system and moving active public employees onto a cash balance retirement plan, but it hinges largely on reducing health care costs to free up cash.

[…]

While the proposed changes are quite involved, broadly, active employees would be moved onto health care plans equivalent to gold plans under the Affordable Care Act, and retirees would be given retiree reimbursement accounts to cover the cost of purchasing coverage through a private exchange.

In total, the state would save $2.23 billion, including $1.42 billion through lower-cost benefits and $810 million by shifting the cost of retired teachers’ benefits to their employers (the commission assumes that will be offset by benefit changes at the local level).

While the report stressed that the plan reduces the total cost of the system, rather than just shifting those costs to members, active and retired workers would still have to pick up an additional $190 million.

The commission estimated premiums will fall 30 percent, and the state will save $510 million.

Christie submits his budget proposal next Tuesday. If it includes the panel’s recommendations, the package will likely face stark opposition in the Senate.

Photo by Bob Jagendorf from Manalapan, NJ, USA (NJ Governor Chris Christie) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons