NJ Supreme Court Will Hear COLA Case in March

Later this month, a suit by retirees over frozen pension COLAs will hit the halls of New Jersey’s highest court.

In 2011, New Jersey lawmakers passed a pension reform package that raised retirement ages, increased worker contributions and froze COLAs unless the pension plans surpassed a certain funding benchmark.

Workers argue the law was a breach of contract, especially because Gov. Christie – who signed the bill, which required full annual payments from the state – didn’t hold up his side of the bargain.

A lower court ruled against the retirees.

More from NJ.com:

The state Supreme Court will hear oral arguments later this month in a case addressing whether the state must restore retired public workers’ cost-of-living adjustments.

Retirees argue that a state law freezing their COLAs ran afoul of their rights to their pension benefits. The state’s high court is scheduled to hear arguments at 10 a.m. March 14. The outcome could wipe out tens of billions of dollars lawmakers expected to save the pension system over three decades.

All together, those changes were to save the state $122 billion over 30 years, and the COLA suspension accounted for more than half of those savings.

Senate President Stephen Sweeney, who partnered with Christie on the 5-year-old reforms, has said losing the case and being forced to restore the increases and reimburse retirees could cripple the already shaky system.

Moody’s Investors Service weighed in in January, saying that the state portion of the total unfunded pension liability would increase from $40 billion to about $53 billion, and the system would fall from 51 percent funded to 44 percent funded if the court strikes down the freeze.

Oral arguments will begin on March 14.

Photo by  Lee Haywood via Flickr CC License