One of the criticisms leveled at New Jersey and its underfunded pension system – and one of the main justifications used to cuts in worker benefits – is that New Jersey’s public employees receive more generous pension benefits than their peers in other states.
But a left-leaning think tank released a report Wednesday that cast doubt on the generosity of New Jersey’s pension benefits relative to other states.
New Jersey’s public employee pension plans ranked among the least generous of top public pension plans in the country, according to a report released today.
The study shows New Jersey’s pensions are more modest than 94 of the country’s 100 largest plans.
The study considered whether pension plans protect retirees from rising inflation, how benefits are calculated and how much employees contribute to their plans.
New Jersey fell in the bottom half in all three fields, which Stephen Herzenberg, the Executive Director of the Keystone Research Center, who authored the report, called the three most important dimensions of generosity.
Workers kick in 6.93 percent of their pay — and that number is rising — while employees contribute less in more than half of the other systems, according to the findings.
New Jersey’s retirees do not receive yearly cost-of-living adjustments to offset inflation, unlike 69 other plans included in the study that offer some protection from inflation. Retirees are suing to restore the cost-of-living increases that Gov. Chris Christie suspended as part of a 2011 pension reform package.
The state’s formula for calculating pension payments also uses a low multiplier — 1.67 percent — that lands it in the bottom quarter of plans.
The report notes that Garden State workers also receive some of the lowest pension benefits, but those were not factored into the rankings.
On average, pension benefits are $26,000 a year. Local government employees receive less on average, $16,000, while teachers receive more, $40,000. State employees collect $25,000.
Read the full think tank report here.
Photo: “New Jersey State House” by Marion Touvel. Licensed under Public domain via Wikimedia Commons