Three Pension Funds Sue New Jersey for $4 Billion Over Alleged Contract Breach

Trustees from three of New Jersey’s largest pension funds – the Public Employees’ Retirement System, the Teachers’ Pension and Annuity Fund and the Police and Firemen’s Retirement System – are suing the state of New Jersey and seeking approximately $4 billion in damages.

The trustees are alleging that the state breached its contract with the funds by routinely underpaying or flat out skipping annual contributions to the systems.

The lawsuit comes in the wake of last month’s Supreme Court ruling, which said the state couldn’t be forced to make pension contributions.

From NJ.com:

The amended complaint, filed Friday in Mercer County Superior Court, challenges whether the state really is off the hook. It argues that the Supreme Court declared only the promise to make the appropriations unenforceable. The new argument hinges on a separate promise found elsewhere in the law.

“The promise to make the annual required contribution is separate and apart from the promise that the Legislature will make the necessary appropriations to satisfy those obligations,” the complaint said.

“It’s the difference between putting down your credit card and promising to pay the bank for the money that they’re lending you, and actually writing the check to pay the credit card company,” said Bennet Zurofsky, attorney for the trio of pension funds.

The Supreme Court held that the state can’t be forced to pay at a certain time and in a certain way, he added, but that doesn’t mean it doesn’t still owe the money.

“We are saying that the contractual promise to pay has been breached, and we’re entitled to get a judgement,” Zurofsky said.

The suit asks for the $1.25 billion owed to the Public Employees’ Retirement System over the 2014, 2015 and 2016 fiscal years, plus interest, and $2.53 billion for the Teachers’ Pension and Annuity Fund and $363 million for the Police and Firemen’s Retirement System.

Read more about last month’s court decision here.

Photo By Walter Burns [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons