TRENTON - Democrats who control New Jersey's Legislature on Friday unveiled a plan to overhaul the state's public pension system that would require current workers to pay more but leave retirees unaffected.
Their proposal bases pension contributions on the financial solvency of the funds, curtails automatic cost-of-living increases and requires workers to pay more to keep a 9 percent benefit increase they got a decade ago.
The pension system for government workers, teachers, police and firefighters is underfunded by $53.9 billion and in danger of collapse if changes aren't made.
Senate President Stephen Sweeney, D-Salem, Gloucester, Cumberland, said any changes that affect public workers must be accompanied by a guarantee that the state will begin paying into the fund.
Republican Gov. Chris Christie skipped a $3.1 billion payment this year, the latest in a series of missed or greatly reduced payments by governors of both parties over most of the past 20 years.
Sweeney said the more recent proposals "move us closer to the goal of a system that works for both taxpayers and public servants."
Assembly Speaker Sheila Oliver, D-Essex, Passaic, said the changes would impose "better planning, more accountability, more affordability for taxpayers and a system that's based on economic reality."
Christie, who proposed pension changes in September, has not signed off on the Democrats' plan.
His spokesman, Michael Drewniak, said the administration is glad the Democrats are thinking about needed changes to a system weighted down by its unfunded obligation.
"The good news is everyone, including the Democratic leadership, recognizes the need to go further and work in a bipartisan way to fix a broken pension system that will benefit no one if it is unsustainable and goes broke under its own weight," Drewniak said.
A key change in Sweeney and Oliver's proposal is the establishment of new oversight boards for the five funds that make up the system. The boards would be made up of employees and management. They would pick investment managers and decide how much employers and employees had to pay into the system each year based on a financial analysis. Adjustments would be made based on the financial solvency of the system.
The proposal would require a greater contribution from employees who want to keep receiving a 9 percent pension boost so that they begin paying for the enhanced benefit.
Cost-of-living adjustments also would be curtailed for some future retirees. Those with fewer than five years in the system would not receive automatic adjustments. Those with more than five years of service would get the automatic increases but would be required to contribute more.
Christie announced proposed pension changes in September that included raising the retirement age to 65 from 62 and requiring all workers to contribute 8.5 percent of their salaries toward their pension, more than most do now.
Christie also wants to roll back the 9 percent increase in benefits the Legislature granted in 2001.
In March, the Legislature, at Christie's urging, passed pension reforms that required public workers to contribute 1.5 percent of their salaries toward health insurance and closed the state pension system to part-timers.
Christie also signed a law that requires the state to stop skipping its annual contribution to the retirees' system beginning with a one-seventh contribution totaling $512 million due in June. Governors can still decide to skip the payment, however, because the budget supersedes the other law.