Here is one reason why our property taxes are so high

Brigit said:
I have no problem with state employees working in the private sector after they retire and collecting their pension benefits at the same time. I do have a problem with state employees who "retire" (sometimes in their 40s and 50s) and then take another state job and collect pension benefits at the same time.

In Joe D and Fortoura's cases they "retired" from their positions, then started working the next day in the SAME job, basically giving themselves a $62,000+ raise.

Political insiders and those in the know are exploiting legal loopholes, with some state and municipal workers even triple-dipping. Not only do they collect a pension and salary simultaneously, but by doing so they "boost" their overall pension payout. Couple this with early retirement (in some cases) and hefty salaries and the problem expands exponentially. Pensions were meant to help support workers in retirement, not enrich them; they are not buy outs.

Pensions are a combination of deferred income plus forced savings (when employees contribute towards their pension through payroll deduction). Employees hired with the understanding that they will receive a pension upon retirement, assuming they meet the conditions set forth in the pension plan, are entitled to receive the pension specified in their pension plan when they retire.

Fully fund the pension plan over time, set up less generous tiers for future hires, and change some of the pension plan provisions for future hires (and current hires where possible) and the problem with public pensions in NJ can be significantly reduced. The most difficult hurdle will be fully funding the pension plan since the State has been so lax in this regard.

Joan, I agree with you. My father is a retired cop and my sister, sister-in-law, two brothers-in-law and mother-in-law are or were state workers. So I respect state workers and of course they're entitled to the benefits they have earned and contributed to through deferred income. That said, we do have a problem with political insiders exploiting the system and this has escalated greatly in the last 20 years. Is this the main factor in the pension mess? No, just one of many factors. In the case of state workers who retire and then accept state jobs, I believe the pension should be deferred or at least partially reduced until they actually retire. Just my opinion.

My issue is not with getting a 2nd state job, it's with taking exactly the same job and having your cronies change the title to avoid the accusation of double dipping. "I am not a developer, I am a software engineer."

The only thing that makes this easier to swallow is to think that it's probably worse in Hudson County.

Back to the title, the impact on our taxes is minimal. Assume you pay $16,000 in taxes. The county gets about 25% of that, or around $4,000. Lets also assume the pension comes directly from the county budget (which it doesn't). DiVincenzo's pension is about 70k. The Essex county budget is about $750 million. So DiVincenzo's pension is 0.009333333% of the county budget. So for everyone who double dips and gets this level of pension, it costs you about $0.37.

But his pension does not come directly from the county budget, and there are not THAT many people double dipping like this.

And as Tom R points out above, had he simply retired and someone else taken the position, it would cost the county at least the same as it does now.

However, it's indicative of the mentality of those running the County. This is just the tip of the iceberg. There are loopholes, waste, and corruption at all levels. Closing this loophole would symbolic as well as save some taxpayer dollars.

yahooyahoo said:
However, it's indicative of the mentality of those running the County. This is just the tip of the iceberg. There are loopholes, waste, and corruption at all levels. Closing this loophole would symbolic as well as save some taxpayer dollars.

How will it save taxpayers money?

I'm cool with what I pay vs. what I receive, it would be similar in any affluent community near/around NYC

joan_crystal said:
I think the problem some are having with this is that a State employee can continue to receive a State pension while working in a second State job. In other jurisdictions, the State employee would not be able to collect a State pension until after the employee had retired from both State jobs.
If the State employee in this scenario were to have to wait until after leaving the second State job to receive a State pension, the State employee would be receiving a higher pension based on higher base salary and greater length of service but the pension would be paid for a shorter period time because the State employee would be deferring the date by which the pension was paid. Depending on age at final retirement and life expectancy, this could end up being the less costly alternative for the taxpayer.

They can't anymore. Joe D. got in under the wire...

I think that the thought is that maybe someone like Joe D. wouldn't retire and would stay on as County Executive without the pension if he couldn't double dip. If he didn't, he wouldn't be able to put his pretty pictures up all over the County. Don't know if it would actually happen that way, but that might be the theory of how it would save money.

joan_crystal said:
Pensions are a combination of deferred income plus forced savings (when employees contribute towards their pension through payroll deduction). Employees hired with the understanding that they will receive a pension upon retirement, assuming they meet the conditions set forth in the pension plan, are entitled to receive the pension specified in their pension plan when they retire.
Fully fund the pension plan over time, set up less generous tiers for future hires, and change some of the pension plan provisions for future hires (and current hires where possible) and the problem with public pensions in NJ can be significantly reduced. The most difficult hurdle will be fully funding the pension plan since the State has been so lax in this regard.

What about generational equity? Why, in moral terms, should there be such a stark difference in pension payments between older hires and new hires? Since NJ pensions are functionally pay-as-you-go, why should new hires have to pay for retirement benefits to the previous generation that are much, much more generous than what they are going to get? Also, when you are only talking about cuts to new hires you are going to have to wait DECADES for any savings to materialize.

"Fully fund the pension plan over time" is easier said than done. Even without COLA payments being restored, NJ's unfunded pension debts are $40-80 billion. (the huge variation is due to the kind of actuarial standards you want to use.)

ParticleMan said:

yahooyahoo said:
However, it's indicative of the mentality of those running the County. This is just the tip of the iceberg. There are loopholes, waste, and corruption at all levels. Closing this loophole would symbolic as well as save some taxpayer dollars.

How will it save taxpayers money?

ParticleMan, I applaud your efforts but ultimately they're a waste of time. The general public simply doesn't want to acknowledge that their tax dollars are not actually being used to pay public employee pensions. That would deprive them of one very big reason to hate on public sector workers and you know we can't have that...

ParticleMan said:
Back to the title, the impact on our taxes is minimal. Assume you pay $16,000 in taxes. The county gets about 25% of that, or around $4,000. Lets also assume the pension comes directly from the county budget (which it doesn't). DiVincenzo's pension is about 70k. The Essex county budget is about $750 million. So DiVincenzo's pension is 0.009333333% of the county budget. So for everyone who double dips and gets this level of pension, it costs you about $0.37.
But his pension does not come directly from the county budget, and there are not THAT many people double dipping like this.
And as Tom R points out above, had he simply retired and someone else taken the position, it would cost the county at least the same as it does now.

You're right that Joe DiVencenzo's own pension doesn't cause our extreme property taxes but his pension is emblematic of a larger problem.

Joe DiVincenzo is only 62 years old. He started getting a retirement pension in 2011 when he was only 59. When people can retire at such young ages it costs the state a lot.

JBennett said:

Joe DiVincenzo is only 62 years old. He started getting a retirement pension in 2011 when he was only 59. When people can retire at such young ages it costs the state a lot.

Yes, this is the problem, though it's much less so with civilian employees than with uniformed ones. When the pension rules for uniformed employees were established, police and firefighter lifespans were considerably shorter than other government workers. Accordingly, they were able to retire and collect a pension at a younger age. That difference no longer exists (or, to the extent it does, is nominal). That's where the changes need to be made.

Right on, JBennett. I was hoping you'd join in.

Here's an interesting analysis of double-dipping in NJ. There are currently 540 double dippers in the state. This may not sound like a lot but their pay packages are often very large and their projected benefits costs are snowballing. The system simply can't support this kind of excess, not in the short term and certainly not in the long term, especially given the fact that people are living longer and will be collecting benefits for a longer period of time. Obviously, pension underfunding is a more serious and pressing issue, but that doesn't mean we shouldn't fix this particular issue.

http://www.dailyrecord.com/story/news/local/new-jersey/2015/04/10/many-jobs-big-bucks/25613691/

Woot said:

marylago said:

Jackson_Fusion said:

tjohn said:
I wonder what is the present value of a New Jersey pension for a worker aged, say, 45?

If they had a payout of $60k and we assumed 35 years left of life @ 3% discount rate the present value of that cashflow would be about $1.5mm


For Joe D assuming normal life expectancy and same rate it's about $900k

$60K! Unless you are a firefighter or a police officer, that's not a realistic sum. Most pensions for people of retirement age (55+) with 25 or more years are far less. The tier one formula is x years over 55 times your last three years salary (which is why many long time legislators take high paying state positions right before they are ready to retire, assuming you are 55 or greater.

The bigger question is "why is anyone allowed to "retire" at anywhere near age 55? People can not work 30 years and expect a pension to pay for the next 30. People in 2015 should be working to near 70. Otherwise the math never works.

+10

It's so easy for people with office jobs to say everyone should work to 70.

Another massive problem with the design of the pension system is that the pension is based on only a few years salary and not a career-long average.

Read about Susan Bass Levin, who "retired" at age 58 with a $5300 a month pension and health insurance.

http://www.nj.com/news/index.ssf/2010/11/nj_career_politician_retires_o.html

Much of Susan Bass Levin's career for the state was working part-time a"Local Finance Board" commissioner. (which oversees local spending) During that time Susan Bass Levin was also employed by the Port Authority in a six-figure job that came with a Manhattan apartment.

Former Gov. Jon Corzine had named Levin to the board, which pays commissioners about $12,000 — plus benefits — to attend 15 to 18 meetings a year. That appointment allowed her to stay within the state's health and pension system.

Susan Bass Levin stayed on the Local Finance Board exactly long enough (to the day) to qualify for a pension.

mjh said:
It's so easy for people with office jobs to say everyone should work to 70.

There are ways around the problem of age in many fields. However there is a real issue that has to be addressed. it's just not feasible to work 30-35 years, and then spend another 35 years in retirement. The math just doesn't work. Particularly when you factor in health care costs.

JBennett said:

joan_crystal said:
Pensions are a combination of deferred income plus forced savings (when employees contribute towards their pension through payroll deduction). Employees hired with the understanding that they will receive a pension upon retirement, assuming they meet the conditions set forth in the pension plan, are entitled to receive the pension specified in their pension plan when they retire.
Fully fund the pension plan over time, set up less generous tiers for future hires, and change some of the pension plan provisions for future hires (and current hires where possible) and the problem with public pensions in NJ can be significantly reduced. The most difficult hurdle will be fully funding the pension plan since the State has been so lax in this regard.

What about generational equity? Why, in moral terms, should there be such a stark difference in pension payments between older hires and new hires? Since NJ pensions are functionally pay-as-you-go, why should new hires have to pay for retirement benefits to the previous generation that are much, much more generous than what they are going to get? Also, when you are only talking about cuts to new hires you are going to have to wait DECADES for any savings to materialize.

"Fully fund the pension plan over time" is easier said than done. Even without COLA payments being restored, NJ's unfunded pension debts are $40-80 billion. (the huge variation is due to the kind of actuarial standards you want to use.)

Generational equality may not be sustainable. Social Security has increased retirement age for full benefits a few times since the original retirement age was set. Other jurisdictions such as the City of New York (NYCERS) have created several tiers for more recent hires over the years. In part, this is justified because retirees tend to live longer now than they did when tier 1 was established and in part to control pension costs going forward.

joan_crystal said:

JBennett said:

joan_crystal said:
Pensions are a combination of deferred income plus forced savings (when employees contribute towards their pension through payroll deduction). Employees hired with the understanding that they will receive a pension upon retirement, assuming they meet the conditions set forth in the pension plan, are entitled to receive the pension specified in their pension plan when they retire.
Fully fund the pension plan over time, set up less generous tiers for future hires, and change some of the pension plan provisions for future hires (and current hires where possible) and the problem with public pensions in NJ can be significantly reduced. The most difficult hurdle will be fully funding the pension plan since the State has been so lax in this regard.

What about generational equity? Why, in moral terms, should there be such a stark difference in pension payments between older hires and new hires? Since NJ pensions are functionally pay-as-you-go, why should new hires have to pay for retirement benefits to the previous generation that are much, much more generous than what they are going to get? Also, when you are only talking about cuts to new hires you are going to have to wait DECADES for any savings to materialize.

"Fully fund the pension plan over time" is easier said than done. Even without COLA payments being restored, NJ's unfunded pension debts are $40-80 billion. (the huge variation is due to the kind of actuarial standards you want to use.)

Generational equality may not be sustainable. Social Security has increased retirement age for full benefits a few times since the original retirement age was set. Other jurisdictions such as the City of New York (NYCERS) have created several tiers for more recent hires over the years. In part, this is justified because retirees tend to live longer now than they did when tier 1 was established and in part to control pension costs going forward.

I agree that generational equity based on maintaining pensions at the current levels would be unsustainable. What I was saying is that pensions are going to have to be reduced for everyone, current retirees, soon-to-be retirees, and future retirees.

The worst outcome in the COLA case would be if the NJ Supreme Court said that COLA payments had to be made for current retirees and people whose pensions vested before 2011 but needn't be made for future retirees.

The state would get ZERO savings from this for decades since the workers who would not get COLAs are years away from retirement anyway. NJ doesn't have years to wait! The Judges pension goes broke in 2019, the state portion of PERS in 2024, and TPAF in 2027!

The costs to restore COLAs for everyone would be $74 billion.

The former prosecutor who is suing NJ over COLAs, Charles Ouslander, retired at age 48 with a $67,000 pension.

http://nj-pensions.findthedata.com/l/257717/Ouslander-Charles-M

http://njeducationaid.blogspot.com/2015/08/steve-sweeney-restoring-pension-colas.html