Today’s Star Ledger reports that New Jersey public workers are retiring in record numbers, “rather than risk having their benefits cut by legislators.” Approximately 15,000 workers are estimated to have taken retirement between January and June. Couple this with last year’s record retirement of 20,000 and the state can expect to have to pay out more money from its underfunded pension system.
Unions blame Governor Christie’s public remarks. But the truth is the state’s pension system is in serious shape due to decades of bad decisions: careless benefit enhancements, erroneous accounting practices and skipped contributions. Health benefits are entirely unfunded as they are in most states. Denial of these structural flaws won’t improve the outcome for workers. Further, it points to how poorly funded states have created inter-generational inequity among public workers. Younger workers have fewer options. They can quit now, receive very little in benefits, and enter into a weak job market. Older workers can head for the exit with their full benefits locked into place and retirement assured. Another problem to consider is will the crisis in pension plans prompt an out-of-state exit and tax base erosion? While only an anecdote, one New Jersey worker says she will wait out the next 18 months until she reaches 25 years of
retirement service to see what policy changes are implemented thus delaying her plans to retire in Virginia.