The Governor signed legislation, P.L.2016, c. 83 (S-2810 / A-4 (Sweeney/Prieto)), requiring quarterly payments to public employee pension systems during the course of the State’s budget year. The Legislature had previously passed the measure, but it was twice vetoed by Governor Christie.
Currently, New Jersey has the most underfunded pension system in the country with the state just receiving its 10th credit downgrade. As a result, Legislators worked hard to garner bipartisan support for this legislation to address the State underfunding of its pension obligations.
Specifically, the legislation requires the State to make its required contributions to the State and public employees’ retirement systems (Teachers Pension and Annuity Fund, TPAF, Judicial Retirements System,JRS, Consolidated Police and Firemen’s Pension Fund, Police and Firemen’s Retirement System, PFRS, State Police Retirement System, and the Public Employees’ Retirement System, and the Prison Officers’ Pension Fund) in 25% increments of the annual state contribution to each system on September 30, December 31, March 31 and June 30 for each fiscal year. If signed by Christie, the legislation will go into effect on July 1, 2017 for State fiscal year 2018.
NJPSA has long supported the legislation as a positive step toward the State meeting its annual pension contributions since the State has historically made no payment toward its pension obligations until the June 30th due date, often adjusting the budgeted payment amount in response to unforeseen fiscal issues or other state priorities to the detriment of public employee pensions. The new law will ensure that our members’ pension funds begin receiving state payments at the start of the fiscal year thereby allowing the fund to utilize more of its funding in investments to further bolster the fund.