Pension Trustees File Action to Compel Employee Pensions ‘Made Whole’
Pension Trustees of three public employee retirement funds filed a motion last week in Superior Court seeking a contract judgment for unpaid pension debt against the State – in essence asking that the system be ‘made whole.’ The filing represents a different attempt on new legal grounds to secure the funding – and this time with interest.
The trustees’ motion, accepts the recent ruling, originally filed by employee groups, which sought to enforce a section of the 2011 law (Chapter 78), that promised as a contractual right of the employees a specific set of state pension contributions over a seven-year term. The Court found in that case that the State could not be compelled to make a payment, in light of the existing Debt Limitations Clause. Rather, the trustee’s ask the Superior Court to issue a judgment against the state to reflect that the overall contractual obligation to the workers spelled out in Chapter 78 must still eventually be met.
The trustees serve on the boards of the Public Employees Retirement System, the Teachers’ Pension and Annuity Fund and the Police and Firemen’s Retirement System, the three largest individual pension funds that make up the broader $80 billion pension system.
“This is a collection action under New Jersey statutes governing each of the Plaintiff Retirement Systems for breach of contract and constructive trust for unpaid contributions owed to the Retirement Systems administered by the Plaintiff Trustees,” according the motion.
“The individual Boards of Trustees bring this action to assure that the State honor its contractual promised deferred wages by reducing that promise to a judgment which can be enforced in the ordinary course, as would be any other contract judgment against the State,” the motion says.
Winning a judgment the pension funds would gain standing as a creditor of the state and would be put in line for repayment – therein also increasing pressure on the State to come up with a funding stream.
The state would also owe interest, which could be based on the amount the pension system, which is professionally managed, earned off investments in each fiscal year that the full state payment was not funded in the budget.
Source: Law Journal; NJSpotlight