Wednesday, June 4, 2008

New Jersey Legislators consider public employee pension changes

Cutting pension benefits for newly hired government workers is one option being considered by state legislators in a move to slash the state budget according to this article from the New Jersey Courier Post.

A new state worker contract effective last July capped at $97,200 the salary upon which pensions are calculated for new hires, raised the retirement age from 55 to 60 for new hires, increased employee pension contributions from 5 to 5.5 percent and required employees to pay 1.5 percent toward health care.

Legislators cannot alter most benefits for existing workers but are weighing the following for new hires:

Increasing the retirement age to at least 62.
  • Basing state pension calculations on a five-year average instead of three years.
  • Requiring people with multiple public jobs to collect one pension.
  • Raising the minimum salary to get a pension from $1,500 to $15,000.
  • Requiring retirees to contribute to health insurance.
  • Eliminating benefits for part-time employees.

New Jersey's pension fund faces a $25 billion deficit, with the state also obligated for $58 billion in medical benefits for retired government workers.

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