As controversial pension and benefit legislation heads for final passage in the New Jersey Legislature, retirees face crippling cuts to their pensions in their remaining years, according to an NJEA study.
Case examples involving four former public school employees show that the elimination of annual cost-of-living adjustments (COLAs) would cost them between 33 and 44 percent of their pensions.
Retirement benefits without a COLA lose purchasing power by the annual rate of inflation.
The study – using an average inflation rate of 3 percent, and life expectancy data from Social Security – paints a bleak picture for current and future retired public employees in New Jersey.
The legislation, passed by the Senate on June 20, and headed for an Assembly vote tomorrow, would eliminate COLAs until the state’s pension funds are at least 80 percent funded. Based on state estimates, that could take as long as 30 years.
The four examples cited by NJEA:
Roberta Woessner, 75, a retired history teacher in Camden, would see the purchasing power of her pension decline from $46,800 to $31,498 after 13 years – a 33% reduction.
Charles Moses, 63, a retired 5th grade teacher in Bridgeton, would see the purchasing power of his pension decline from $37,000 to $20,742 after 19 years – a 44% reduction.
Rosemarie Jankowski, 69, a retired school payroll clerk in Willingboro and Delran, would see the purchasing power of her pension decline from $15,000 to $9,198 after 17 years – a 39% reduction.
Irma Lorenz, 69, of Medford, a retired 2nd grade teacher in Burlington Township, would see the purchasing power of her pension decline from $40,500 to $24,131 after 17 years – a 40% reduction.
“Legislators do not seem to understand the impact this legislation will have on retired school employees,” said NJEA President Barbara Keshishian. “Without a cost-of-living adjustment, the purchasing power of their pensions will erode to levels that will cause them terrible hardship at the most vulnerable time of their lives.”
Keshishian added that the legislation will force teachers and school employees to pay more into the pension system for declining benefits, while failing to require the state to immediately make its required contributions – a primary reason the pension systems are so deeply under-funded.
“Not only are current employees being asked to increase their personal contributions to the pension system from 5.5 to 7.5 percent of every paycheck, but they now face retirements that will be marked by a steady decline in their purchasing power,” Keshishian said.
“After dedicating their entire careers to the children of New Jersey, teachers and other school employees are being treated with cold contempt by this legislation. They retired in the belief that their income would be stable and predictable. This legislation is nothing short of unconscionable,” said Keshishian.
“I urge members of the Assembly to search their consciences, and ask themselves if they think it is right to change the rules for people who have contributed so much to the quality of life in New Jersey.”