Your financial future depends on it
By Marybeth Beichert
New Jersey’s public employee pension systems have often been misrepresented in the news as being too generous, too costly to the taxpayer and too severely underfunded. There is nearly always a call for pension reform – casting public employees as greedy takers. The 50-year attack on public employee pensions is real and relentless.
It seems whenever the state finds itself in an economic jam, it decides to skirt its responsibility to fund the pension, and pit public employees against workers in the private sector.
Even after the financially crippling consequences of his Chapter 78 legislation, former Gov. Chris Christie still called the pension system an “insatiable beast.” Christie looked to blame pension recipients—especially New Jersey’s educators—for the pension crisis that was caused by years of government mismanagement, missed payments and underfunding of the pension system. It is the reason New Jersey educators have five pension tiers – each new one worse than the one before.
During last November’s gubernatorial election, one candidate proposed forcing educators out of the defined benefit pension system and into a 401(k)-style savings plan, framing it as giving them “choice” over their financial future. Yet this so‑called choice was offered only to educators – most of whom are women. Meanwhile, he pledged to fully fund the defined benefit pensions of police and fire employees, a clear attempt to pit public workers against one another. Fortunately, voters saw through this divisive approach, and he did not win the election.
NJEA members know that whenever there is a fiscal crisis at the national or state level, the first to feel the financial cuts are public employees. It is the main reason the pension has a huge unfunded liability and our NJREA members have not received a COLA in 14 years.
When former Gov. Phil Murphy was elected, he vowed to right some of the wrongs to the pension by making it a budget priority. And he kept that promise before he left, he budgeted five full pension payments: the first governor to do that since 1996. He has done much to put the pension on the road to stability, but it will take many more governors willing to make many more full pension payments before the pension will be on sound footing.
As NJEA members continue to advocate for pension fairness for all members, it is important to speak to the facts about your pension and why this is every member’s fight.
A public employee pension is deferred compensation.
- Educators understand that while their salaries may not keep up with the private sector, they are willing to take home less pay now in return for a secure retirement later.
- Public educators in New Jersey pay 7.5% from each paycheck toward their pension – even though they will not see a return on that investment for years.
A fair, stable and fully funded public employee pension helps to recruit and retain an experienced workforce that provides the taxpayer services citizens depend on.
- Education for K-12 and community college
- Emergency and first response services
- Police protection
- Firefighting
- Public works
- Health care services
- Child welfare protection
- Health inspections
- Prison and correctional services.
These services are public goods but, unfortunately right now we are seeing staff shortages and high turnover rates in these jobs, especially in public education.
- Reliable retirement benefits attract high-quality educators to a profession they may otherwise pass over due to the comparatively low salaries.
- Because of the division of New Jersey’s pension tiers, especially Tier 5, we see more and more experienced educators leaving the profession.
A fully funded public pension system is vital to the economy.
- Pension funds are a continuous source of economic stimulus to every state, city and town.
- Local and state economies depend upon investments from the pension system.
- Retirees spend their pension checks in the local community. One person’s spending becomes another person’s income, creating a ripple effect in the economy.
- Each dollar invested in the pension system results in more than four dollars spent in the state’s economy.
Pension funding should be a budgetary priority.
- Pensions get into financial crisis when the state does not make its obligatory payments, not because pension plans are too expensive. The vast majority of the pension received by a retiree is from the interest earned on the pension payments made by public employees every time they are paid.
- Prior to Gov. Phil Murphy’s five consecutive budgets with full pension payments, no New Jersey governor had made a full pension payment since 1996.
- That is why electing a pro-public, pro-labor governor and state Legislature matters.
No teacher or educational support professional is getting rich from their pension. In fact, most must rely on other savings or Social Security when they retire. In fact, a teacher’s average pension is around $3,000 and for an ESP it is about $1,900 a month.
A 2024 survey conducted by the National Institute on Retirement Security found that Americans are highly supportive of pensions for all workers. In fact, 86% of Americans say that all workers, not just those employed by state and local governments, should have a pension.
NJEA members, just like all public employees, must stand guard and protect the pension and health benefits they have earned. No member can assume they will always be secure.
That means as union members we must be politically engaged because the pension depends on the governor and Legislature deciding whether pension benefits are fully funded every year. The phrase “show me your budget and I will show you your priorities” shows a government’s true values. If our pensions are fully funded, it shows the work our members do is valued by those in office. If not, we have a lot more organizing to do in the future.
Marybeth Beichert is an associate director in the Communications Division. She can be reached at mbeichert@njea.org.