The fight for retirement dignity
By Marybeth Beichert, Sarah Favinger and Michael Flynn
In a recent survey conducted for NJEA, members were clear about issues they want to prioritize as a union. More than 93% said that fully funding the pension is a ”very important” priority.
Members are tired of the state’s pension system dividing colleagues, undermining the profession and making it harder to recruit and retain future educators. The overwhelming majority of those polled believe equal pension benefits are vital for the profession, and they are willing to take action to ensure pensions are fully funded and fair.
The current tiering of the pension system has left tens of thousands of members earning a much lower pension—or no pension at all—putting a secure retirement out of reach.
Tiers of destruction
All aspects of public employment—salary, health benefits, retirement benefits, evaluations and curriculum—are largely shaped by decisions made by elected officials at the local, state and federal levels.
The date you were hired, your job title, where you work and the number of hours you work per week determine whether you are eligible for a public pension and how that pension is calculated. Most public school employees belong to either Teachers’ Pension Annuity Fund (TPAF) or the Public Employees’ Retirement System (PERS).
Funding for the TPAF, which covers certified school employees, depends on the Legislature and, most importantly, the governor, who is responsible for creating a budget that specifies how much the state will contribute to the pension. For years, the state failed to meet its financial obligations while NJEA members always contributed to the pension even when the state was skirting their responsibilities. Partial payments and poor fiscal choices created an unfunded liability that put the pension in financial jeopardy. This led to the creation of multiple pension tiers that put a stable and dignified retirement further out of reach. The most damage was done when Gov. Christie created Tier 4 in 2010 and Tier 5 in 2011.
Members in tiers 4 and 5 must work at least 32 hours a week to be eligible for enrollment in the pension system. The base pension calculation was also changed effective with Tier 4, diminishing retirement benefits for those members compared to earlier tiers. Tier 5 also added severe penalties for those who retire before age 65, even if they have 30 or more years of service.
Members hired after May 21, 2010, who work fewer than 32 hours per week cannot qualify for a pension. Instead, they are enrolled in the Defined Contribution Retirement Program known as DCRP—a savings account that is not a financially secure pension. Further, members in DCRP are not accruing years of credit toward post-retirement medical benefits, even when they work over 30 hours and qualify for employer-sponsored health insurance through their jobs.
NJEA members have opposed the tiering of the pension system since 2007. Public educators have never missed a payment into the system, and they understand that pension “reforms” passed over the last 20 years—marketed as ways to eliminate abuse or reduce liability—were simply a mechanism for the state to reduce its obligation by shifting costs onto hardworking public employees.
There is no doubt that Tier 5 has had a detrimental impact on the profession. Right now, there are more NJEA members in Tier 5 than in any other tier in TPAF. More and more support staff members are being placed into DCRP rather than PERS. Also disturbing is that school districts are not informing these members that they are not in a pension or explaining to them how DCRP works.
As a result of such drastically diminished benefits for Tier 5, all newly hired public school employees, our schools are facing a severe staffing crisis and too many of our experienced educators are leaving midcareer because their lower relative earnings as public sector employees are no longer offset by reasonable retirement benefits.
Pension tiers impact all
Whether you are new to the profession in Tier 5, a veteran educator getting ready to retire in Tier 1 or a retired educator, the pension tiers affect all members. No one is guaranteed a pension if full pension payments are not made by the Legislature.
For members in Tier 1, we must remember that if members in Tier 5 leave before they are able to retire there is less money going into the pension system to fund the pensions of current retirees. One of the reasons that a public employee pension is a more secure retirement is because pension contributions are pooled together and invested to maximize returns.
Full pension payments matter to pension stability. Gov. Phil Murphy is the first governor since 1996 to make full pension payments. But unless the future governors continue to make full pension payments, the pension system will remain at risk—even for those already retired. This is why NJEA members must act with urgency.
The campaign for Tier 1 for Everyone
For the past two years, NJEA local leaders and staff have worked together to educate members about the different pension tiers, how they impact their financial future and why Tier 5 and DCRP are a threat to public education.
More than 50,000 members signed up to be pension advocates at local lunch and learns, rep council and general membership meetings, and specially created pension events. Pension advocates organized fellow colleagues to reach out to their state legislators through emails, phone calls and face-to-face meetings.
As a result, two bills have been introduced to compress the five tiers of TPAF (A-5158/S-3998) and PERS (A-5160/S-3997) systems into one single tier. These bills have yet to receive a committee hearing.
Now is the time we must move to the next phase of this campaign and get these bills passed through the Assembly and the Senate and signed by Gov. Murphy.
With just a few months left before Gov. Murphy leaves office, we must organize to fix this broken, inequitable tiered pension system. The goal is to get both pieces of legislation passed when the Legislature reconvenes in November.
NJEA members must keep the pressure on the legislature and one of the most effective ways to do this is through a petition drive. Our goal is to collect 100,000 member signatures by the NJEA Convention and deliver them to the Statehouse to show legislators that Tier 1 for Everyone is a top priority of NJEA member.
Every NJEA member who has devoted their life to public service deserves a secure retirement. Your signature is your voice.
Be sure to ask your local president for the petition, or visit njea.org/tier1 to learn more and print your own petition.
Marybeth Beichert is an associate director in the NJEA communications Division. Sarah Favinger is an associate director in the NJEA Research and Economic Services Division. Michael Flynn is an associate director in the NJEA Government Relations Division Office of Politics and Policy.