PFRS Board Update: The Future of Firefighter Pensions in New Jersey

The health and management of the Police and Firemen's Retirement System (PFRS) continues to be a top priority for New Jersey's first responders. At the March 2025 NJFMBA meeting, PFRS representative Matt Lubin provided a comprehensive update on the pension system's status and future direction.

Perhaps the most encouraging news is the improvement in the PFRS funded ratio, which has increased to 72.0% for the local plan, up from 71.5% previously. While the state plan remains significantly lower at 42.2% (up from 41%), both are moving in the positive direction. This discrepancy reflects the legacy of years when the state failed to make required contributions, creating a substantial funding gap that is only gradually being addressed.

Governor Murphy's administration has made five consecutive full pension payments, with a sixth expected in the current budget. This consistent funding is helping to stabilize the system, though challenges remain. As Lubin noted, "The State Pension payment is very significant for us."

The maturity of the PFRS system presents unique challenges. With 11,000 more retirees than active members, the system must carefully manage its assets and cash flow. Monthly benefit payments total approximately $267 million paid to retirees, requiring thoughtful investment strategies and liquidity management.

The PFRS Board is exploring potential benefit enhancements that could be self-funded without impacting the pension fund's viability. One focus is addressing disparities between different tiers of members. "We want to bring fairness to Tier systems to be closer to Tier 1 as we now have most of our membership in Tier 2 and 3," Lubin explained.

Some key statistics about the system:

• Average member age: 39

• Average years of service: 12.8 years

• Average salary: $112,000

• Average pension payment: $70,500

President Donnelly emphasized the importance of the pension system's governance structure, noting, "We are a minority in this country as the way our Pension fund is governed and run. Our dividends from having a labor majority on the board is paying off."

The "Twenty and Out" provision, which allows retirement after 20 years regardless of age, remains in effect until June 2026. However, it has not seen significant utilization and will be reevaluated by the Board.

As the PFRS moves forward, the focus remains on sustainable management that balances benefit security with fiscal responsibility. The labor-majority board continues to demonstrate that proper governance can lead to improved outcomes for both members and taxpayers, ensuring the long-term viability of this critical retirement system for New Jersey's first responders.