Restoring COLA Responsibly
I realize the return of cost-of-living adjustments to our retirement allowance is of great importance to all members of the PFRSNJ system. For those that have been retired for many years, the impact is even greater.
Before one looks at how to fix it, let’s make sure we have the facts. First, the new pension board was not the one to suspend COLA, that was done under the Christie administration.
In fact, the NJ FMBA fought vehemently against Chapter 78 and the suspension of COLA. To sum up the lawsuit, the Supreme Court ruled - we have a non-forfeitable right to a pension but do not have that same non-forfeitable right to fund the pension. Crazy, right?! We can discuss that in another article! This was one of the main reasons the NJ FMBA, with the NJSPBA, fought to pass monumental pension legislation to take back the control and governance of our pension and give us the ability to address COLA restoration.
Now let’s talk a little political history.... Some may not want to hear this as we walk down memory lane. There were four staunch supporters of our pension legislation.
First is Senate President Sweeney, he was the first legislator to approach the NJ FMBA and PBA to explore this new governance of pensions. Once the decision was made to move forward, we felt it was important to have bi-partisan support. That is when we reached out to the minority leader of the Senate, Tom Kean Jr. After discussions, Senator Kean pledged the support of the Republican caucus. Although he is no longer in the legislature, Assembly Speaker Vinnie Prieto was a loud and clear voice for this legislation. Finally, none of this becomes law without Governor Murphy’s signature.
Five years of hard work, with guidance from former Division of Pensions Director Fred Beaver and our lobbyist Rudy Garcia, became a reality July 4, 2019. While you all may have different feelings about each of those legislators, the hard truth is none of this is possible without each of them. Without question, there were many more folks who helped push this legislation along and they know who they are.
So, now we have this legislation - what the heck are we going to do. I’m not going to rehash what PFRSNJ Trustee Lubin reports monthly in our Bulletin.
I will pause, and say thank you! Matt Lubin is such an asset and advocate to every PFRSNJ member and our Union. In two short years, the pension board has moved mountains and accomplished much. The NJ FMBA could not be more proud of this legislation and the tireless efforts of the pension board.
Notwithstanding all the accomplishments and hard work stated above, COLA has yet to be restored.... For some, that is all that matters. For me, as President of our great Union, COLA is one of many issues which needs to be rectified. Our pension had been mismanaged for decades. To think anyone could right all the wrongs in two years is unrealistic.
With all that said, how does the pension board restore COLA responsibly? Yes, responsibly. I would hope no one out there would demand COLA be restored without truly knowing any impact to the overall fund it might have. To restore it any other way would be reckless. The awesome part to this whole piece is that the Pension Board is going to be able to do just that. Standby a minute; here are some very important facts you all should be aware of:
1. The board is currently in the process of beginning to transfer the PFRSNJ pension fund assets from State control. As of today, the PFRSNJ does not have control of the fund’s assets. As you can understand, that is a very complex and critical undertaking.
2. The board has hired its own actuary. This is one of the most important tasks the board has accomplished to date.
3. The board hired a national governmental affairs firm to, among other things, help with the task of reviewing, assessing and restoring COLA.
4. It will require a super majority of the board to enact ANY benefit enhancement, such as COLA. The current board make-up is seven (7) fire and police representatives and five (5) Governor appointees.
Here is what has been done to date. Under the direction of the Board, the PFRSNJ Executive Director has tasked the governmental affairs firm to do a deep dive in the other 49 states to see how those states administer COLA.
I think it fair to assume that when COLA can be restored, it will look different than it did. Once this data is compiled, the board could direct its own (very important) actuary to run tests on reinstating COLA in many different ways which would include an analysis on the ultimate impact of COLA restoration to the fund. While this cannot happen overnight, be assured the process has started. Unlike the past, all steps will be open and transparent. While many of you take to the social media airwaves and get confused by conflicting tales, take solace in the fact that the PFRSNJ has started the process.
The NJ FMBA has two trustees who sit on the PFRSNJ board. I implore you to get the facts from your Union. Be very careful of what you read on social media and from other organizations.
This is not just a retiree concern. Every one of us will be a retiree at some point. It’s all of our concern.