In the wonky world of pensions, a new report by the Brookings Institution made some news because of its rather optimistic take on the fate of America’s public pensions. The authors argue that due to recent reforms, in the long run, most plans are sustainable with relatively modest adjustments.
Except for New Jersey’s Teachers’ Pension and Annuity Fund (TPAF), which according to Brookings is BY FAR the single-worst public pension fund in the nation (NJ’s Public Employee Retirement System – PERS – is second-worst).
This is what Brookings had to say: Under any of their investment return scenarios, TPAF is in “near-term trouble.” TPAF is projected to run out of assets in 12-15 years, at which point the $4 billion+ in benefits payments will have to be made from the state budget. This would be a fiscal disaster for NJ and a retirement crisis for NJ’s teachers. (See Sunlight’s “Ugly Truths and Hard Facts About New Jersey’s Pension Crisis, Part II” for details).
Brookings’ bottom line is that TPAF’s funded-level is so low that better investment returns do not make much of a difference. In other words, TPAF is broken and needs to be fixed.
But NJEA-friendly Gov. Murphy wants to throw billions of good money after bad by making a $6.4 billion pension payment this year. And he borrowed $4.3 billion to help him do so. Why? Because thats’ what happens when powerful special interests like the NJEA dominate a political system. They get what they want regardless of the consequences for the rest of the state.
Teachers are not being told the truth about their pension fund, which is the worst in the nation and on a path to near-term insolvency – even according to public pension optimists.