Pension and Benefit Crisis - Sunlight Policy Center

Pension and Benefit Crisis

New Jersey has a pension and benefit crisis.  We have the worst-funded public pension system in the nation.  Our unfunded retiree liabilities are $190 billion – five times the size of the state’s annual budget and a fiscal disaster waiting to happen.  Using its unmatched political clout over decades, the NJEA structured the New Jersey’s pension and benefit system we have today.  While the NJEA wants to blame the crisis on elected politicians, the facts show that the NJEA participated in schemes and pension raids that undermined the pension system and gained “platinum-plus” health benefits for its members at little or no cost to them.  The NJEA knowingly acquiesced to underfunding while constantly pushing for enhanced benefits, and has successfully blocked the many attempts to reform the system before it was too late.  The NJEA deserves the primary blame for New Jersey’s pension crisis.

pension and benefits

Sign Up For Updates

Don’t miss facts that come to light.

Research Reports

The Ugly Truths and Hard Facts about New Jersey's Pension Crisis Part 2

Ugly Truths And Hard Facts About New Jersey’s Pension Crisis, Part 2

It’s time for New Jersey’s teachers to wake up to the ugly truths and hard facts about their pensions:

  1. They are vastly inferior to the pensions that the New Jersey Education Association (NJEA) leadership provides for themselves – all paid for by teachers’ dues.
  2. The NJEA is not telling teachers the truth about their pension fund: the Teachers’ Pension and Annuity Fund (TPAF) is in such deep trouble that teachers’ and even retirees’ retirements may be at risk.
  3. TPAF is unfair to new and younger teachers, the majority of whom will lose money participating in TPAF and end up subsidizing the minority of teachers who make teaching a life-long career.


Read The Full Report


TPAF Report - Pension Case Study

Ugly Truths And Hard Facts About New Jersey’s Pension Crisis, Part 1

A case study of what happens when a special interest like NJEA becomes too powerful.

New Jersey’s past is coming back to haunt the present at a very bad time.

Due to COVID-related shortfalls, Governor Murphy is proposing to borrow $4 billion and raise taxes by $1 billion in order to plug large budget gaps.  Yet the governor is also proposing to spend an equal amount – $4.9 billion of his $40.1 billion budget – to fund the state’s public-sector pensions.  That is 12 percent of the total budget going to shore up New Jersey’s worst-in-the-nation public pension system.

Read The Full Report


pension benefit crisis

Job Number One: NJEA’s Leading Role In New Jersey’s Pension Crisis

The New Jersey Education Association (NJEA), New Jersey’s most powerful special interest, has lived up to Powell’s words – much to the detriment of New Jersey citizens.

“The fiscal future of New Jersey is bleak,” concluded the recent bipartisan legislative workgroup. This grim conclusion was largely based on the fact that New Jersey’s public pension and health benefit system is a looming disaster that threatens the state’s future. Under generally accepted national accounting standards, the total amount of the state’s unfunded public pension and health care liabilities is $190.1 billion.


Read The Full Report


Even after Governor Murphy spent billions for additional funding, the Teachers’ Pension and Annuity Fund (TPAF) was 33.9% funded for FY2022.  That means that the state has less than 34 cents set aside for every dollar it owes to retirees.  This is a crisis condition.

That’s why a recent Urban Institute study placed TPAF in the “Deep Red” category — as one of the nine worst public pensions funds in America.  TPAF is projected to run out of money in 20 years or less, which would be a disaster for New Jersey.

FY 2022 shows why. Because TPAF is structurally unsound, poor investment returns meant that TPAF had to sell $1.89 billion in assets to meet its annual payments to retirees.  Meanwhile, TPAF’s liabilities continued to climb.  The result was a 33.9% funded ratio.

Yet Murphy continues to refuse to do the the hard work of restructuring TPAF.  To please his biggest political supporter, the NJEA, he is pouring billions of good (taxpayer) money after bad.  Pandemic-related revenue windfalls have allowed Murphy to increase state spending to record levels, but what happens when these windfalls go away?

Read The Full Report


Despite Governor Murphy’s happy talk, the teachers’ pension fund (TPAF) is not healthy.

One bad year — pension investments were down -7.9% for FY2022 — forced TPAF to sell $2 billion of assets to meet its annual obligation to retirees.  TPAF is again under 35% funded, which means that 65% of what is owed to retired teachers is not funded. Taxpayers will be on the hook for the shortfall.

Murphy’s pension contributions amounted to over 13% of state budgets inflated by federal COVID aid and record tax revenues.  When those go away, such large pension payments will not be sustainable.

Teachers and taxpayers need to be told the truth.

Read The Full Report



Related Posts From Sunlight Blog

Strong 2023 Investment Returns But Teachers’ Pension Plan Is Still in Trouble

The Star-Ledger reports that state pension investments have “raked in huge gains” so far this year, but the structurally unsound state pension system is still in trouble.   It is of course good news that stock…

Read More

Sweeney Center Warns of “Fiscal Crisis” When Revenue Windfalls Go Away. What Happens with $7 Billion Pension Payments?

Sunlight has long warned about New Jersey’s fiscal condition.  In particular, we have focused on Gov. Murphy’s decision to accommodate his biggest political supporter, the NJEA, by choosing to make the full required pension payment…

Read More

New Jersey Gets Bond-Rating Upgrades, But Many Challenges Remain for the Future

The good news: all three bond-rating agencies upgraded their ratings for New Jersey’s bonds for the second time in the last year.  The upgrades are good news in that they reflect an improved fiscal condition,…

Read More



All Blog Posts On This Issue