New Jersey’s pension fund has only two-thirds of the assets needed to pay future benefits, and the gap widened even as Governor Chris Christie boosted employee contributions and froze raises, according to state data.
The seven retirement funds covering government workers and teachers had a funded ratio of 67.5 percent as of June 30, down from 70.5 percent a year earlier, according to data released yesterday by the Division of Pensions and Benefits. The deficit swelled by $5.5 billion during the 12 months to $41.8 billion.
To address chronic shortfalls, Christie in June signed bills that raised pension and health-care expenses for public workers, increased the minimum retirement age for new employees to 65 from 62 and froze cost-of-living increases.
Without Christie’s changes, the deficit would have been $61.8 billion, Andrew Pratt, a spokesman for Treasurer Andrew Sidamon-Eristoff, said in an interview. “We always planned for that,” he said. “This is no surprise.”
The so-called unfunded liability stood at $53.9 billion before passage of Christie’s plan. After approval, the gap was lowered to $36.3 billion based on revised 30-year projections, Pratt said.
A 2010 law required the state to begin phasing in the full payments over seven years after a decade of lapsed funding. Christie this year has budgeted $484 million for a pension payment, according to the Treasury Department. Actuaries had recommended the state put in $3 billion. Pratt said 20 years of underfunding “magnified” the problem.
Moody’s Investors Service said a day after the pension law was signed that it wouldn’t help New Jersey until 2017 and that the health of the funds would “continue to deteriorate” as the state skipped payments. A 2010 law required the state to begin phasing in the full payments over seven years.
New Jersey’s pensions in 2010 had 66 percent of what was needed to pay promised benefits, down from 71.7 percent in the preceding year, according to an annual study by Bloomberg Rankings. The median for all states was 74.6 percent.