By Briana Vannozzi
“This bill takes us from silent stakeholders to active decision makers with our pension system,” said Ed Donnelly, president of the New Jersey State Firefighters Mutual Benevolent Association.
Cops and firefighters are hoping legislation moving through Trenton will finally free them from the state’s grip on their pension fund. A bill unanimously passed the Senate this week transferring management of the police and firemen’s retirement system from the state back to its roughly 85,000 current and retired members by creating a board of trustees.
“The board is going to hire an executive director, a chief financial officer, our own actuaries, our own legal team. Right now we have no say. Everything is hired through the division and the treasurer’s office and the governor’s office. As board members currently today, those decisions are made up there and by the time they trickle down to us they’re so diluted and we really are nothing more than a rubber stamp at that point,” Donnelly said.
New Jersey’s State Investment Council currently handles the $72 billion worth of assets for the state’s seven public pension funds. And while it’s no secret the rest are in critical shape, the police and firemen’s account is in good standing. It’s over 70 percent funded.
“The advantage is allowing them to control their destiny. You know what happened, there’s been a lot of complaints about too many hedge funds, the fees being too high. This is their retirement and they really don’t have the type of say they should have in it,” said Senate President Steve Sweeney.
Bill sponsor Sweeney says with more control, members are likely to make frugal and smart decisions. Board trustees will have authority to change members’ contributions, benefit amounts and even reinstate cost of living adjustments that got eliminated during the 2011 reform.
“[This is] I think, a responsible approach that will work in the best interest of both the taxpayer but also people who’ve earned these benefits over time for their service to the public,” said Sen. Tom Kean Jr.
“We have some serious reservations about the bill in its current form. The concept is something definitely worth exploring,” said Mike Cerra, assistant executive director of the New Jersey State League of Municipalities.
New Jersey’s League of Municipalities wants to see board composition equalized. Right now it calls for seven labor and five management members.
“The risk is on the backs of the employer, and the employers in this circumstance, which are the municipalities and the counties and by extension the taxpayers, are contributing 25 percent into the system and employees are contributing 10 percent. Because of that we think it’s vital that the board have an equal number of labor and management representatives,” Cerra said.
“The counties and the towns have been working very well with police and fire on this and they pointed out we’re paying 25 percent to your 10.5 [percent] but that’s because they skipped years of payments. They have to plug that in. I’m not saying they’re being dishonest, I’m just saying they forgot a couple facts,” Sweeney said.
Speaker Vincent Prieto is introducing the Assembly version of the bill today and expects to schedule a vote in the coming weeks.