This is a major reason why taxpayers and voters have become fed up with the Legislature. The bill was introduced last week by Democratic Assemblyman John McKeon.
Essentially it allows a public official who’s retired and receiving a pension from a previous job to request the pension from a newly elected position be counted toward the original.
For example, person “A” retires as a school superintendent and begins collecting their pension payment. They decide to run for office and get elected as an Assembly member. This bill doesn’t force them to re-enroll in the system. Re-enrollment means the person’s pension payments are frozen from that previous job until they retire.
And once they do retire, under this bill their pensions would be recalculated taking into account their current salary and additional years of service. That matters because payments are calculated based on highest average salary you receive, and you receive a slightly higher percentage for each additional month of service. The public employee can then receive a retroactive payment based on the difference between how much they already received in pension benefits and how much they should have received with the new, more generous, calculation.
It all stems from a 2007 law that placed newly elected officials in a less generous, 401k-style defined contribution account instead of the public pension. Under that law, anyone who changed elected offices after 2007 had their pensions frozen in place and were put in the 401(k) account.
We probably don’t have to remind you that New Jersey’s pension fund is considered the worst-funded in the country. This could also affect the number of people who are qualified for lifetime retirement benefits in the state because their years of service are being increased, though advocates say it only affects a handful of people so it wouldn’t push the needle on the system. As of Tuesday, the bill has yet to go before the Budget Committee for a vote.