Sweeney Announces Plan for Quarterly Pension Payments
Legislation Would Require Scheduled Payments Into State Pension Funds
TRENTON – The state would be required to make quarterly pension payments under legislation announced by Senate President Steve Sweeney today. The bill, which will be introduced today, would provide substantial savings and help restore fiscal stability to state finances by setting a timetable for the already required payments to the state’s pension funds.
“This is a smart and fiscally responsible way to manage state finances and the pension system,” said Senator Sweeney. “It will save the taxpayers’ money and help bring more fiscal stability. This is about living up to promises and agreements but it is also the best way to serve all taxpayers.”
Senator Sweeney said his staff has been working productively with the Governor’s staff and is confident the Governor will support it.
The legislation would require the state to make pension payments every three months – which the federal Employee Retirement Income Security Act requires underfunded private pensions to do to maximize investment earnings. Other states have enacted the quarterly-payment requirement. California, Indiana, North Carolina and Pennsylvania all have statutes requiring quarterly pension payments in order to maximize their investment earnings.
Making quarterly payments is expected to save taxpayers between $10 billion and $13 billion over the next 30 years, Senator Sweeney said.
“Quarterly pension payments are a cornerstone of our effort to restore the fiscal solvency of the nation’s worst-funded pension system,” said Senator Sweeney. “This year alone, making quarterly pension payments would have generated more than $100 million in additional investment income – based on the State Investment Council’s projections. In future years, when the state is making its full pension contribution, this law will generate $200 million a year in additional investment income.”
The payment schedule would allow the state to ramp up to the full actuarially-required pension payments, a goal that would restore fiscal health to the funds.
“Quarterly pension payments by themselves do not solve the state’s pension crisis but this is an important step in cutting the unfunded liability and reducing the amount of money taxpayers will have to pay into the pension system in the future,” Senator Sweeney said. “The past practice of waiting until the end of the fiscal year to make the contributions was an invitation to not making the payments at all.”
Senator Sweeney noted that the courts have affirmed that it is the state’s responsibility to provide the required pension benefits.
Sweeney Tours Pinelands Regional High SchoolDecember 3, 2019