Sweeney Plan for Quarterly Pension Payments Goes To Governor
Legislation Would Require Scheduled Payments Into State Pension Funds
TRENTON – The state would be required to make quarterly pension payments under legislation authored by Senate President Steve Sweeney that was approved by both the Senate and the Assembly today. The bill, S-2810/A-4, which now goes to the governor for his expected approval, would provide substantial savings and help restore fiscal stability to state finances by setting a timetable for the required payments to the state’s pension funds.
“Quarterly pension payments will help 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. In future years, when the state is making its full pension contribution, this law will generate $200 million a year in additional investment income.”
Making quarterly payments is expected to save taxpayers between $10 billion and $13 billion over the next 30 years, Senator Sweeney said.
The Senate voted 35- 0 and the Assembly followed with a vote of 72 – 0 in support of the measure.
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.
“This will provide greater stability to state finances at the same time it produces ongoing savings,” said Senator Sweeney. “This will help make the pension funds healthier with scheduled payments that will generate financial returns. This is about living up to our commitments but it is also the best way to serve all taxpayers.”
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. This schedule of required payments will help to force the state to live up to its commitments.”
Senator Sweeney noted that the courts have affirmed that it is the state’s responsibility to provide the required pension benefits.