Thomson says state’s public-worker pension system set up for failure

Thomson says state’s public-worker pension system set up for failure

TRENTON, N.J. – In light of New Jersey’s disappointing returns from public-worker pension fund investments, Assemblyman Ned Thomson released a new video today that cites the critical need to fully fund the pension as soon as possible. New Jersey’s public-worker pension fund investments fell short by returning 6.27 percent instead of the 7.5 percent assumed rate of return for the fiscal year ending in June.

WATCH: Set up for failure: New Jersey’s public-worker pensions

“There comes a point in time in actuarial mathematics at which you can’t recover and we’re getting real close,” said Thomson (R-Monmouth), an enrolled pension actuary. “Unless we fully fund our pension liability immediately and grow our revenue streams to improve New Jersey’s economy, which neither are being done at this time, then we keep going down that rabbit hole and we will not be able to recover. What happens then? The system freezes and/or fails.”

Thomson was vocally opposed to Gov. Phil Murphy raising the pension fund’s assumed return rate to 7.5 percent from the 7 percent shortly after he took office. The accounting change lowered the state’s pension payments by more than $235 million.

The unrealistic rates of return are contributing to the state’s pension crisis. Assuming the investments will earn a high rate makes the pension fund look healthier, but doesn’t reflect the reality of the state’s investment outcomes, which reduces the value of the pension system.