I’m Rich Fortunato and I am running in next Tuesday’s election for the State Assembly for District 22, which includes Plainfield, Rahway, North Plainfield, Green Brook and Dunellen.
There’s a big financial issue looming which will have an effect on all New Jersey residents, and that is our State pension crisis. This will affect not just government retirees and taxpayers, but also everyone who receives services of any type from the State. It is a very serious financial problem to which Trenton is not paying enough attention.
In short, over time the State’s obligation to make benefit payments to government retirees will greatly reduce funds available for other State services, with the result that important State services will be cut. It is only a matter of time before this starts to happen.
Maybe the State retirement plans were too generous; but that isn’t my point. Promises were made, rightly or wrongly, and government workers relied on those promises. I don’t think it would be fair to now reduce benefits which were promised.
The State needs to deal with this issue, now, in a way that gives retirees what they were promised and is also most cost effective to taxpayers, while minimizing as much as possible the effect on future State budgets.
We need to move towards a system where new employees are enrolled in 'defined contribution plans' (401(k)'s for example), existing employees going forward are phased into defined contribution plans and vested benefits under the current retirement plans are valued fairly and the employees get, in cash, the value of their vested benefits but they have to put that cash into either an IRA account of their own or a tax-deferred annuity in their name from a qualified insurance company.
Going forward the State and each employee would make payments into the employee’s retirement account. The State would no longer guaranty the payments to be made upon retirement. Employees will get certainty – they will not have to worry about the State being unable or unwilling to pay their pensions down the road.
The downside of this approach is the State will have to borrow the cash needed to fund the payout of its existing plans. But the upside is the total dollar amount owed on the existing plans will be locked in, and can be paid off over many years.
Elected officials will have to make the case to the public, the employees and Wall Street that getting the pension issue behind us, and putting certainty around the numbers going forward to pay that debt off rather than having the unfunded pension specter looming over the budget every year makes sense for the State, the tax payers and the retirees. Needless to say, the state employee unions will object to virtually any pension reform, and our current Assemblymen Green and Kennedy are unlikely to do anything to which the unions object. See fortunatoforassembly.com for more information. Please consider voting for me next Tuesday for the Assembly.