Trenton Police, Firefighters Sue Over Missed Pension Payments

From The New Jersey Times, October 5

TRENTON, N.J. – Police officers and firefighters alleged yesterday that years of skipped payments by the state has jeopardized their retirement fund even as taxpayers face dramatic increases in public employee pension payments.

The Professional Firefighters Association of New Jersey and the New Jersey State Fraternal Order of Police filed a lawsuit yesterday in Superior Court in Trenton alleging that skipped state and municipal payments have made the Police and Firemen's Retirement System of New Jersey (PFRS) unsound.

Thomas P. Canzanella, president of the firefighters union, said the skipped payments came as firefighters and police officers continued paying money into the fund.

State FOP President Edward R. Branigan, said skipped payments have shaken the fund's "ability to make good on earned benefits as they come due in the future."

"An undeniable consequence of this failed scheme is the alarmingly significant reduction in plan earnings from investments and interest that would have been derived," he said.

State Treasury Department spokesman Tom Vincz declined to comment on the litigation.

The lawsuit is the second filed against the state because of skipped payments. The New Jersey Education Association filed a similar lawsuit in 2003.

Both lawsuits ask a judge to force the state to pay what it owes in pension payments, a consequence that could hit taxpayers hard. Canzanella said police officers and firefighters are also taxpayers and share taxpayer concerns, but the state is obligated.

Local governments did not make payments into the system from 1997 until 2003 after Gov. Christie Whitman's administration put $2.8 billion in borrowed funds into the plans and a booming stock market lifted investments.

But the stock market collapse drained billions of dollars from the system. Meanwhile, the Legislature increased retirement benefits, and the state has deferred pension payments amid budget woes.

Officials estimate the overall system is now underfunded by as much as $35 billion, and in the budget signed into law in July the state skipped about $900 million in scheduled pension system payments.

Pension costs will increase by as much as $1 billion in the next fiscal year, and acting Gov. Richard J. Codey has created a task force that is considering reforms.

The state has allowed local governments to phase in payments to the pension system to soften the financial hit. This year's payments for the PFRS, for instance, represent 60 percent of the liability due.

Statewide, local taxpayers will owe $382.8 million to the state this fiscal year for public employee and police and firefighter pension payments, a $207.1 million increase.