Senator Declan O’Scanlon (R-Monmouth) has introduced legislation that would provide police and firemen greater control of their pension system, while safeguarding property taxpayers from losses.
Sen. Declan O’Scanlon’s legislation would provide police and firemen greater control of their pension system, while safeguarding property taxpayers from losses. (SenateNJ.com)
“I understand the desire of PFRS members to assume greater control over their pension fund, but it shouldn’t be unchecked control that leaves property taxpayers on the hook for bad decisions they may make,” said O’Scanlon, a member of the Senate Budget & Appropriations Committee. “Our new legislation addresses the concerns of counties and municipalities that they wouldn’t have an equal say in important pension fund decisions, despite their taxpayers being liable for losses. We’re also ensuring that any benefit enhancements approved by the new PFRS board are sustainable over the long term, another protection for property taxpayers.”
O’Scanlon’s legislation incorporates the safeguards he proposed adding into a competing version of legislation that would transfer management of the Police and Firemen’s Retirement System (PFRS) to a newly empowered PFRS Board of Trustees.
His effort to amend the existing bill to include those taxpayer protections was tabled by Democrats on the Senate Budget & Appropriations committee, leading to his introduction of the new bill.
His legislation would:
- Balance the PFRS board between labor and management by increasing the PFRS board in the bill from 12 to 15. This new board will be 7 -7 with the tiebreaker, so attaining a super-majority will really mean something. The 3 new members will be:
- One direct appointment by NJAC.
- One direct appointment by NJLOM.
- One appointment to be tiebreaker focused on taxpayers without police/fire experience or local government management experience.
- Require a super-majority of the board (9 of 15) for any benefit enhancement including COLA restoration or any contribution change until the fund reaches the sustained target funded ratio of 80%. After it hits 80%, then a simple-majority of the board (8 of 15) will be enough for any benefit enhancement or contribution change.
- Ensure that any pension changes will allow it to sustain 80% funding – not just hit it and immediately decline once a benefit enhancement begins.
- Ensure that the cost of any underperforming investment returns be shared between the labor unions and the taxpayers. A rolling 3-year analysis comparing the PFRS return rate to the return rate of the other state managed systems will be done, and if PFRS underperforms against the other pension funds, the PFRS member and employer contribution rates shall equally increase from the current statutory contribution rates to make up the difference over a 2-year period.
“The safeguards we’ve proposed in the new bill are fair to both PFRS members and property taxpayers, and it will protect the pensions of our police and firemen,” said O’Scanlon. “If the police and fire unions are truly acting in good faith on this initiative, there’s no reason they shouldn’t back my proposal 100 percent.”
An identical version of the legislation has been introduced in the General Assembly by Assemblyman Ned Thompson (R-Monmouth and Ocean).