OPINION: COLA’s for Firefighters Pension in New Jersey – A Contractual Right/State Obligation
Updated On: Sep 18, 2015
PolitickerNJ - The State of New Jersey entered into a contract with each firefighter on the day they were hired. As part of that employment contract, firefighters were promised a specified pension benefit after a career of service. For that retirement benefit, in addition to their service, firefighters were required to contribute a portion of their pay to fund the promised retirement benefits. The state, likewise, was committed to pay their portion of the cost of those retirement benefits.
From their first paycheck at hire, to their last paycheck at retirement, firefighters have never missed a pension payment. Firefighters have fully and faithfully met their obligations under the employment contract, both in service and in payment.
The state, on the other hand, beginning with Governor Whitman in the 80’s, decided to violate its own contract and failed to make annually required payments into the pension system. Up to that point the pension system was well funded and employer contributions modest. Like any unpaid debt, the amount owed grows over time, especially when compounded with interest. Again and again state government chose to fund its immediate political priorities, by failing to live up to the payments it had contracted for, essentially borrowing from benefits promised to employees at retirement. After failing to consistently make State required payments to the retirement system, the debt has grown exponentially. Actuarial calculations show that if the proper required payments had been made, the systems would be well funded.
Governor Christie, acknowledging this failure, enacted a law requiring the state to ramp up its payments to the full amount called for under the contract over a seven year period. Less than two years later, Governor Christie violated his own commitment under the law he championed, and declared the required payments unconstitutional. Once again money was borrowed from the employees’ futures to pay for current political priorities.
The question before the state Supreme Court now is: Can the state, after a firefighter has fully and faithfully met their obligations under a contract of the states making, simply renege, and fail to perform its contractual obligations to provide a COLA? For the Governor or any State Legislator to insert their personal opinion on what the Supreme Court ruling should be or what it would mean to the pension system is nothing more than a sound bite for their own political gains.
These Cost of Living Adjustments are important. Firefighters in New Jersey are not eligible for Social Security. If a firefighter and one of our New Jersey neighbors each retired with a benefit of $2,000 per month, after 30 years of 3% inflation, the New Jersey Social Security retiree would have a pension of $4,855. The firefighter pension would still be $2,000 — 60% less than the Social Security retiree.
Decisions have consequences. The state choosing to borrow from their employees future retirement benefits to fund today’s political priorities, for decades, is not and should not be sufficient reason to be relieved from its contractual obligations. If a person purchases a home and entered into a mortgage; failure to make those mortgage payments results in consequences.
We are a Nation of laws. Firefighters have lived up to their legal obligations under the contract; the state should be required to do the same. So fundamental is this principal that impairment of contracts is prohibited by the US Constitution.
Dominick Marino is the President of the Professional Firefighters Association of New Jersey. The Professional Firefighters Association of New Jersey (PFANJ) is the IAFF charted state association in New Jersey representing nearly 3,500 career firefighters and more than 500 career emergency medical care providers in the Garden State.