Though he’s not popular with New Jersey public employees, Gov. Chris Christie (R) seems likely to play the “Constant Gardener” with the state pension scheme in the wake of a report by the State Budget Crisis Task Force headed by Paul Volker and Rutgers professor Richard Keevy. Though recent reforms trimmed the public pension gap from $37 billion to $26 billion, tough choices lie ahead. The $1 billion contributed this year to the pension plan will have to grow to $5.5 billion — which is 40% of the education budget.
Like Rhode Island, New Jersey is headed for a showdown with public employees and their unions, forcing states to make the choices large private companies made decades ago when they fled from DB to DC plans. The problem is more severe for governments because they are starting later, and doing so in an era of slower market growth. Either way, more state and municipal employees had better learn how to spell “401(k)” — making knowledgeable plan advisors in even more demand.
