Trenton (February
25, 2014) – The National Federation
of Independent Business (NFIB) today said its members are alarmed by how
much of the state budget is being consumed by the government pension system and
urged lawmakers and the Governor to move quickly to a system that resembles a
private sector plan.
“Almost no one in the private sector gets a
pension anymore and there’s nothing fair about making most taxpayers finance a
system that is considerably more generous than their own plans,” said NFIB New Jersey State Director Laurie
Ehlbeck. “Many people are living
more years in retirement then they spent working and we can’t be expected to
finance that forever.”
Governor Chris Christie later today is expected to
make pension reform a central part of his annual budget address. Advance copies of his speech include a
proposal to contribute $2.25 billion to the state pension system this year and
even more in subsequent years. That
level of spending just for government pensions is crowding out other priorities
and can’t be sustained without higher taxes in the future.
Many small businesses don’t have retirement
plans. Those that do mostly offer
defined contribution plans funded mainly by the beneficiary with a percentage match
from the employer. The investments are
self-directed and the accounts are portable, so when an employee leaves she can
roll them into a personal retirement account and keep saving.
“Public employees have a much better deal,” said
Ehlbeck. “They get a defined income and
health care benefits that never run out, never go down and far exceed their personal
contributions. That’s not reality and it has
to change.”
A report this week found more than 1,700 former
government employees in New Jersey who are collecting more than $100,000 per
year. That’s far above the median
household income in New Jersey ($61k US Census).
“In order for a private sector worker to collect
that much in retirement she would have to have saved more than $1 million
dollars and her investments would have to generate a return of 10 percent every
year,” said Ehlbeck. “There are very few
small business owners and even fewer private sector employees who can save that
much over their careers. But we’re all
paying. Enough is enough.”
Ehlbeck said the state should transition new
workers into a 401k-style plan funded mostly by public employees. Workers who are vested should be allowed to
remain in the current system because that’s what they’ve been planning for, but
they should be asked to contribute more.
“They’ll be getting a guaranteed income for the
rest of their lives, which is more than small business owners, their employees
and most taxpayers can expect,” said Ehlbeck.
“They should pay more for that kind of security.”
For more information about NFIB, please visit www.nfib.com.
