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Moody’s says the New Jersey Public Employees Retirement System
(PERS) and the Teachers’ Pension and Annuity Fund (TPAF) “could fully
expend their assets as soon as 2024 and 2027… even assuming the funds
meet assumed investment returns.”
Last week, New Jersey reported its unfunded pension liabilities
doubled to an astonishing $83 billion at the end of June. New more
realistic accounting guidelines required by the Governmental Accounting
Standards Board require New Jersey, and other states, to use smaller
discount rates to determine investment results. The Moody’s report -- New Jersey Reports Surge in Unfunded Liabilities Under New Pension Accounting Rule
-- indicates New Jersey has limited time to fix its poorly funded
public pensions, or the state’s taxpayers face a nightmarish future of
higher taxes and fewer services.
According to Moody’s: “Once plan assets are depleted, the state will
have to fund pension benefits directly from its operating budget,
driving its annual retiree benefit expenses significantly higher.”
Benefits paid to teachers and public sector retirees in 2013 from
TPAF and PERS assets totaled $4.9 billion, roughly 16% of the states
operating revenues. The state’s contribution to those plans last year
was $878 million. When those pension plan assets are depleted, taxpayers
will have to fund the $4 billion shortfall. New Jersey has already
delayed plans to better fund its public pensions, and Moody’s warns the
new accounting standards will cause the state’s unfunded liability to
continue to grow.
Culled from Fox Business
A new report from Moody’s Investors Service warns that two of
New Jersey’s largest public employee pensions will run out of money and
exhaust their underlying assets within ten years.
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