*Cross posted from Teacherpensions.org’s blog.
New Jersey teachers are still angry with Governor Chris Christie for shorting the pension fund and are now suing for $4 billion total in damages. While teachers have absolutely every right to be mad with the Governor—who after all, broke his own promise and law—teachers are also severely shortchanged by the pension system itself. Over half (55 percent) of the state’s new teachers won’t meet the minimum 10-year service requirements to qualify for a minimum pension benefit. Even for teachers who do qualify for benefits, these teachers will most likely end up paying more towards the system in contributions plus interest than what they will get back in return, losing money overall.
Christie’s pension commission proposed a fiscally responsible plan that would overhaul the current system and provide better benefits for new early and mid-career teachers. Unfortunately, however, it looks like Christie’s politics may jeopardize the chance for true reform.
Even those who do not qualify for a minimum pension benefit still get their contributions and any interest that accrued. This is no worse and perhaps better that most 401K plans that private sector employees have as their only choice. They can roll this money over into an IRA, or, often times transfer to another pension plan. I have done this after teaching in Calif, then Louisian and back to Calif. The facto of the matter is that the real problem is that states are short changing the pension systems. Taxes need to be raised to fully fund pensions.