Despite mass mobilizations from union members and community supporters and strong opposition from the majority of the Democratic Caucus in both Houses, landmark health insurance and pension benefits legislation passed in Trenton June, 2011. A small group of Democrats, including those in leadership positions, sided with the Governor and Republicans. The legislation will have an immediate negative impact on AFTNJ members and severely restricts collective bargaining rights for the future.
Pensions Contributions Rising
Members who are enrolled in the state Public Employees Retirement System (PERS) or the Teachers’ Pension and Annuity Fund (TPAF) program will see one‐percent of salary increase coming out of pay into the system starting in October. An additional increase to be phased over the next 7 years will bring the total pension contribution rate to 7.5% of salary.
Further information at http://www.state.nj.us/treasury/pensions/coltr11.shtml#ch78perstpaf.
Those enrolled in the 401k-styled Alternate Benefits Program (ABP, which has the carriers such as TIAA‐CREF, Met Life, ING, etc.) will not have changes.
Health Insurance Costs Rise for All
There will be significant increases in costs for those participating in the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP). Increased costs will be based on a percentage of the premium and will be phased in over four years, based on salary as indicated on the Frequently Asked Questions page at http://www.state.nj.us/treasury/pensions/reform-hb-qa.shtml. Scroll down the page to see the charts.
New plans are supposed to be available during Open Enrollment in the Fall of 2011 with an effective date of coverage of January 1, 2012. The pricing of the new plans will then set the actual rate from which the percentage of the premium will be deducted. Union representatives serving on the committees are fighting to ensure active members and retirees have access to quality health care coverage at the most reasonable cost available and to protect them from incurring any additional out-of-pocket expenses. Management representatives have been dragging the process out.
Retirees pension cost of living adjustments have been frozen and will not increase unless the level of the fund increases to meet certain targets, which is likely to take a long time. Fortunately, retirees and those with more than 20 years in the retirement system will not be charged more for retirement health insurance. Those with more than 20 years in the system, but less than 25, they will pay the same percent of the premium as an active employee. However they will only have to pay 1.5% of their final salary for retiree health care.
Those who join the system will immediately pay health insurance costs at the maximum amount for their pay grade, which will make recruiting the best and brightest to the profession more difficult. There are outstanding questions as to whether new workers with appointment letter pre-dating the deadline will start at the first year percentage of insurance premium contribution or at the full rate.