By John Reitmeyer, State House Bureau,
As Governor Christie awaits final recommendations from a panel he’s asked to come up with ways to lower the cost of pensions and other public employee benefits in New Jersey, two liberal think tanks said on Tuesday that shifting employees to a 401(k) retirement plan would be a costly mistake.
A report released by New Jersey Policy Perspective and Keystone Research Center said the shift from the current pension plan to a 401(k) would cost state taxpayers an estimated $42 billion — nearly half the current value of New Jersey’s pension system.
Without current employees covering the benefits of retirees — which is the current structure of the pension system — taxpayers would be left to pick up the tab, the report found.
“Most states that have considered switching employees to 401(k)-type accounts have rejected doing so because it risks putting a severe burden on taxpayers,” said Stephen Herzenberg, an economist at the Harrisburg-based Keystone Research Center who wrote the report. “The three states that have actually gone forward have seen pension debt mushroom.”
“It’s a policy prescription that New Jersey taxpayers simply can’t afford,” Herzenberg said.
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