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Public employees in New Jersey have to contribute more toward their pensions, but according to union leader Hetty Rosenstein, the average worker isn’t receiving much money during retirement.
Rosenstein, state director of the Communication Workers of America, recently made that claim when hers and other unions filed a lawsuit challenging a new state law that demands workers pay more toward their pension and health benefits.
"New Jersey made a promise to its public workers: work hard, serve the people of New Jersey, and take a salary that is less than what you might earn in the private sector – and you can look forward to a secure and stable retirement," Rosenstein said in an Aug. 31 press release. "It is not lavish: the average state pension, including managers, is $23,000 a year; and just $14,000 for local government workers."
PolitiFact New Jersey found that Rosenstein’s pension estimates need some clarification. Depending on when workers retired and how long they served, some average pensions are higher than what she claimed.
Before we talk about payments, let’s briefly explain New Jersey’s pension system.
The state has five major pension funds covering various public workers. Rosenstein told us her figures refer to the Public Employees’ Retirement System, or PERS, the fund covering most CWA members.
Data on state workers from the New Jersey Department of the Treasury back up Rosenstein’s claim that her members mostly belong to PERS.
Pension amounts vary, depending on a worker’s salary and years of service. On top of pensions, most public workers also receive subsidized health benefits in retirement.
Now, let’s explain how Rosenstein arrived at her estimates.
Rosenstein referred us to the average payments made by the state under PERS in the year preceding July 1, 2009.
According to that data, which includes most retirement types, the state paid, on average, $22,034 to retired state workers or their beneficiaries. The average annual payment made on behalf of retired local workers was $14,028. More recent data show similar average payments.
Those figures support Rosenstein’s statement, but looking at state payments is just one way of measuring average pensions.
Another way is looking at the average annual benefits due to retirees when they retired. That measurement is different than what Rosenstein cited, because it reflects what workers would be paid on a full-year basis. The state payment data includes part-year payments made to new retirees.
When we consider the average annual benefits at the date of retirement, Rosenstein’s numbers fall short for new retirees.
As of July 1, 2010, the average annual pension among four types of retirement under PERS was $21,145 for all state retirees and $13,579 for all local retirees. Those figures exclude cost-of-living adjustments granted after retirement.
Those numbers are close to Rosenstein’s estimates, but the average annual pension for "new retirees" -- people who had retired within the previous year -- was $30,199 for state workers and $20,075 for local workers.
Still, average benefits can be weighted down by people with fewer years of service, said Bill Hallmark, an actuary with the American Academy of Actuaries. To judge the lavishness of a pension, one should consider benefits paid to full-career employees, he said.
In fact, Treasury data shows that nearly half of PERS retirees in the two largest retirement groups left their jobs after 25 or more years of service -- and some of those folks are taking home the largest pensions.
In the year preceding July 1, 2010, here’s the average annual pensions for new retirees with at least 25 years of service who opted for a special retirement: $39,551 for state workers and $33,828 for local workers.
It’s also worth noting that the average annual pension in two other funds covering a small number of CWA members in state government are higher than the estimates provided by Rosenstein.
Rosenstein claimed average pensions are $23,000 for state workers and $14,000 for local government workers. Her numbers are mostly accurate when you consider the average annual payments made by the state under PERS, and also when you look at the average annual benefits for all retirees at the date of retirement.
But new retirees in PERS are receiving larger pensions than what Rosenstein suggested. Also, some CWA members are members of other pension funds where average pensions are even higher.
We rate the statement Half True.
To comment on this ruling, go to NJ.com.
Communications Workers of America, CWA, other Public Worker Unions, file Lawsuit on Pension, Aug. 31, 2011
The Star-Ledger, N.J. unions, public workers sue to stop pension, benefits overhaul, Aug. 31, 2011
Phone and email interviews with Hetty Rosenstein, Communication Workers of America, Sept. 6 and 12, 2011
New Jersey Department of the Treasury, Actuarial Section of the Comprehensive Annual Financial Report for Fiscal Year 2010, Sept. 13, 2010
New Jersey Department of the Treasury, Fiscal Year 2010 Actuarial Report for Public Employees’ Retirement System, Dec. 17, 2010
New Jersey Department of the Treasury, Fiscal Year 2010 Actuarial Report for Teachers’ Pension and Annuity Fund, Dec. 22, 2010
New Jersey Department of the Treasury, Fiscal Year 2010 Actuarial Report for Police and Firemen’s Retirement System, Dec. 17, 2010
Phone and email interviews with Bill Quinn, spokesman for New Jersey Department of the Treasury, Sept. 7-14, 2011
Interview with Bill Hallmark, American Academy of Actuaries, Sept. 14, 2011
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