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How can we sustain this system?

Wall Township Administrator Joseph Verruni is retiring from his $179,000 per year job, after 20 years of service, on June 1, 2012.   He is 54 years old.  His pension will be between $80,000 and $90,000 per year, according to a report in The Asbury Park Press.

This rant is not about Verruni. 

As Wall is a wonderful place, I’m sure he did a terrific job over the last 20 years.   I don’t necessarily begrudge him the $179,000 salary for the work he did (even though Monmouth County Administrator Teri O’Connor makes significantly less)  But he’s 54 years old, starting a new career in the private sector,  that will be supplemented by $2,500,000  if he lives another 30 years!   That doesn’t include the tax payer funded health insurance that will keep him alive, hopefully for his sake and that of his family, more than 30 years!

If Verruni collects $85,000 per year for 30 years, he will have “earned” an additional $127,500 for every year he worked as Wall Township’s administrator.

I really should have taken a government job when I graduated from Georgetown in 1980.

This is not about Verruni.  It is about a system that pays adults in the prime of their earning years the equivalent of full time wages not to work.  Like my high school buddy who retired from the Bergenfield Police Department at 53 and takes home $20 per month less per month than he did when he put the uniform on every day.  Or like the retired State Police Investigator, 47 years old, collecting  a pension of $84,300 per year, who is Acting President of Brookdale Community College with a salary of $150,000 per year.

This system is not sustainable and it is not equitable.

The pension and benefit reform package that Governor Christie negotiated with the Democratic Legislature is an improvement of the previous system.  Yet the new system is not sustainable over time either.  We’re not feeling any of the pain yet.

Over the next 30 years, the state pension contribution will be $4.9 billion per year.  The local government contributions will be $2.3 billion per year over the next 30 years.  Both figures are on average.   We’re “enjoying” the savings now with smaller pension contributions that must increase by $500 million per year until we’re “caught up” with all the contributions we haven’t made since 2000.

Unless there is significant economic growth, soon, we won’t be able to sustain this system without significant tax increases. 

Who is going to be left to pay those taxes?

If we’re going to have a pension system for government employees, we shouldn’t be paying out until the retirees are 65 years old, or older as life expectancies increase.

Posted: December 29th, 2011 | Author: | Filed under: 2011 Year in review, Pensions | Tags: , , , , , , , | 2 Comments »