Cost-of-living adjustments not guaranteed for public pensioners, says NJ Supreme Court
A New Jersey pension overhaul that suspended cost-of-living adjustments for public employees was upheld Thursday by the state supreme court.
The plan, enacted in 2011, reduces the state pension system’s unfunded liability by $17.5 billion, the Philadelphia Inquirer reports. According to NJ.com, the state’s pension system is underfunded by $59 billion.
Union representatives and a group of retired state prosecutors argued that a 1997 law created a contractual right to cost-of-living adjustments to benefits for New Jersey employees. According to the Inquirer, the law holds that public workers vested in the retirement system have a “nonforfeitable right to receive benefits as provided under the laws governing the retirement system or fund.”
The New Jersey Supreme Court found in a 6-1 decision that the plaintiffs didn’t prove the legislature and governor who passed the law “unequivocally” wanted it to create a contractual right to “yet-unreceived [cost-of-living adjustments].” Also, the court found that the state’s Pension Adjustment Act, not the 1997 law, authorizes cost-of-living adjustments for retirees, and does not make that benefit nonforfeitable.
“Based on this decision, all public employees should be gravely concerned that their remaining pension benefits have any legal protections left,” Charles Ouslander, a retired prosecutor who argued the appeal, said in a statement.
The state supreme court ruling keeps New Jersey out of a funding crisis, the Wall Street Journal reports.
“State taxpayers have won another huge victory…One that spares them from the burden of unaffordable benefit increases for public employee unions,” Republican Gov. Chris Christie told NJ.com.
