"This is not the kind of problem you can solve overnight," said Joshua Rauh, a pension expert at Northwestern University who co-authored the study.
A sign of the high emotion associated with the measure came in Bergen County on Wednesday at one of Gov. Christie's town hall meetings, where singing protesters were removed by police and a significant portion of the audience booed when Christie spoke of his pension and health-benefits plan. It was perhaps the most contentious town hall of the Republican governor's term.
"Not everyone will like every compromise. I don't like every compromise. But I was not sent here to pose and preen, ladies and gentlemen. I was sent here to govern," Christie said, repeatedly noting that the bipartisan cooperation that went into crafting the measure should serve as an example to Congress.
"Those [benefits] systems will now not go insolvent, the pensions will be paid, the taxpayers will be protected. The state will be back on sound fiscal course because both parties have decided we need to put political courage ahead of political expediency," he said.
Experts say the provision of the bill with the most long-term impact is the suspension of automatic cost-of-living adjustments for current and future retirees. The automatic increases would only kick in after the state's various pension funds - depleted after several governors skipped billions in contributions - were restored to 80 percent.
That move alone would account for more than half of the $120 billion in savings the legislation is expected to yield over 30 years, according to state officials.
For each percentage-point cut in cost-of-living increases, the state could reduce its unfunded liability by about 16 percent, according to Rauh, who last year found that New Jersey owed $119 billion more in pension obligations than it had set aside to pay.
Hetty Rosenstein, a director of the Communications Workers of America, New Jersey's largest state workers union, said her members have "nonforfeitable rights" associated with their pensions, and they include cost-of-living increases. Taking them away will put many retirees in the poorhouse, she said.
Attempts by other states to suspend the automatic increases have prompted lawsuits. Rosenstein said the CWA also is exploring its legal options.
For teachers and state and local workers in the Public Employee Retirement System, the legislation would raise workers' pension contribution rates to 6.5 percent in the first year, an increase of 1 percentage point. An additional percentage-point increase would be phased in over seven years.
Contributions would immediately rise to 10 percent, from the current 8.5 percent, for police and fire employees.
Yet the bill does not adequately address the funding gap caused by successive administrations' not putting enough away for retirement benefits, some experts say.
"While I think the bill is a good sign of acknowledging a very big problem . . . I don't think it's going to be enough to save the system from the size of the liability they are looking at," said Eileen Norcross of George Mason University, who has studied the state's pension situation.
New Jersey should have looked into 401(k) plans for some of its younger employees, Norcross suggested. That's a proposal that has not gotten much headway in Trenton.
The new legislation empowers unions to sue the state if it does not make its legally required contribution. But a 2010 law created a system that allows New Jersey to make just one-seventh - or $506 million - of the more than $3 billion contribution called for this year by actuaries. Its obligation is supposed to increase gradually to the full contribution in seven years.
Norcross questioned how the phase-in figures would be enough to support the pension system, especially since the full amount recommended by actuaries is considered insufficient by some.
Rauh agrees. So does Jeremy Gold, a New York-based actuary.
"The state, even if were meeting the actuarial requirements, wouldn't be paying enough," Gold said. "In spite of that, I still think this [legislation] is a step in the right direction, which I guess is pretty sad."
The bill establishes new pension committees, composed of employer and labor representatives, that will set contribution rates and make other modifications once the state's retirement obligations are 80 percent funded.
The state's judgment that its pension obligations are 80 percent funded could be overly optimistic, however. Some authorities warn that New Jersey, like other states, has anticipated unrealistically high rates of return on its fund investments.
The state's $67 billion in unfunded liabilities for retiree medical benefits has received less attention, and it is unclear to what extent the bill addresses that problem. Unlike pensions, New Jersey funds health care under a "pay as you go" system and has not set aside any money to cover such benefits for the wave of baby boomers facing retirement.
The legislation introduces a complex system of employee health contributions, and delegates to state committees the task of creating a more varied array of plans than now offered. The bill features 18 tiers of contribution levels for a family plan, with the highest earners chipping in 35 percent of their premiums.
Everyone who is currently working will have to pay the higher contributions. However, those who have already put in 20 years with the state will not have to pay the higher rates when they retire.
"It's a recognition of a lot of folks who have a lot of years in. . . . The only unfortunate thing there is, you have to draw the line somewhere," said Derek Roseman, spokesman for the Senate Majority Office.
Contact staff writer Maya Rao at 609-989-8990 or email@example.com
Inquirer staff writer Matt Katz contributed to this report.