Pension System

Proposed changes to the federal pension-insurance system would go a long way toward warding off crisis and avoiding an eventual taxpayer bailout. But the cost of the changes could threaten businesses' ability to offer the very defined-benefit pensions that the proposals are meant to protect. And the Bush administration's proposed changes - introduced in January - have run into broad opposition from corporate lobbying groups and unions. They say changes should be made, but the current proposals could lead to lower pension benefits and overburden weak companies.

When Mayor Goode delivers his annual budget address this morning, he probably will not even mention the city's pension system. It is, after all, one of those fixed costs of doing business, like heating bills and health insurance. But the pension system is expensive - it has cost the city $157 million this fiscal year, close to 10 percent of the entire operating budget. And the pension benefits are generous - among the best money can buy. Simply put, the city spends more than half of all the real estate taxes it collects every year covering the cost of its pension system.

A bill to create a two-tiered city pension system - with reduced benefits for new city workers hired from 1987 on - was proposed yesterday by the Goode administration. The measure would bring Philadelphia into compliance with a new state law designed to provide more solid financing for municipal pension systems throughout the state. City officials were unable to provide any specific projections on the financial impact of the proposal, citing uncertainty over the number of future city employees, future salary levels and other variables.

Dec. 11 began what could be a catastrophic era for Pennsylvania taxpayers. The Board of Trustees of the Pennsylvania School Employees Retirement System (PSERS) voted to increase the employer contribution rate to 8.22 percent of payroll for 2010-11, a 72 percent increase from this year's rate. Those percentages will continue to climb, reaching a projected rate of near 30 percent of payroll by 2012-13 and are estimated to remain above 20 percent for nearly two decades. How much will school property tax bills increase to fund this unsustainable expense?

TRENTON - Without drastic changes, New Jersey's public employee pension funds are headed for insolvency. Gov. Christie is expected to unveil his proposal to reform the public employee pension and health-care system this week. The governor has made clear that workers should expect cuts, which may include a rollback of a 9 percent pension increase granted in 2001. But even with significant cuts in benefits, the pension system, which covers more than 720,000 current workers and retirees, needs massive infusions of taxpayer dollars to remain afloat.

The Republican and Democratic candidates for governor, all together for the first time last night, bemoaned one of the most pressing issues facing the state's next chief executive - the looming pension crisis. But they offered no certain solutions. When Gov. Rendell's second term ends in January, he will leave state government with a $20 billion pension gap. Although taxpayers are scheduled to pay $1.3 billion next year to help fund the pension system for state and school employees, that amount may have to grow severalfold in order to avoid default.

New Jersey's Legislature needs to confront a crisis in the state's pension system for public employees, and soon. For more than a decade, leaders of both political parties in Trenton have winked at the state's obligation to pay into the retirement funds for state government employees, teachers and other retirees. In some years, the state kicked in virtually nothing when it should have been contributing hundreds of millions of dollars. Gov. Corzine last year called legislators' bluff and insisted on a substantial state payment into the pension system.

In the tradition of his predecessors, Gov. Corzine is giving an adviser one final reward before leaving office: appointment to a casino-funded state authority that pays $18,000 a year and keeps recipients in the pension system. Michellene Davis, the governor's chief policy counsel, was named on Tuesday to the board of the Casino Reinvestment Development Authority. Davis will join board member Peter Cammarano, who was chief of staff to Gov. Richard J. Codey in 2005 when Codey appointed him weeks before leaving office.

The Pennsylvania teachers' pension system has accelerated its push into the high-risk, global venture capital markets by committing $135 million to a new, Radnor-based private equity fund. The Co-Investment 2000 Fund will be managed by Radnor-based Cross-Atlantic Capital Partners and by Richard M. Fox, who until January was head of the investment banking arm of Penn Mutual Life Insurance Co. and its Janney Montgomery Scott brokerage. The new fund will invest in some of the privately held companies belonging to 25 venture capital firms that already manage money for the state-subsidized Pennsylvania Public School Employees Retirement System, according to Fox and John C. Lane, the pension system's chief investment officer.

Citing billions in losses, the McGreevey administration is planning an overhaul of New Jersey's state pension system, and has put one of the governor's top supporters in charge of making it happen. The state plans to hire outside auditors to review the $62 billion plan, which is currently run by state workers on a shoestring budget. Based on the auditors' report, the administration may start hiring private money managers, or beefing up the system's current staff. New Jersey may also consider going beyond its historic focus on publicly traded stocks and bonds, and start investing in high-yield, high-risk junk bonds, along with property, venture-capital, and other "private" investments it now avoids, according to the new State Investment Council chairman, Orin Kramer.

After the last guy quit and moved to Jersey, Philadelphia's Board of Pensions and Retirement - five city officials and four union reps - hired Connecticut hedge-fund manager Sumit Handa as its new chief investment officer. It's a big job. City taxpayers had to pump more than $500 million last year into the pension system - about as much as the city spends on police, and twice what it spends on prisons - to keep the fund from falling further behind. City workers also help finance pensions through payroll deductions.

Veteran public official Lee Solomon, president of the New Jersey Board of Public Utilities, will be nominated to return to his previous position as a Camden County Superior Court judge, Gov. Christie said Thursday. The Haddonfield Republican has been a county freeholder, state assemblyman, county prosecutor, state monitor of the Camden police, and deputy U.S. attorney for South Jersey. Solomon, 57, was a judge from 2006 to 2010. After Christie was elected in 2009, he asked Solomon, who worked under him when the governor was U.S. attorney, to take a cabinet-level position heading the BPU. The agency regulates natural gas, electricity, water, telecommunications, and cable TV. "If anybody else in the world had asked me to leave the bench, I would have said no," Solomon said at a joint Statehouse news conference.

Fraud alleged for L.I. rail pensions NEW YORK - Hundreds of Long Island Rail Road employees may have cheated their way to big pensions through a $1 billion fraud by paying off doctors to say they were unable to work, authorities said Thursday as they revealed that some supposedly disabled retirees were spotted regularly playing tennis and golf, shoveling heavy snow, and working out for hours at a gym. Eleven people, including two orthopedists and...

It's the Republican reformers vs. the entrenched Democratic politicians. So goes one of the themes of attack ads filling mailboxes and airwaves in South Jersey a little more than two weeks before the Nov. 8 elections. Republicans are hoping to grab a few seats in the Democrat-controlled Legislature, and Democrats are fighting back with ads of their own. You can even hear the noise from Southeastern Pennsylvania, where many fall races are sleepy by comparison. Some of the South Jersey ad wars are on Philadelphia TV and radio.

The Pennsylvania State Employees' Retirement System , which is likely to need a lot more taxpayer help in paying $49 billion in future pensions from $26 billion in current assets, has fired and replaced two private firms that had advised it in hiring hundreds of private stock, bond, real estate, buyout, hedge fund, venture capital, and commodities investment managers since the 1990s. SERS directors, mostly appointed by Gov. Corbett and General Assembly leaders, voted to hire RV Kuhns & Associates Inc. as the fund's general investment consultant and StepStone Group L.L.C.

PHILLY IS ON track to star in a real-life disaster movie. But not the kind where residents fall victim to an incurable disease, evil aliens or savage apes. Call it: "Attack of the Underfunded Pension Plan. " Not scary? Consider this: The pension plan for city workers has less than 50 percent of the money it needs to pay projected benefits. Because the city is obligated to keep the fund going, there could be less cash in the coming years for cops, firefighters and libraries.

LOOKS LIKE THE BUCK stops here for two former city workers convicted of felonies who have been receiving city pensions for years. The city pension board today was to consider disqualifying five former municipal workers from the benefit system - including two check-collecting felons who were identified by the Daily News last month. Those two - former juvenile probation officer Sherman Washington and one-time Municipal Court employee Gladys McDowell - were among eight felons the People's Paper found were receiving benefits.

In the Region N.J. pension savings seen in 2018 One of the nation's top credit-rating firms, Moody's Investors Service, said pension legislation signed by Gov. Christie on Tuesday would not result in material savings until 2018. Still, "the reforms are a critical step in managing the state's long-term liabilities," said Moody's vice president Baye Larsen, author of a report on New Jersey health and pension reform. The state faces $37.1 billion in unfunded liability in its pension system, making it the seventh-lowest-funded state system in the nation, Moody's said.

One of the nation's top credit-rating firms, Moody's Investor Service, said Wednesday pension-reform legislation signed by New Jersey Gov. Christie on Tuesday wouldn't result in material savings until 2018. Still, "The reforms are a critical step in managing the state's long-term liabilities," said Moody's vice president Baye Larsen, author of a report on New Jersey's health and pension reform. New Jersey is facing $37.1 billion in unfunded liability in its pension system, making it the seventh-lowest funded state system in the nation, according to Moody's.

TRENTON - A contentious bill raising pension and health-benefit costs for more than a half-million New Jersey government workers was headed back to the state Senate one more time today, for a formality vote. A provision in the main bill allowing health plans that restrict out-of-state care will be removed. The provision was seen as a plum to South Jersey political boss George Norcross III, who oversees Cooper University Hospital in Camden, minutes away from Philadelphia. It caused an uproar among public-sector union leaders, who vehemently oppose the entire piece of benefits legislation, and threatened to upend Republican support.