O’SCANLON: EARLY RETIREMENT PLAN IS NOT GOING TO BE A COST-SAVER FOR STATE

PLAN WILL RESULT IN SOME EMPLOYEES RECEIVING FULL PENSIONS FOR LONGER THAN THEY WORKED 

At today’s meeting of the Assembly Budget Committee, Assemblyman Declan O’Scanlon questioned Treasurer David Rousseau about Governor Corzine’s proposed early retirement program for state workers and suggested that the idea will not succeed in reducing costs for the state.

“Any short-term savings under this program will ultimately be outweighed by the added costs to our pension system,” said O’Scanlon, R-Monmouth. “I think it is important to understand that under this program a state worker will be able to retire with a full pension at age 52. This means that person may receive that benefit for 30 or more years – possibly longer than they were in the workforce.”

As part of his effort to cut this year’s budget, Governor Corzine has proposed an early retirement incentive plan for state workers. The last time the state offered an early retirement incentive was in 2002 when about 4,000 workers took advantage of a plan offered under Governor McGreevey. It has been estimated that while the state saved $314 million in the four years since then, its taxpayer-funded pension liability has increased by $645.4 million.

O’Scanlon said that the state needs to look at more significant, long-term reforms such as increasing the retirement age from 60, shifting to a defined contributions retirement plan for state workers, and changing from the current retirement benefit formula of “(n) over 55” back to the pre-2001 retirement formula.

“In the past these early retirement programs have been a net-loss to the state, and we need to look at real changes that will actually reduce costs,” O’Scanlon said. “The current early retirement proposal will only add to problems with the state’s already overburdened pension system.” 

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