According to a new analysis from Bellwether, New Jersey’s teacher pension system, the Teachers’ Pension and Annuity Fund (TPAF), is in just about the worst shape of all of state teacher pension systems, ranking 50th among all states and the District of Columbia. Illinois was 51st and Kentucky was 49th. Out of 100 possible points, TPAF earned 36.2% and scored an “F” in every category.
Why the low score? One reason (among many), according to “Teacher Retirement Systems: A Ranking of the States,” is that traditional public school teachers in NJ are required to pay into the pension system each year but only see returns if they stay for 10 years. Also, it’s a defined-benefit pension so if teachers change careers, a trend among younger people, their contributions can’t be transferred to a new employer’s plan. While 37 states have defined benefits plans, more and more are offering alternatives, like 401K’s, that can be transferred to other jobs.
And, of course, NJ teachers’ pension plan is in terrible shape and desperately in need of reform, with less that 25 cents socked away for every dollar owed a teacher, even with the Murphy Administration’s $4.8 billion payment to TPAF for the 2021 fiscal year. (But note this: The pension plan for the 336 staff members of New Jersey Education Association’s central office is both “generous” and “overfunded,” according to John Bury’s calculations.)
Actually, New Jersey has a pension reform plan, part of Senate President Steve Sweeney’s “Path to Progress.” But as Mike Lilley explains, “TPAF reform is simply not going to happen under NJEA-friendly Governor Murphy…Last year Murphy pocket-vetoed Sweeney’s bill to establish a Path to Progress panel to recommend reforms, just as the NJEA wished.”
The Bellweather analysts write,
The pension debate is too often about pensions versus 401(k)-style plans or whether the ideal educator is a 30-year veteran or a teacher with five years of classroom experience. This obscures just how poorly retirement systems are serving most teachers and the variety of ways policymakers can do better. It’s time to focus on an equitable retirement solution that benefits all of America’s teachers.
Here are New Jersey’s scores:
