By Michael P. Affuso, Esq., Executive Vice President/Director of Government Relations, NJBankers
It is axiomatic that in business when you can’t do everything, to do something. It seems the natural corollary is that if you do nothing for long enough, you’ll be forced to do everything. This is the state of the state pension and health benefits crisis.
This problem has two chief issues, both are faced squarely by businesses in New Jersey.
First on the pension side, a full payment has not been made in decades. If you can imagine a business owner failing to properly fund the employer portion of the company 401k plan, I’d bet imagining them in an orange jumpsuit – they’d be headed to jail. There is much blame to go around, but since there are no real ramifications in the short term, none of the principals feel the pain. Add in the late 90s gift of higher benefits based on the chimera of the dotcom bubble and two decades later we are at the cliff – actually over it.
The second issue is on the health benefits side. The current plans are based upon assumptions that reflect realities of a generation ago. While the legislature took steps to rein in costs almost a decade ago, there is much more to do. These plans do not reflect the current trends in coverage and cost share for both current workers and retirees.
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