TRENTON – Senator Nicholas P. Scutari, Co-Chair of the Joint Committee on Public Employee Benefits Reform, read the following opening remarks this morning at the panel’s hearing on the public employee pension system.
“Good morning and welcome to today’s meeting of the Joint Committee on Public Employee Benefits Reform. I look forward to today’s discussion because I believe it will illuminate aspects of both defined contribution and defined benefit plans that are not readily apparent or understood. There is a tendency when talking about pension reform to envision only two possible outcomes: either we embrace the existing system, or we throw it out altogether in favor of something like a 401(k).
“This is a false choice. Both approaches have their strengths and weaknesses, and it is important that we assess them in cost-benefit terms. We must also examine the various hybrid plans that have been adopted by public and private employers. These plans retain the defined benefit element of our current system, while including a defined contribution component. They can serve to reduce the employer’s overall liability while at the same time providing guaranteed retirement income to employees.
“The retirement system is intended to realize certain goals. Primarily, it is meant to help us attract and retain talented individuals in public service. It is meant to provide a significant source of retirement income to public employees. As we endeavor to reform the system, we must not lose sight of these very important goals, and we must choose to act in ways that allow us to forward them.”