Gov. rejects push for all N.J. police, firefighters to retire with pensions after 20 years
A 2021 law allowed nearly 8,000 officers and firefighters about to reach 20 years of service a two-year window to retire early with half their final compensation
By Brent Johnson
TRENTON, N.J. — Gov. Phil Murphy on Monday rejected a proposal to immediately allow all police and firefighters enrolled in New Jersey’s pension system to retire early with a reduced pension after 20 years of service.
But the Democratic governor didn’t rule out the idea completely as he issued a conditional veto of the measure, dubbed the “burnout bill.”
Instead, Murphy suggested extending a law he signed temporarily providing the 20-and-out benefit by another three years and reassessing its impact after that. If it still makes financial sense, he said, the pension system’s board can make the benefit permanent.
This all relates to a complicated issue that has changed a few times in recent decades.
State law requires members of the state’s Police and Firemen’s Retirement System to retire at 65 with their full pension. But a 1999 state law allowed people with 20 years of service to retire, albeit at half their final compensation. That was later changed during then-Gov. Chris Christie’s administration so anyone hired after January 2000 has to be at least 55 years old or have 25 years of service to retire early.
Murphy, though, signed a law in 2021 allowing nearly 8,000 police officers and firefighters about to reach 20 years of service a two-year window to retire early, regardless of their age or enrollment date, with half their final compensation. The unions who advocated for the change said the law was not creating a new benefit, but bringing workers in line with those hired before 2000 to correct what they argued was a misrepresentation of the 1999 law by Christie’s administration.
That temporary law Murphy signed is set to expire this month, and this new bill, S3090, would technically be an indefinite extension of it, allowing all Police and Firemen’s Retirement System members the option to retire after 20 years. It overwhelmingly passed the state Legislature earlier this year — 36-0 in the Senate and 72-0 in the Assembly.
Supporters say it’s designed to help a small number of public safety workers who find it difficult to keep doing the job because of mental or physical exhaustion.
Opponents warn it would burden taxpayers by further straining New Jersey’s notoriously underfunded pension system and raising costs for local governments at a time of economic uncertainty.
In his veto message Monday, Murphy said he signed the temporary law “in light of the confusion” to create a “limited, two-year window” to help members who “may have relied on the incorrect, but prevalent, interpretation at the time of their hiring” and give “affected parties the ability to study the impact of this benefit on PFRS members, employers, and the system as a whole.”
One concern of the law was that it would inspire many of the 7,630 of workers it covered to retire early. But police and fire union officials said only about 280 did in the last two years.
Murphy said the law did provide “some valuable insight into the impact” a 20-and-out benefit could have on the Police and Firemen’s Retirement System “in the short term.” But he said he’s “concerned that it is still too early to ascertain the long-term impacts.”
That, he said, is because New Jersey’s pension system in general is “still suffering from decades of underfunding that preceded my time in office.” That’s even though Murphy has proposed in his new state budget proposal for the state to make a full pension payment for a third consecutive year.
“Staying the course and continuing the positive trajectory of the state’s financial health is my administration’s highest priority, and there remains much work to be done to better protect the stability of the state’s pension funds, the expectations of its members, and the financial interests of the taxpayers of this state,” Murphy said.
Supporters also argue making the 20-and-out benefit permanent would reduce payrolls for local governments because higher-salaried employees would leave and there would be fewer overtime costs for those employees calling out sick.
But, Murphy said, the “bulk” of the savings “are expected to materialize following the first five years of a member’s retirement.”
“Simply put,” he wrote, “two years is not enough time to fully understand the impact.”
The governor said he is also concerned the trial period aligned with the COVID-19 pandemic, which could have skewed retirement rates in the two-year window.
The nonpartisan state Office of Legislative Services said in a fiscal analysis of the bill it did not know how many police and firefighters would retire because of the legislation and did not attach a cost to the it.
The office did say the measure would “result in an indeterminate increase in the annual contributions” the state and local governments would be required to pay to the pension system.
Murphy instead recommended lawmakers send him a bill that would extend the trial period another three years to “permit further evaluation of this benefit’s impact” on state finances, the Police and Firemen’s Retirement System, and its members over a five-year window.
After that, he said, if the system’s board of trustees finds the benefit does not result in increased employer contributions or impact the long-term viability” of the system, the board “can then permanently institute” a 20-and-out benefit “without the need for additional legislation.”
That, Murphy said, is because of a 2018 bill that gave the board “certain functions, powers, and duties relating to the management” of the system.
“I have full confidence that the Board would make such a decision responsibly, based on the facts and data that are developed during the five-year trial period,” Murphy wrote.
State Sen. Vin Gopal, D-Monmouth, a main sponsor of the bill, declined to comment Monday.
Our journalism needs your support. Please subscribe today to NJ.com.