NJ Plan Seeks to Let Police Officers and Firefighters Retire Early

A proposal moving through the New Jersey legislature that allows police officers and firefighters to retire after 20 years of service has divided union members and local governments.

Under the current law, workers in the Police and Firemen’s Retirement System (PFRS) must be at least 55 years old to get retirement benefits. The pension plan guarantees half their highest-earned salary every year for the rest of their life. Right now, if they retire before 55, they have to wait until that age to get a pension.

But under a proposal that cleared a committee hearing earlier this month, an officer or firefighter who starts working at 20 years old could retire at age 40 and draw benefits right away, though they would not get health care.

Proponents of the plan call it the “burnout bill,” arguing that the measure allows struggling workers to leave behind the physical and mental stresses of public safety work after two grueling decades at it. They argue that more working police officers nationwide die by suicide than from the hazards they face on duty.

“It’s a tough job we do. Some of us see things that no human being should ever have to see,” Bob Gries, executive vice president at the New Jersey Fraternal Order of Police, said at the hearing.

Representatives of counties and municipalities oppose the bill, saying the cost of the enhanced benefit hurts the fiscal stability of PFRS, which is about 70% funded. Plus, they say, the funded ratio does not include the impact of the recent market declines on investment, such as the economic fallout from the coronavirus.

Another factor in the deliberations: Starting next year, the assumed rate of return will also fall to 7%, down from 7.3%, which is also expected to increase liabilities.

“We really need to get our fund healthy because it helps not only us as employers, but it helps the fund members as well,” Lori Buckelew, senior legislative analyst at the New Jersey State League of Municipalities, said at the hearing.

Opponents say the fiscal impact on the PFRS would be significant, “likely in the hundreds of millions of dollars,” according to an actuarial assessment.

However, union members took issue with that figure, arguing that it assumed all public safety workers would take advantage of early retirement. That’s not the case, they said. When a similar bill passed in 1999, less than 5% of eligible workers left the workforce after 20 years. (Only officers and firefighters who were enrolled in the public pension before January 2000 could take advantage of the plan.)

But opponents say the 1999 law passed under different circumstances, when public safety workers weren’t required to contribute toward their health benefits, which was mandated in New Jersey in 2011. New members may find it more cost-effective to give up their health care contribution, they argued, by quitting sooner.

Legislators also said that roughly one-fifth of New Jersey’s 565 municipalities do not offer medical benefits to begin with, saying there are actually few savings there for the government to offset liabilities.