State top court denies public retiree cost-of-living raises
(Reuters) — The New Jersey Supreme Court ruled on Thursday that retired public employees do not have a contractual right to receive increasing cost-of-living adjustments, a decision that is expected to save the state billions of dollars.
Gov. Chris Christie’s administration suspended the COLA payments, which are tied to inflation, as part of bipartisan reforms in 2011 aimed at curtailing the ballooning cost of public pensions.
Thursday’s ruling “eliminates a major threat to the state’s fiscal stability,” said Moody’s Investors Service Inc. analyst Baye Larsen in a statement.
Wall Street credit rating agencies rank New Jersey the second-worst U.S. state, behind only Illinois, in part because of its growing pension costs and narrow reserves.
New Jersey’s already underfunded retirement plans could have been hit with another $17.5 billion of liabilities, according to The Record, a Bergen County newspaper, which cited a court filing.
The state’s roughly $83 billion pension system is as poorly funded as it has ever been. The state’s aggregate funded ratio for all plans is 48.6%.
The high court found that “proof of unequivocal intent to create a non-forfeitable right to yet-unreceived COLAs is lacking,” according to the opinion.
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