N.J. panel urges benefits cuts for teachers, others Thursday, December 01, 2005 • BY JOE DONOHUE • Star-Ledger Staff A state advisory panel today will recommend that the retirement age for teachers and state workers be raised from 55 to 60 and that employees of the state and some local governments pay a greater share of their health insurance premiums to stem soaring fringe benefit costs. The Benefits Review Task Force also will call for an end to pensions for municipal attorneys, assessors and other "professional services" vendors who do not work directly for the government, according to details of a report to be released today. Some lawmakers have fattened their pensions by taking on such work. The advisory panel, however, rejected suggestions that the state drop its pension system in favor of a "defined contribution" plan like a 401k for new public workers, according to a Codey administration source. Earlier this year, the state's pension director predicted that without major changes, the $2.2 billion tab for health insurance and retirement benefits could triple in just five years. The recommendations are expected to draw opposition from powerful unions, including the New Jersey Education Association, which represents 192,000 teachers and support staff members. Changes to the pension system require approval by lawmakers. Health benefits are negotiated in contract talks. The task force, appointed by acting Gov. Richard Codey in May, says government workers should get full retirement benefits if they retire at 60. Currently members of retirement funds for state and local workers and teachers can get retire with full benefits at age 55 if they have at least 25 years of service. The panel urged that workers get reduced benefits if they retire before age 60, saying it would generate $175 million in state and local savings by the third year. The task force noted that 91 percent of large private employers use 65 years as the cutoff for full benefits. At least 13 states have a cutoff older than 55. Steven Baker, a spokesman for the New Jersey Education Association, said that while the teachers union would support a crackdown on abusive pension practices, it would resist an increase in the retirement age. "We would be opposed to something that diminishes the retirement benefits of our members and this is something that does that," he said. However, Gregg Edwards, president of the Center for Policy Research of New Jersey, a conservative think tank, applauded the recommendation. "People are living longer. Many people are choosing not to retire at an early age," Edwards said. "And early retirement is a bad incentive to provide, especially for teachers." The task force wants to require the nearly 80,000 state workers, along with employees of municipalities that are insured through the system, to contribute more toward their health insurance. Currently, workers with the most basic coverage pay nothing. Those insured by HMOs pay 5 percent, while those with the most generous, traditional policies pay 25 percent. The traditional plan is closed to new employees. The task force said if the state required 10 percent contributions for those insured under the basic policies, state and local governments would save $489 million a year. "The Task Force believes that all active and retired employees should share in the cost of health care," the report states. Alan Kaufman, spokesman for the Communications Workers of America, which represents more than 36,000 state workers, said public workers should not be penalized, charging that Republican tax cuts in the 1990s left state officials unable to afford rising fringe benefit payments. "They have an obligation to fund the pension plan because they were totally irresponsible in terms of how they handled the budget," he said. Changes in health insurance benefits are subject to contract talks, and most state worker contracts do not expire until June 30, 2007. "It's very nice this task force wants to make proposals, but proposals on health care are made across the table," Kaufman said. A Codey administration official said the recommendations would go a long way toward halting the skyrocketing of fringe benefits costs. "There's a serious problem. We think there are some serious ideas for people to consider in this report," said the official. Staff writer Dunstan McNichol contributed to this report. © 2005 The Star-Ledger. Used by NJ.com with permission.