Another Study Rates Teachers’ Pension Fund As One of the Worst in the Nation; 2021’s Stellar Returns Won’t Change That

A third reputable institution has found the New Jersey teachers’ pension fund to be one of the very worst in the nation.  First it was the Center for Retirement Research, then the Brookings Institution, and now  Bellwether Education Partners‘ has published its own ranking of state teachers’ pension funds.  NJEdReport has already done its (usual) excellent analysis of Bellwether’s study but Sunlight wanted to highlight some key points as well.

1. As Sunlight has said loudly and often, Bellwether confirms that New Jersey’s Teachers Pension and Annuity Fund (TPAF) is one of the single-worst public pension funds in America.  TPAF got a grade of “F” in every single category and its overall rating was 49th out of the 50 states, with only Illinois in worse condition (by a hair).
2. As Sunlight has said loudly and often, TPAF is particularly bad for teachers.  Bellwether ranked pensions on a short-term (teachers who stay less than 10 years), medium-term (stay more than 10 years but short of retirement) and long-term (stay until retirement) basis: TPAF was dead-last in the country for medium- and long-term teachers (and in the bottom ten for short-term, or 41st).
3. TPAF is also the bottom ten for taxpayers, ranking 42nd, so TPAF hurts everyone.

Stellar investment returns in 2021 as well as Gov. Murphy’s $6.9 billion pension contribution have increased asset levels and therefore improved funded ratios for public pensions, including TPAF.  But it is almost certain that TPAF’s funded ratio remains well below 40% (that is, there are fewer than 40 cents set aside for each dollar owed), which means TPAF is still in crisis.  It is also almost certain that future investment returns will lessen and that New Jersey will find it difficult to devote 15% of the state budget to pension contributions when there is no more pandemic money from the federal government.  The bottom line is that despite the recent good news the outlook for TPAF remains grim.

But rather than looking out for teachers, the NJEA steadfastly refuses to tell teachers the truth about their pensions or to take steps to ensure that TPAF will be sound long into the future.  The NJEA prefers to deflect attention from TPAF’s true condition so that its own leading role in the undermining of TPAF does not come to light.  The NJEA doesn’t want teachers to know that it has also blocked all efforts to reform TPAF for decades.

The NJEA wants to keep teachers in the dark about the dire condition of their pensions because if teachers knew the truth about the failure of the NJEA to protect them, they would be outraged.