The merger of the pension funds of NJ and the Empire state seems to be in the cards. To paraphrase George Laufenberg from the meeting of Local 254 this past Wednesday, he said, if it is possible to merge the two funds it will happen.
That said, I think George should be taken very seriously. I for one do not believe, as someone stated on the member forum, all he cares about is his golf game. George is a serious man and we should pay heed when he talks about the New Jersey pension fund. Especially with respect to its merger with the Empire fund. What I took from his explanation concerning the level of funding for each of the funds was this. The Empire fund is not as solvent as is New Jerseys’. He stated that New Jerseys funding level has risen from a mid 60% range to 72.9%. The Empire fund has reported an 80% funding level. However, George said, that the 80% level was a result of creative actuaries not the true picture of the fund. He went on to say that our fund does not engage in such practices. Then he said, if the Empire fund did its accounting the way our fund does it would only be funded in the mid 60% range not the misleading 80% level.
I do not think it would be in the best interest of the New Jersey fund to merge with the much weaker Empire fund. To begin with the Empire fund lost 160 million dollars to the fraud of Bernie Maddoff. The economy of New York State is not as strong as New Jersey and never has been and future contributions to the fund would be at a lower level than ours, therefore making it much harder to sustain healthy funding levels.
Any person whose main focus is the health and stability of the New Jersey pension fund would see the merging of the two funds simply as not in the best interest of New Jersey. And in my opinion a good financial advisor would strongly recommend against it.