Court: NJ Can Skip Pension Payments

An appeals court ruled last week that the State of New Jersey is not constitutionally required to pay the millions it owes every year into the teachers’ pension fund.

In the case, NJEA v. State of New Jersey, et al., the New Jersey Education Association claimed the state was required to fund the Teachers Pension and Annuity Fund. A previous court ruling found that the state was required to make the payments, but the union failed to show that the funding gaps substantially impaired the state’s ability to pay out benefits for the next 30 years. 

The March 4 Appellate Division ruling affirmed the lower court’s decision, but for other reasons. The appeals court ruled “that TPAF members, although entitled by law to the receipt of vested benefits upon retirement, possess no constitutionally-protected contract right to the particular level, manner or method of State funding provided in the statute.” 

The court noted that “there is a clear distinction between the right to receive pension benefits and the funding method adopted by the Legislature to assure that monies are available for payment of such benefits.”

The NJEA has complained that the state has contributed nothing toward the teachers’ pension fund in 11 of the past 15 years, leaving the security of the pension system vulnerable for future retirees.

The NJEA is considering an appeal to the state Supreme Court.

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