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Judge Sues N.J. Over Pension Cuts?
Before I get into my latest topic, I was advised by a union member that PSP Investments released its Annual Report 2011.
They do this every year around this time because Parliament has to
approve it before they post results. Problem is that the fiscal year
ended in March (March 31st 2010 to March 31st 2011) and the delay in
reporting the results publicly is unacceptable. Most people are away on
vacation this time of year so reporters do not cover it.
The
overall results are excellent, up 14.5%, or 180 basis points above the
benchmark portfolio which returned 12.7% in FY 2011. But I want to take
my time and go over PSP's annual report over the weekend, as well as the
Special Examination 2011 performed by the Office of the Auditor General of Canada (OAG).
Given
that I worked as a senior investment analyst at this organization in
the past covering public and private markets, have tremendous respect
for some individuals there (most aren't slimy weasels), and know senior
people at the Treasury Board and the Office of the Auditor General of
Canada, I promise to be fair,
professional but ruthlessly critical in my comments covering the annual
report and the OAG's special examination (trust me, you don't want to
miss it!).
So let me get onto my Friday comment. Lisa Fleisher of the WSJ reports, Judge Sues N.J. Over Pension Cuts:
A
New Jersey judge is challenging the state's recent pension and
health-care cuts, claiming the state Constitution protects judges'
salaries to keep the bench independent.
Judge
Paul DePascale, who sits on the Superior Court bench in Hudson County,
filed a lawsuit in state court Thursday challenging the laws signed
last month by Gov. Chris Christie.
Judges, who must retire at
age 70, are now required to contribute 12% of their salary, up from 3%.
The state Constitution says that judicial salaries "shall not be
diminished during their term of appointment." The lawsuit also said
that an earlier draft of the legislation cited the constitutional
requirement.
It's at least the second
lawsuit filed challenging the cuts, which require current workers to
contribute more of their salaries to receive the same pensions.
The
Democratic leaders of the Legislature bucked the majority of their own
party by putting the bills up for a vote. Unions vowed to take revenge
in the November elections.
Michael Drewniak, a
spokesman for Mr. Christie, pointed out that judges previously
contributed an average of $59,300 to their pensions during their time
on the bench. "Judge DePascale should probably just say, 'Thank you'
and look forward to a comfortable retirement," he said.
MaryAnn Spoto of NJ.com covered the story more in depth, reporting that N.J. judge files lawsuit against new pension and health benefit increases for public workers:
New
Jersey’s public worker pension and health benefits increases should be
revoked for state judges because they unconstitutionally slash their
salaries and undermine judicial independence, a state Superior Court
judge claims in a lawsuit filed Thursday.
The complaint, filed
Thursday by Superior Court Judge Paul DePascale, who sits in Hudson
County, is the first legal challenge to the landmark health and benefit
law enacted last month. State public employee unions angered by the
changes are also vowing to go to court.
The
complaint says the law runs counter to the part of the state
constitution that says the salaries of the Supreme Court justices and
Superior Court judges "shall not be diminished during their term of
appointment."
"It diminishes the salary of all justices and
judges appointed before the enactment of the subject legislation during
their term of appointment and, by doing so, unconstitutionally and
adversely (affects) the public and the independence of the judiciary,"
DePascale’s attorney, Justin Walder of Roseland, wrote.
Gov. Chris Christie’s spokesman Michael Drewniak fired back, saying judges fare far better than other public workers.
"Of
all classes of New Jersey state employees, judges of the Superior
Court have enjoyed the lowest pension contribution rate and received
the richest pension benefits," Drewniak said. "Judge DePascale should
probably just say thank you and look forward to a comfortable
retirement."
Set by law, judicial salaries range from $165,000
for Superior Court trial judges, including DePascale, to $192,795 for
Supreme Court Chief Justice Stuart Rabner. New Jersey now has 430
judges.
Drewniak said before changes judges’ contributions
covered less than 10 percent of their pensions, while other public
workers contributed about half. He said the average annual pension for a
retired judge in the Judicial Pension System is $107,540.
DePascale,
however, said in his court filing that his deductions will increase
"steadily and dramatically" over the next seven years. His pension
deductions would be hiked $14,849 by 2017, when he would be paying
$18,137 into the pension system, according to court filings.
The
new law, to be phased in over seven years, will make judges’ pension
contributions go from 3 to 12 percent of their annual salaries. The
same law will boost the contributions of members of the Public Employee
Retirement System from 5.5 percent of their salaries to 7.5 percent
over that same period.
DiPascale also said his health benefits
contribution would more than double to $5,230.86, based on state
estimates that would allow different levels of coverage, according to
court papers.
Judges currently pay 1.5 percent of their salaries
toward their health care benefits. The new law requires them to pay 35
percent of the premium cost.
The lawsuit concedes no New
Jersey court has addressed its contention that increasing benefit
contributions constitutes a salary cut, but it noted the Delaware
Supreme Court ruled it was.
Drewniak declined to comment on the constitutional question.
Winnie
Comfort, spokeswoman for the Administrative Office of the Courts, said
Rabner is aware of the suit but has no comment. An initial hearing
before Mercer County Assignment Judge Linda Feinberg is set for Sept.
16.
Pension changes took effect July 1. However, actual deductions start Oct. 14, along with health benefits contribution hikes.
I've already expressed my thoughts on this and other similar articles in comment on whether public pensions are a "vested right."
I don't think so. While I empathize with public sector employees who
contributed to their pensions, I'm also keenly aware that they shouldn't
enjoy benefits that their private sector counterparts don't have,
namely, retirement security for the rest of their life once they retire.
The state of New Jersey made its share of mistakes too, not topping up
its state plan when it should have, but when the money isn't there, I
don't think it's reasonable for judges and state workers to challenge
the constitutionality of the cuts in benefits. If catastrophe strikes,
all the laws in the world will not protect these public sector workers.
People have to keep that in mind and stop thinking they're entitled to
"gold-plated" pensions. They simply aren't part of this planet if that's
what they think.
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Typical Leo, puting his view of fairness above a state constitution.
This judge may be worthless. Worst judge ever.
But the state constitution is clear, his salary shall not be diminished while a judge.
And it's not being diminished. Requiring him to pay more into his pension plan is not diminishing his salary.
His pension after leaving that job is NOT protected by that constitutional provision. The state could reduce his pension to ZERO and it wouldn't violate that constitutional provision.
In other words, he has no case.
Most public workers know they didn't really earn their inflated pensions, consequently most will not be that disappointed when they wind up like those in Prichard Alabama...
http://www.nytimes.com/2010/12/23/business/23prichard.html
Hudson County is a solid Dem county, and Christie is a Republican. So of course this tax feeder judge is going to throw a hissy fit for all the good it'll do him.
Sadly for Christie, there are portions of his new pension bill which violate state and national contract law. Christie knows this and pushed it through anyway, making him scumbag #1 in my book. It’s a tough situation for the courts to accept, because, doing so moves us from a government of laws to a government of men. Remember when those AIG traders who sunk their company nonetheless received their bonuses because - they had a contract? There are going to be a lot of tough battles in the courts before this pension bill is finally realized.
Meanwhile, what I find disgusting about this judge is his narrow approach to fighting the new law. He should be arguing more broadly on behalf of all NJ pensioners affected by it. Instead, he’s just fighting for his own dime, making him scumbag #2 in my book. That’s New Jersey for you, the land of scumbags. I guess someone has to make New York look good.
Well, good post. They do not and will not have the money to fund all of these promises. It is simple. It is over. Time for all of us to take less. Sue all you want. We are freaking Broke. They just do not get it yet. Man, what a bunch of morons.
What he is doing he has every right, but it's funny as hell. These individuals like him and the cops and all public workers are seeing how much those promises mean. I've said befor that a police state feeds on itself and this one is. He and the public employees are no use to them anymore, so it's time to fleece them and make them sacrifice in order for states and the federal govt. (it's coming to the fed, just you wait) to balance their budgets. He probably thought that he was untouchable and that he was part of the "inside team". Now he's seeing how much use he is to them.
Karma would be he passes on, the day after he retires
Seasmoke FTW.
On the language of the law described above, the judge probably has a solid case. However, they are the only public employees in NJ protected this way.
Most of the comments bring up good points. Just because he's a judge doesn't mean he can't file lawsuits. Yes, it does appear to be self-serving (he's protecting his income, we all do) but he's using the way the law was written to do it (as you would do, if we got such benefits in law). I agree that an average pension of 107K is three times what I currently make and waaayyyy more than I'll retire with from SS (please, stop laughing, I already know). That 107K though is funded by taxes, so taxpayers have a vested interest and with 430 current judges at about 150K per year, it's a cost of 64 Million dollars for existing salaries and who knows how many retired judges already?
When they retire, do we really need to keep them in the lifestyle they have come to expect? I realize we would all like to be there but darn few of us get there on the public dole
That perspective is a good one to take for prospective judges/arrangements... but it's another beast altogether to renegotiate benefits already promised and to which the other side has already performed its part of the bargain...
Practically speaking, fighting gravity is a temporary victory at best... but that doesn't make what occurs any more moral... moral hazard giveth and moral hazard taketh away.
"When you're been feasting on Lobster, Filets and Louis Chateau wine, it's hard to return to a Ham sandwich and club soda."
...Proverbs chapt. V; verse XIX.....
I don't think it's reasonable for judges and state workers to challenge the constitutionality of the cuts in benefits.
Uhh... would it be reasonable for him to challenge the constitutionality of a law prohibiting his ownership of firearms, right to free speech, or right to vote? I think it's perfectly reasonable for him to challenge anything he feels is protected... Whether or not he will ultimately succeed is a different issue altogether...
"I'm also keenly aware that they shouldn't enjoy benefits that their private sector counterparts don't have..."
I don't believe the above has anything whatsoever to do with what the law says. Now, courts may rule that increasing the employee's contribution is not, in fact, a reduction in judges' pay, but I'm pretty sure the courts won't make their determination based on what Leo is "keenly aware" of, i.e. the screwing of the private sector.
Regardless of public pension "promises" I expect a pension cap in many bankrupt states, in the range of US $75,000. Getting there will be ugly.... default/bankruptcy and adjusting the value of the 75k for inflation would be another hit to the annual payout, but reality will not be denied. The alternative - ending essential services?
On a side note, a Cal Pers rep was crowing about the systems investment returns on CNbs yesterday, made me wonder who the greater fool is that will buy from them.
The company cancelled the picnic (no free beer). Salary cut ?
The company locked the supply room. Compensation reduced ?
My new manager checks time sheets. Benefits denied ?
When will the whining stop?
Wasn't good enough to make Partner at a Law Firm. Should be happy that anyone saw him fit for employment at all.
Do us all a favor and retire now.
These are the type of arrogant, self-important a******* that sit in judgment of all of us when something goes wrong in our lives. This is the type of decision making we get.
This guy can't do simple math. How can we trust any other decision he makes?
Not just a whiner; incompetent too.
I'm going to give you a big fat junk for such a retarded comment. You may not like judges, but perhaps you'd like to settle your differences in some other manner? Perhaps trial by combat? Or forgo a judiciary altogether? One of the reasons judges have a decent salery is that if it was $15,000 per year, do you think they might be tempted to take a little something extra to 'rule the other way'? There are other arguments, but I'm not going to waste my time on you.
weiner you get junked for taking .1 of his argument and making it 100% of your argument.. No one was arguing if there should be judges or if their comp should be lower or higher. No one is going to waste any more time addressing you...dickhead.
No. High salaries on judges just puts the bribery bar higher than most people can afford.
+165,000
"If catastrophe strikes, all the laws in the world will not protect these public sector workers. People have to keep that in mind and stop thinking they're entitled to "gold-plated" pensions. They simply aren't part of this planet if that's what they think."
Well put, Leo.
Some probably think ZH'ers just want to hear negative sentiment and we're all just perma-bear pessimists, but I disagree. I'd like to think there's a lot of people here who share something in common - integrity and desire to tell the truth, even if it hurts.
It's a tough responsibility, especially when you consider most people do not want to hear these sorts of things.
-FN
Lying sack judges should be tarred and feathered.
Salary does not equal total compensation. Of course, the judge in NJ knows this.
"Salary does not equal total compensation." Oh, you mean stuff like pensions? I'm sure you fully caught the irony in your post.
This is a good article pointing out the political and economic realities that now conflict with notions of 'fairness,' Leo.
The political climate is only going to get more heated and non-government employed citizens are only going to become more resistant to 'untouchable' benefits for public sector workers....a lot more heated and a lot more resistant.
Yes. He should call 1-800-Waaaaah.
His pension deductions would be hiked $14,849 by 2017, when he would be paying $18,137 into the pension system, according to court filings.
Sounds fair if he is expected to get $107,540 back from the system each year.