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New Jersey Retired Public Employees Organization Position Paper . . . June 22,2011

Dear State Representative:

We are writing to you concerning one of the proposed changes to the New Jersey Public Employees Retirement System that will affect all state and local retirees. As you know, pending legislation would suspend and possibly elminate the right of pension system retirees to receive annual cost of living adjustments to their pension benefit. Cost of living adjustments are a vital and essential component of the pension system. They assure that the individual retiree, regardless of when they retired and regardless of what their monthly pension benefits was at the time they retired, would continue to realize the same relative standard of living regardless of unforeseen inflationary economic changes. Cost of living adjustments are the only vehicle that permits former public employees to maintain a sustainable income over time. So important is this aspect of the pension system that it had been acknowledged as a basic obligation owed by the state to the retired members of the public employee pension systems. For many years this obligation reflected a moral obligation on the part of the public employer to the dedicated public employee The nature of this obligation dramaticly changed, not in practice alone, but when in 1997, Title 43, sections 43: 3C-9.5 redefined this and other aspects of the pension system as contractual obligations under state law. The contractual obligations established for those members of the pension system with 5 or more years of service ( as of the date the law was inacted in 1997) non-forfeitable rights under the pension system. Included within these rights remain the right to receive annual cost of living increases. (See testimony by Peter Kelly, Office of Legislative Services, to the state legislature on August 23,2006)

Additionally, please see an additional legal opinion dated August 24, 2006 from Zuilma V. Farber, Attorny General to the Special Legislative Committee. (both legal opinions substancially confirm that Public Employees have non-fofietable pension rights guaranteed with the enactment of N.J.S.A. 43:3C-9.5 and can be found at Final Report.pdf).

The current attempt to strip what has become an entitlement, justly due and earned by those who spent many years of hard work supporting the needs of our fellow residents is disappointing. Many of us spent our careers in public service dedicated to the principles of the constitution of the State of New Jersey. We Know that the members of the state legislature share with us this pledge to preserve, protect and defend this constitution. There is within the pending legislation the lurking presence of the temptation to turn away from the principles inherent within this constitution. We submit that any decision to ignore the principles at play here, regardless of the rationale, will constitue an act from which no individual or group of individuals will feel immune from. Once government breaks a moral and a legal contractual obligation to one group of citizens all of us are at risk of loosing what is the most important quality that defines this state's and this countries greatness, There is no doubt that should the legislation follow through and eliminate the COLA provisionof the pension system there will be legal challenges. No one can predict the ultimate resolution of these challenges. What is most apparent however will be that this attempt was made to the retired public employees. Who next will see the state turn its back on its contractual promises?

Therefore, we strongly urge you to vote against any proposal that would elminate the cost of living for retirees.

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