New Jersey judges not subject to pension reform - court

Reuters News
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Posted: Jul 24, 2012 6:30 PM
New Jersey judges not subject to pension reform - court

(Reuters) - New Jersey Supreme Court justices ruled on Tuesday that they are exempt from last year's state pension reform.

The reform, which called for judges and justices in the state to increase their pension and healthcare contributions, violates the New Jersey constitution, the court found in a split decision.

State Senate President Steve Sweeney, a Democrat, said in a statement that he was disappointed in the court's decision, which he said "will not be the final word on this issue."

"The reforms we passed last year are essential to ensuring the health and viability of every one of the state's pension systems," he said.

The state Senate's Republican leader, Tom Keane Jr., also blasted the court's ruling.

"Judges should not be insulated from economic reality by a dubious claim that paying their fair share for the richest benefits in state government is an impediment to judicial independence," he said in a statement.

Most U.S. states are changing their public pension and retiree healthcare systems after years of underfunding and other problems have left them with estimated unfunded liabilities of $1.38 trillion.

In June 2011, New Jersey enacted Chapter 78, which made changes to public employees' retirement benefits, including the state's sitting judges and justices.

But the New Jersey constitution says that judges' salaries "shall not be diminished during the term of their appointment," according to the opinion handed down on Tuesday.

The new law called for judges to boost their required pension contributions from 3 percent of their salaries to 12 percent over a seven-year, the opinion said.

Judges also would have had to more than double their healthcare contributions, from 1.5 percent of their salaries to 35 percent of the premium over the same period of time, the opinion said.

That would have left judges and justices effectively taking home about $17,000 less in salary, which would be about a 10 percent drop in their disposable income, according to the ruling.

Since courts sometimes strike down laws made by legislators and executives, protecting judges' salaries from cuts can ensure an independent judiciary and "prevent those branches from placing a chokehold on the livelihood of jurists who might be required to oppose their actions," the opinion said.

Three justices joined the court's opinion. Two joined a dissent, saying that the majority's decision was not supported by either the constitution or the deliberations of those who framed it.

The ruling does not affect judges hired after Chapter 78 was signed into law.

It also doesn't stop New Jersey lawmakers from dedicating future judicial pay raises to increased retirement benefit contributions, as they have always done in the past.

(Reporting By Hilary Russ; Editing by Steve Orlofsky)