NJ Retired Police, Firefighters to Receive $3,700 Payments as Testa Pushes to Restore Pension Increases

More than 15 years after New Jersey suspended automatic cost-of-living adjustments, the South Jersey senator says the state must honor its commitments to retired first responders.

TRENTON, N.J. — Thousands of retired New Jersey police officers and firefighters are expected to receive a one-time $3,700 payment before the end of the year, but the long-running battle to restore annual cost-of-living increases to their pensions remains unresolved.

State Sen. Michael Testa, R-1st, says New Jersey needs to find a way to restore those increases, which were suspended in 2011 as part of sweeping pension reforms.

During an appearance Wednesday, Oct. 7, on The AC Mike Lopez Show on News Talk 1400 and 92.3 WOND, Testa said he has been meeting with law enforcement organizations and other stakeholders to determine how the state can fulfill what he considers a longstanding commitment to retirees.

"We're talking with multiple groups, whether it be the PBA, the Fraternal Order of Police," Testa said.

"We're trying to talk to all of the stakeholders, at least I am, and trying to figure out a proper way to get this done."

Testa's comments come just weeks after the Police and Firemen's Retirement System of New Jersey approved a special payment for eligible retirees, providing some financial relief without permanently increasing their monthly pensions.

Retirees to Receive $3,700 Payments

On Sept. 8, the Police and Firemen's Retirement System Board of Trustees approved a one-time benefit enhancement of $3,700 for eligible retired police officers and firefighters.

The retirement system attributed the decision to strong investment performance and favorable financial market conditions.

According to the retirement system, retirees generally qualify if their effective retirement date was no later than June 1, 2024.

Certain surviving spouses and dependents also qualify, provided the applicable retirement or survivor benefits have been paid for at least 24 months.

Payments are anticipated before the end of 2026 and will be distributed through the same method retirees normally receive their pension benefits.

The retirement system said the payment was approved in recognition of the financial pressures facing retirees.

"The Board is keenly aware of the economic pressures facing our retired members," the system stated in its explanation of the benefit enhancement.

The payment, however, is not a restoration of annual cost-of-living adjustments, commonly known as COLAs.

Unlike a permanent pension increase, the $3,700 payment will be issued only once.

A retiree receiving a $40,000 annual pension, for example, would receive the additional $3,700 without any permanent change to the pension's annual amount.

By comparison, a hypothetical 3% annual cost-of-living adjustment would increase that pension by $1,200 in the first year, with the higher benefit continuing into subsequent years.

The distinction is particularly important for retirees who have watched inflation reduce the purchasing power of their pensions over more than a decade.

Pension Increases Suspended Since 2011

New Jersey suspended automatic cost-of-living adjustments for public pension recipients in 2011 under legislation signed by then-Gov. Chris Christie.

The changes were intended to address longstanding financial problems affecting the state's retirement systems.

At the time, lawmakers were confronting substantial unfunded pension obligations and concerns about the state's ability to meet future retirement costs.

The suspension affected multiple public retirement systems, including those covering police officers, firefighters, teachers and other government employees.

Retirees who had already received cost-of-living increases were generally permitted to retain those adjustments, but additional automatic increases were suspended.

As a result, some retired public employees have gone more than 15 years without receiving another automatic inflation adjustment.

Testa said the consequences are particularly difficult for people who retired years ago when salaries were substantially lower.

"For the retired men and women who retired at a point in time when they weren't making the salaries of today, [they] really relied on the fact that they were going to be getting a cost-of-living adjustment," he said.

The senator argued that those expectations should be taken seriously.

"I believe that the state of New Jersey at that time made a promise to them, and I believe in promises made, promises kept," Testa said.

"And here we are, we have men and women who serve their communities, protected and serve their communities. I think we should do our best to keep our promises to them."

Atlantic County Senator Sponsors Legislation

One proposal to restore annual increases has a direct South Jersey connection.

State Sen. Vince Polistina, R-2nd, who represents Atlantic County, is a primary sponsor of Senate Bill 2065, along with Sen. Holly Schepisi, R-39th.

The legislation would reinstate automatic cost-of-living adjustments for certain members of the Police and Firemen's Retirement System.

The proposal has attracted bipartisan support, with Democratic and Republican lawmakers signing on as co-sponsors.

Under the bill, retirees generally would need to have been receiving pension benefits for at least 10 years to qualify.

The legislation would prioritize longtime retirees, many of whom retired when police and firefighter salaries were significantly lower.

For eligible retirees receiving pensions of $75,000 or less, the proposed increases would be tied to a federal inflation measure.

Those receiving pensions above $75,000 would initially receive a smaller adjustment, limited to 1% during the first year.

The legislation also includes provisions addressing surviving spouses and other eligible beneficiaries.

Importantly, the bill would not provide retroactive payments covering all the years during which cost-of-living adjustments were suspended.

Instead, increases would apply to future pension payments.

The proposal would also exclude certain categories of retirees and future employees.

The legislation calls for state funding to cover the cost of the adjustments, including reimbursement to local governments for additional pension expenses.

S2065 was introduced in January and referred to the Senate State Government, Wagering, Tourism and Historic Preservation Committee.

It has not become law.

Testa Has Proposed Another Approach

Testa has also publicly called for legislation restoring cost-of-living adjustments for retired police officers and firefighters.

In August, he announced plans to introduce a proposal that would redirect certain state expenditures toward funding pension increases.

Testa specifically identified spending on programs serving immigrants without legal status as a potential funding source.

During Wednesday's radio interview, he reiterated that position.

"I've been very loud about how much money we spend on illegal aliens in the state of New Jersey," Testa said.

"I think we need to take a long, hard look at that because New Jersey citizens are suffering, not just our retirees who are police and fire. I want to be clear about that."

He also criticized state spending on legal defense services for immigrants.

The senator's proposal reflects a broader disagreement over state budget priorities.

Programs providing health coverage and legal assistance to certain immigrants have been supported by advocates who argue they protect vulnerable families and serve important public interests.

Redirecting those funds would therefore involve policy decisions extending beyond the pension system.

Additionally, the amount needed to finance permanent annual pension increases would depend on eligibility requirements, inflation and actuarial projections.

A specific, independently verified funding estimate for Testa's proposed approach was not available.

Why Restoring COLAs Is Complicated

The central challenge is the difference between providing temporary financial relief and committing to permanent pension increases.

The recently approved $3,700 payment is being financed through the retirement system following a period of strong investment returns.

According to the New Jersey State League of Municipalities, the special distribution was structured so it would not require an increase in employer contributions or materially affect the pension fund's long-term financial condition.

Permanent cost-of-living adjustments would create additional obligations that could continue for decades.

Those obligations could increase during periods of high inflation.

Supporters of restoring COLAs argue that retired police officers and firefighters should not have to absorb the continuing loss of purchasing power after spending their careers in public service.

They also argue that many retirees planned their finances around the expectation that pension benefits would increase periodically.

The competing concern is how to finance those increases without undermining pension funding improvements or creating additional burdens for taxpayers.

New Jersey has struggled with pension underfunding for decades, and the 2011 suspension was part of an effort to address those financial challenges.

Polistina's legislation attempts to balance the competing concerns by limiting initial eligibility, excluding retroactive payments and requiring state funding.

The debate also raises questions about retirees in other public pension systems who remain without automatic cost-of-living adjustments.

What Happens Next?

For eligible retired police officers and firefighters, the most immediate development is the $3,700 payment expected before the end of the year.

The Police and Firemen's Retirement System has published eligibility information and said it is developing a distribution plan.

Retirees do not need to interpret the payment as evidence that their regular pension increases have been restored.

The broader question remains whether lawmakers can agree on legislation establishing a permanent system of cost-of-living adjustments.

Testa said Wednesday that discussions are continuing following the Legislature's return to work.

He noted that he had attended a Senate Budget and Appropriations Committee meeting earlier in the week and was continuing conversations with organizations representing retired first responders.

Although he did not announce an agreement or timetable for passage, he made clear that he believes the state has an obligation to address the issue.

"I believe in promises made, promises kept," Testa said.

For thousands of retired police officers and firefighters throughout Atlantic, Cape May and Cumberland counties, the difference between a one-time payment and permanent pension increases could have significant financial consequences for years to come.

State Sen. Michael Testa appeared Wednesday, Oct. 7, on The AC Mike Lopez Show, heard weekdays from noon to 1 p.m. on News Talk 1400 and 92.3 WOND.