Supporters of the bill say the state needs to cut costs because the pension and health systems are underfunded by more than $120 billion total. The Christie administration estimated the bill would save $3 billion in health benefits over the next 10 years and $120 billion in pension costs over 30 years. Much of the pension savings are from the controversial elimination of the cost-of-living adjustments for retirees, which unions have threatened to challenge in court.
The tremendous bang-for-the-buck you can get by eliminating or reducing COLAs for retirees, compounded over time, is the key thing here. Doing so reduces payouts to retirees only gradually, allowing them time to plan. It sure seems like a fair formula to me, particularly when younger workers are going to have drastically limited pensions, if they get any pensions at all. Why couldn't we do something like this for Social Security? Instead, the fear of the AARP and other old-folks' lobbyists keeps talk of reforming Social Security within the parameters of.... "and remember: we're not touching anything having to do with people currently in retirement or nearing retirement." But if we don't touch them, we're letting a huge (and rich) portion of the public off scot-free, while the young will bear the entire burden.