NJ State Pension COLA Freeze Upheld By State Supreme Court

by David Madden

TRENTON, NJ (CBS) -- The New Jersey Supreme Court has handed the Christie Administration a major victory on the state pension front, upholding a 5-year-old law that reformed the system.

The high court in a 6-1 decision ruled that the state could, in fact, freeze cost of living adjustments to some 800 thousand retirees.

Unions argued the COLAs should receive the same legal protections as the pensions themselves. The justices disagreed, saying the legislature never intended to make COLAs a "non-forfeitable right".

As you might imagine, unions are none too thrilled with the ruling. Wendell Steinhauer, president of the New Jersey Education Association, called the freeze "theft, plain and simple".

Had the state lost this fight, it would have worsened the financial condition of the pension fund.

The reform plan called for increased state contributions, but the administration has not met its funding benchmarks and the courts have allowed that.