A New Jersey pension board has awarded $16 billion in the second installment of a $12.5-billion pension loan to help New Jersey’s $19 billion-a-year pension fund cope with the fallout from the recession, the state’s finance agency said Thursday.
The state Department of Financial and Professional Regulation said in a statement the third installment of the loan would be available through Oct. 1 and would provide funds to cover the cost of the next six years for New Jerseyans whose benefits will be impacted by the state pension crisis.
The pension board approved the loan earlier this month and approved the second round of funding in a vote that included the two largest state-chartered pension funds, New York’s U.S.A. Pension Fund and California’s UBS Investment Company, as well as the National Association of State Retirement Administrators, the agency said.
The state’s three other state pension funds also received funding.
The third installment includes $10 billion in contributions for a new “non-qualified” employee pension plan and $6.7 billion for a “qualified” pension plan.
The funds also plan to add a third employee plan.
The fund will provide the first installment of $5.6 billion in payments to pension fund beneficiaries on Jan. 1, 2019, according to a notice the state sent to members of the New Jersey Legislature last month.
The money will come from two sources: $4.7 million from the federal government, which is set to pay the remaining $3.5 million, and $2.7 to the state from the state and local governments.
The first installment was approved by the New York City Board of Trustees in a unanimous vote in January and approved by state legislators last month, according.
The second installment will come with an initial payment of $1.5 in 2018, the money will be payable in full in 2019 and $1 in 2020.
The fund will then make payments monthly until it has paid $5 million in 2019, $10 million in 2020 and $15 million in 2021, according the notice.
The funds will then receive $2 billion in 2019 from the Social Security Administration and the federal Disability Insurance program.
The New Jersey Department of Business and Professional Standards said in the notice that the first payment of the third and final installment of funds would be due on Dec. 31, 2021, but the second payment will be due Jan. 5, 2022.
The third installment will pay the state $3 million in 2022.