(The following story by Larry Higgs appeared on the Asbury Park Press website on August 14.)
NEWARK, N.J. — Following the state’s lead, NJ Transit’s board of directors approved its own early retirement plan Wednesday and a two-year hiring freeze of administrative workers, which officials hope could net the agency an estimated $6 million in annual savings and benefits.
Officials hope that at least 70 of the 140 eligible administrative and management employees will take advantage of the early retirement, said Richard Sarles, NJ Transit executive director.
“This is another tool to contain our costs and reduce costs so we don’t have to go back for such things as fare increases,” Sarles said. “It is a one-time offer.”
The pension program is being extended to administrative workers who are age 55 or older, already qualified to retire and are not union members. Workers who take early retirement would receive credit for an additional three years of service, which is used to calculate their pension and retiree health benefits.
An additional employer contribution of 6 percent to the employees 401A plan account balance would be provided on the date of retirement, as an additional incentive. No severence payment would be offered, Sarles said. Workers taking the package have to retire between Sept. 1 and Dec. 1.
Another incentive for reduced cost health benefits would be extended to employees age 60 or up with 10 years, but less than 20 years of service. Employees taking that incentive would receive reduced contribution rates for health coverage, which would be the same as the contribution rate for active employees.
Workers in bus, rail or light rail operations and NJ Transit police are not eligible because they are considered essential, Sarles said. Sarles pledged that only 10 percent of the positions left behind by those workers would be filled.
“We still have costs escalating, and early retirement incentives are the right tool,” said Kris Kolluri, state transportation commissioner and NJ Transit board chairman. “We’ll recover the cost of this program in one calendar year.”
NJ Transit lopped $14 million out of its fiscal year 2009 budget, Sarles said, noting the early retirement package was another tool to absorb increased costs such as diesel fuel for buses and trains.
Sarles also announced a two-year hiring freeze of administrative workers on Wednesday.
“Any exceptions (to the hiring freeze) require my approval,” he said.