Pensions might seem like things of the past, but no. Even if fewer companies are actually offering pension plans, they still exist, and at the state level, it’s becoming a real problem. Not because pensions are a bad thing, but rather because the way New Jersey’s pension system has been run is not sustainable, says Tom Byrne, founder of Byrne Asset Management at 195 Nassau Street and vice chairman of the New Jersey State Investment Council.

Add healthcare costs to the equation and things can really take a dangerous turn. And you should care about this because the ripple effect could be immense. If you want a real-life example of how bad things can, Byrne says, look at what has happened to Flint, Michigan, where the water crisis can be traced back to the same kinds of pension/benefits funding issues New Jersey is currently staring down the barrel of.

Byrne will speak on the state of New Jersey’s pension and benefits program at the Mid-Jersey Chamber’s State of N.J. Business Luncheon on Wednesday, March 30, from 11:30 a.m. to 1:30 p.m. at Greenacres Country Club. Joining Byrne will be New Jersey Chamber president Tom Bracken and New Jersey Business & Industry Association president Michele Siekerka. Cost: $55. Visit

Byrne is the oldest son of former New Jersey Governor Brendan Byrne. His full name is Brendan Thomas Byrne Jr., and he grew up in West Orange, before attending Princeton University. “My parents followed me to Princeton when my father was elected governor,” he says.

Byrne graduated in 1976, earned his law degree from Fordham, and married Barbara Moakler Byrne, now is a vice chairman at Barclays. (She is also known for financing and producing the upcoming indie film “Equity,” about women power players on Wall Street.) Byrne began his career as a securities and commodities lawyer at Cadwalader, Wickersham & Taft in New York. His investment focus and interest in understanding what drives markets soon took him to Shearson Lehman, where he advised large institutional accounts.

In 1987 Byrne predicted the stock market crash that materialized later that same year and was in 1988 made a member of the Brady Commission staff that reported to President Ronald Reagan on the causes of the crash.

After the Brady Commission, Byrne wrote “The Stock Index Futures Market: a trader’s insights and strategies,” which led to him being tapped for the 1988 team that designed the trading halt procedures, now in place at the New York Stock Exchange and the Chicago futures exchanges. These procedures limit the potential for a crash similar to the one in 1987.

In 1989 Byrne joined Commodities Corporation (now Goldman Sachs) on Mount Lucas Road, where he focused on financial futures and risk management techniques. There he began to manage money for private clients, which led to him establishing his own firm in 1999.

Having learned about politics from his two-term father, Byrne ventured into the political arena himself in the mid-1990s, when he served two terms as chairman of the Democratic State Committee. In 2000, and again in 2008, he sought a U.S. Senate seat, but did not make it past the primaries.

He learned about education from his mother, who was a teacher, and says he enjoys educating people about the realities of the markets.

How we got here. As Byrne sees it — and as the state Investment Council also sees it in its New Jersey Pension and Health Benefit Commission study, which Byrne was a major part of — the past six governors, starting with Christie Whitman, have simply failed to make adequate contributions to the state’s pension system. These governors, Republican and Democrat alike, he says, “justifiably or not took the path of least resistance” in handling the state pension and benefits issue.

In a way, Byrne says, it was an attitude similar to what’s happened to Social Security, in that there’s a budget problem somewhere and people see a big pot of money sitting there that won’t be claimed for years. The difference, he says, is that the federal government has a printing press if it really needs more money. “We don’t have a printing press.”

What it means for business. New Jersey had built a reputation as business friendly over the years, only to see that lofty perch erode under the weight of ever-increasing property taxes, inconsistent business taxes, and generally poor financial judgment. For a while, the flush-with-cash Garden State could float its financial practices without much to worry about.

Now, with the bill due, the state is in trouble. “And a state in financial trouble is not good for business,” Byrne says. There are fewer incentives for businesses, larger taxes on corporations, and terrible strains on employees who often find they can’t afford to live where they work.

This leads to a finite pool of money suddenly being pulled in several new directions, none of which are good, Byrne says. The Flint water crisis happened, he says, because the Michigan government needed to reallocate money by cutting back on programs and trying to save money in places. Eventually, the state realized it had no money to deal with the environmental disaster it’s now almost literally drowning in.

Could that kind of thing happen here? Of course, Byrne says. The inability to fund state benefits and pensions means that the state needs to get the money to do it from somewhere else. Right now, Byrne says, the state budget is $34 billion, and the pension issue is a $9 billion piece of it. In 10 years this very issue will be a quarter of the state’s budget. “And that doesn’t even include healthcare,” he says. “We’re nowhere close to being able to fund that.”

What can be done. The New Jersey Pension and Health Benefit study recommends some harsh truths to fix the issue, starting with the most direct and obvious idea to stop the bleeding. According to the study, New Jersey’s lawmakers should freeze the existing pension plans — the benefits-earned to date would not be affected, but “taxpayers cannot afford additional benefits to be earned under the existing plans,” the report states. Also, align future public employee retirement benefits with private-sector levels. This, the report states, “is the sensible thing to do on its own merits and the savings will make funding more secure for employees and less painful to taxpayers.”

Similarly, align public employee health benefits with private-sector levels. “Get ahead of the curve in controlling these staggering costs before they crowd out retirement benefits from state and local budgets,” the report states. Fairly realign state and local responsibility for new and sustainable pension and health benefits, which would produce the best result from the perspective of employees and the state’s taxpayers as a whole; lock in fixed and certain pension funding with a constitutional amendment to protect employees and retirees from the vagaries of politics and the annual budget process; and transfer the assets, liabilities, and risks of the existing pension and new retirement plans to employee entities willing and able to assume this obligation.

All well and good for a study, but Byrne admits, the suggestions are just that, and are not even great. The commission has no power to fix, only to recommend action in a situation fraught with risk.

“We didn’t say these were good ideas,” Byrne says. “We just said they were ideas. So far no one has come up with better ones. And, actually, no one has came up with any other ideas.”

So if you have some, shout them out.

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