The New Jersey Supreme Court will hear a case on March 14 to determine if annual cost of living adjustments to retirees' pension benefits implemented by Gov. Chris Christie are constitutionally protected.

In a case that could prove pivotal to New Jersey's future credit rating, the state's Supreme Court will hear oral arguments on March 14 to determine if annual cost of living adjustments to retirees' pension benefits need to be restored.

The state's highest court will determine if a 2011 COLA freeze instituted by Gov. Chris Christie violated worker pension rights. The case revolved around a June 2014 Superior Court ruling overturning a lower court decision that determined COLAs to retirees' pension benefits are contractually protected under the state constitution.

Moody's Investors Service released an Aug. 17 report stating that an "unfavorable court decision" in Gov. Chris Christie's pension litigation regarding COLAs could cause the state's already low A2 bond rating to go down. The Garden State is rated A by Standard & Poor's and Fitch Ratings and has the second lowest credit rating of the 50 U.S. states ahead of just Illinois.

In January Moody's said if the Supreme Court rules against Christie, the state's unfunded pension liability would jump by 33% from $40 billion to $53 billion. A 2015 National Association of State Retirement Administrators study showed that New Jersey has underfunded its pensions more than any other U.S. state for the last decade.

The COLA issue is the second major pension case to hit the New Jersey Supreme Court in the last year. The court ruled 5-2 in June that a section of Christie's 2011 pension reform law that called for ramp-up of the state's pension system over a seven-year period was not legally enforceable and enabled the Republican governor to proceed with $1.57 billion in unfunded actuarial accrued liability pension payments he vetoed for the 2015 fiscal year. The U.S. Supreme Court declined to hear an appeal, which kept the cuts in place.

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