chris christie | Pension360

Proposed New Jersey Bill Would Halt State Aid to Municipalities Not Complying With 2011 Pension Reforms

A New Jersey assemblyman proposed on Thursday a piece of legislation that would block state money to cities that aren’t complying with the state’s 2011 pension reform law.

From NJ.com:

[Assemblyman Declan] O’Scalon said he is proposing the legislation after reports surfaced that Newark had not been collecting payments that employees are legally required to pay toward their health care premiums.

Under the revised pension reforms Gov. Chris Christie signed in 2011, all public workers were required to contribute more toward its healthcare premiums, but state officials said earlier this year that Newark has not been compliant.

The city said in October that it took several months to update its payroll system in the wake of the law and that they did not know why the payments weren’t collected last year.

“It was long overdue, but it has come to light that the City of Newark has been ignoring the law since it was put into place,” O’Scalon said in a statement.

“The result is that the Mayor, Council members, and all employees in Newark pay less than the law requires – and worse, what common sense and fairness demand.”

The legislation would also dock the pay of elected officials and top finance department heads in municipalities that are not compliant, according to O’Scalon.

The proposed legislation would also establish noncompliance as grounds for impeachment or removal of the mayor of city officials, O’Scalon said.

O’scalon’s remarks arrive months after the state agreed to give Newark $10 million in transitional aid to address its budget crisis.

“Newark is a city that is facing tough issues and is legitimately going to need continued help from the state, but the local elected officials must lead by example,” O’scalon said.

The legislation will be officially introduced by the end of the year.

Photo credit: “New Jersey State House” by Marion Touvel. Licensed under Public domain via Wikimedia Commons

Moody’s: New Jersey Pensions Could Run Dry In 10 Years

In a new report from Moody’s, the ratings agency warns that two of New Jersey’s largest state-level pension systems – the New Jersey Public Employees Retirement System (PERS) and the Teachers’ Pension and Annuity Fund (TPAF) – could dry up in the next decade.

Reported by the Associated Press:

The finding by Moody’s comes after the state’s recent announcement that public pension liabilities nearly doubled to $83 million, due to new accounting rules.

The agency laid out its concerns in a report this week. Among the concerns it raises are the possible depletion of public worker and teacher pension funds by 2024 and 2027, respectively.

Despite the concerns, Moody’s said the new liability figure is in line with its own calculations. Moody’s has downgraded the state’s credit rating twice, in part due to the pension fund.

Gov. Chris Christie cut the state’s contribution to pensions earlier this year amid budget hardships by nearly $1 billion, lowering it to almost $700 million.

New Jersey recently began implementing new GASB accounting rules. The rules change the way the state calculates pension liabilities, which is why the funding ratio of the state’s pension systems dropped 20 points last week.

But the change was expected, and was already figured into Moody’s analysis of the state’s pension funding situation.

Photo by B Smith via Flickr CC License

Kolivakis on Post-GASB New Jersey and Pension Fund Compensation

Last week, the funding ratio of New Jersey’s pension system dropped 20 points. That’s because the state began measuring funding under new GASB accounting rules, which requires using market asset values instead of actuarial ones.

This new way of measuring liabilities puts New Jersey in an even deeper hole. But as Leo Kolivakis of Pension Pulse points out, this is a hole that New Jersey dug for itself – with poor pension governance, below-median investment performance and by diverting state pension payments to other parts of the budget.

Here’s Kolivakis’ take on New Jersey’s situation, the new GASB rules and compensating pension fund staff.

__________________________

Originally published at Pension Pulse:

You can read more on GASB’s new rules for pensions here. I note the background for these changes:

On August 2, 2012, the GASB published accounting and financial reporting standards that improve the way state and local governments report their pension liabilities and expenses, resulting in a more faithful representation of the full impact of these obligations.

The guidance contained in these Statements will change how governments calculate and report the costs and obligations associated with pensions in important ways. It is designed to improve the decision-usefulness of reported pension information and to increase the transparency, consistency, and comparability of pension information across state and local governments.

For example, net pension liabilities will be reported on governments’ balance sheet, providing citizens and other users of these financial reports with a clearer picture of the size and nature of the financial obligations to current and former employees for past services rendered.

In particular, Statement 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits.

The new GASB rules will impact all state and local pensions, not just New Jersey. This will be another important measure to determine whether U.S. public pensions are indeed on solid footing.

As for New Jersey, back in March, I commented on its pensiongate scandal and didn’t mince my words:

The article doesn’t capture the real problem at U.S. public pension plans, namely, lack of proper governance. You basically have politicians appointing political bureaucrats in charge of public pensions, paying them peanut salaries and getting monkey results. There are exceptions but this is typically how U.S. public pension funds are mismanaged.

And who benefits most from this? Of course, the Paul Singers, Dan Loebs, Steve Schwarzmans, and all the rest of the who’s who managing hedge funds and private equity funds. It’s one big alternatives party — for the big boys. Everyone is making a killing except for these public pension funds, praying for an alternatives miracle that will never happen. These alternatives managers and their sophisticated marketing are milking the public pension cow dry. They basically have a license to steal.

And why not? There are plenty of dumb institutions listening to their useless investment consultants who are more than happy to recommend the latest hot hedge fund or private equity fund to their ignorant clients. It’s a frigging joke which is why the Oracle of Omaha is 100% right when he warns us that the worst is yet to come for U.S. public pensions.

As far as New Jersey, Gov. Christie has done some good things on pension reform but a lot more needs to be done. Double-dipping pensioners are bleeding New Jersey dry. Unions can bitch all they want about rich alternatives managers meddling in their state’s politics but they must accept shared risk of their plan, which includes raising the retirement age and cuts in benefits as long as the plan is chronically underfunded. The state of New Jersey, however, should make sure it tops up its public pension plan which it neglected to do for years (the major cause of the pension deficit).

The biggest factor explaining the pension deficit in New Jersey and other states is how successive state governments failed to make their pension contributions, using the money to fund other things (no doubt in an effort to buy votes).

But there are plenty of other factors that didn’t help, like lack of sensible pension reforms, lousy investment performance and poor governance.

On this last point, Michael B. Marois of Bloomberg reports, California Pension Fund Bonus Payouts Climb 14% From Prior Year:

The $300 billion California Public Employees’ Retirement System, the largest U.S. public pension, paid $9 million in bonuses last fiscal year, up 14 percent from a year earlier as earnings exceeded benchmarks.

The fund, known as Calpers, paid $8.7 million in bonuses to investment staff in the year ended June 30, and almost $300,000 to four non-investment executives, according to data provided by the system. The rewards are based on three-year performance verses a benchmark, as well as the earnings of each asset class and individual portfolios, said spokesman Brad Pacheco.

“These awards are part of the overall compensation we provide to recruit and retain skilled investment professionals needed to ensure success of the fund,” Pacheco said.

Public-pension funds are recouping investment losses suffered during the 18-month recession that ended in June 2009, which wiped out a third of Calpers’ value. Still, the crisis left U.S. pensions short more than an estimated $915 billion needed to cover benefits promised to government workers. Taxpayers have been asked to make up the shortfall.

The biggest bonus earner was Ted Eliopoulos, the chief investment officer who recorded a $305,810 bonus last year in addition to his $412,039 base pay.

Top Job

That bonus was paid when Eliopoulos was acting chief investment officer after his predecessor Joe Dear died in February from cancer. Prior to that, Eliopoulos headed the fund’s real estate portfolio. He now earns $475,000 in base pay after he was tapped for the top investment job in September.

Eliopoulos announced in September that the fund was divesting all $4 billion it had in hedge funds, saying they were too expensive and too complicated and not worth the returns.

The pension fund earned 18.4 percent last fiscal year, 12.5 percent a year earlier and 1 percent in 2012. It estimates it need 7.5 percent annually to meet its long-term obligation to pay benefits promised to state and local government workers.

Calpers is still short $103.6 billion needed to cover those promises based on market value as of June 30, 2012, the latest figure that was available. That shortfall is up 19 percent from a year earlier.

The California fund says it must grant bonuses to help compete with the pay that employees could make if they went to work on Wall Street. Pacheco said spending money on in-house investment management saves about $100 million a year that otherwise would be paid to Wall Street in fees.

Wall Street bonuses, which rose 15 percent on average last year to $164,530 — the highest since 2007 — may climb again as a result of payments deferred from previous years, New York Comptroller Thomas DiNapoli said last month.

Four executives outside the Calpers investment office were paid a total of $295,930 in bonuses last year, the fund said. Anne Stausboll, chief executive officer, got $113,679; Chief Actuary Alan Milligan earned $75,748 and Chief Financial Officer Cheryl Eason was paid $89,703, almost double a year earlier.

Calpers paid a total of $7.9 million in bonuses in the prior fiscal year.

Compensation is part of pension governance and if you ask my expert opinion, CalPERS’ compensation is fair and accurately reflects the market, their performance and their ability to attract and retain professionals to manage billions. The only thing I would change is base it on four-year rolling returns, like they do at Canadian public pension funds.

All this hoopla on compensation at U.S. public pension funds is totally misdirected. I happen to think most U.S. public pension fund managers are grossly underpaid, just like I think some Canadian public pension fund managers are grossly overpaid (read my comment on PSP’s hefty payouts and the subsequent ones on its tricky balancing act and its FY 2014 results which were likely padded by skirting foreign taxes).

Getting compensation right is critical to the long-term health of any public pension fund but supervisors of these funds should make sure they’re paying their senior investment staff properly based on benchmarks that truly reflect the risks they’re taking. I believe in paying people for performance, not for taking dumb risks to trounce their silly benchmark (that contributed to Caisse’s ABCP disaster which the media is still covering up).

Is 80 Percent Funding All It’s Chalked Up To Be?

When it comes to pension funding, an 80 percent funded ratio is the benchmark for a “healthy plan”.

But over at the STUMP blog, actuary Mary Pat Campbell has penned a post taking issue with the 80 percent “rule”. According to Campbell, 80 percent isn’t a magic number that makes pensions “okay”.

The post is published below:

______________________

By Mary Pat Campbell, originally published at STUMP

I have just about had it with the 80 percent.

Unlike the commonplace idiocies of ‘You only use 10% of your brain’ or ‘The Great Wall of China is the only manmade object visible from space’, the 80 percent myth is dangerous.

I speak, of course, of the supposed percent fundedness level at which public pensions are “okay”.

The American Academy of Actuaries has a brief on the 80% pension funding myth, and I will give loads of examples of how even “100% funded” plans have been shown to be shaky.

But that’s not for today.

Today, I have decided to keep track of every idiot who refers to this 80% funding level (or something even worse) as proof that a pension plan is or is not okay. Generally, reporters fall afoul of this, and this is not necessarily concerning. People don’t think of reporters, as a group, as expert in anything.

But when there are politicians directly making decisions about public pensions, union leaders arguing about their public pensions, and dear lord, public plan TRUSTEES putting this bilge forth, that is super dangerous.

If you want to follow yourself, just create a google news alert on ‘80 percent pension’ — google news alerts don’t necessarily work the same for everybody, so feel free to email me at marypat.campbell@gmail.com if I missed any good (or, rather, horrible) examples.

So here goes:

Congrats, New Jersey Senate President Steven Sweeney — you are the inaugural member of my 80 Percent Pension Funding Hall of Shame!

TRENTON — State Senate President Stephen Sweeney is floating an idea to move the goal posts for funding public workers’ pensions in order to take pressure off the state budget.

Sweeney (D-Gloucester) said today the state — which by law is supposed to fund the pension system 100 percent by 2018 — should instead focus on getting the pension system 85 percent funded to put it in line with private sector plans that are considered healthy.

New Jersey’s pension funds are currently funded at about 54 percent, in part because the state skipped or made only partial payments for a decade. Under a 2011 law pushed by Sweeney and signed by Gov. Chris Christie that included cuts to workers’ pension and health benefits, the state is required to ramp up its payments to once again fully fund the system. However, Christie cut the payments by more than $2 billion for this budget year and the previous one.

Yes, yes, he picked 85 percent, but anything less than 100 percent is questionable. Especially with New Jersey math.

Here’s a nice kicker:

“The governor paints a very bleak picture by saying ‘look at what a big hole we’re in,’” said Sweeney. “The governor’s focus is basing everything on us being fully-funded. That’s not a realistic number. And a lot of pension systems live being 85 percent funded, or in the 80s.”

Yeah, they live right up until they don’t.

Ask the Detroit retirees what they think of their supposedly almost-100-percent-funded pension – pension benefits that got cut (note: it was not as fully funded as they thought, but that’s for another time.)

NEWS ALERT SENATOR SWEENEY: lots of public pensions aren’t doing well. While 85% funded would be a lot better than where NJ pensions are right now, that is not a laudable end goal.

I’ve already got THREE OTHER EXAMPLES for my new Hall of Shame from just this week, so this Hall of Shame is going to be filling up rapidly.

With respect to politicians, or union leaders, or other such, there is no cure (that is, I, personally, can’t do much about it other than mock them on the blog).

But at least with regards to reporters, I will be writing them and/or their organizations with links to the Academy’s brief. And maybe the blog posts where I call them idiots. We’ll see.

Panel Recommends Atlantic City Delay Payments to Pension System For Next Three Years

A task force has released its recommendations for staving off the financial collapse of Atlantic City, New Jersey.

Buried in the report is one recommendation that might sound familiar to residents of New Jersey: that the city should defer its payments into the pension system for the next three years.

From NorthJersey.com:

State officials and people outside government would take on a greater administrative role in Atlantic City under a plan for the economically troubled resort made public Thursday.

The proposal comes as the city struggles to right its budget and cover debt payments in the wake of four casino closures this year, and as a fifth casino is threatening to shut down.

To help offset financial losses brought on by the casino closings, Atlantic City would be permitted to defer payments into the public employee pension system and could qualify for more state education aid.

[…]

The details of the report were discussed Wednesday during a meeting Christie organized with local officials, casino executives and union leaders in Atlantic City. A bipartisan group of lawmakers also attended the meeting and has pledged to work cooperatively with the governor on legislation that may be required to help turn the city around.

John Bury gives his take on that part of the plan over at Bury Pensions:

New Jersey politicians and their enablers had a discussion today where they reviewed a secret report that kicked off with the suggestion:

To help ease the burden on city taxpayers, the recommendations include a three-year window for deferring the city’s employer contributions into the public employee pension system.

And that passes for a solution! How has this strategy worked out for the state which has been shortchanging the pension plans for a generation and is now in day 105 of awaiting more solutions from a study panel report that should have been released 45 days ago.

But the chilling paragraph of the northjersey.com story is:

The recommendations released Thursday were prepared by [Christie adviser Jon] Hanson, who also produced a report for Christie in 2010 that the governor used at the time to guide Atlantic City revitalization efforts.

The same adviser! Wasn’t there somebody in 2010 who looked at Hanson’s guide to AC revitalization then and saw it as a blueprint for closing half the casinos and mass layoffs?

More details of the plan can be read here.

Photo by Richard Feliciano via Flickr CC License

New Jersey Lawmaker Proposes Tweak in Pension Funding Formula To Reduce Burden

New Jersey Senator Stephen Sweeney (D) has proposed a plan to tweak the state’s pension funding formula, which would lower the state’s annual contributions to the pension system.

More details from NJ Spotlight:

Senate President Stephen Sweeney (D-Gloucester) wants to overhaul the state’s pension funding formula to make annual state pension contributions lower and more “manageable” over the next decade while preserving benefits for retirees.

“Governor (Chris) Christie says the state can’t afford to get to 100 percent funding of the public employee pension system, and he used that argument to justify cutting pension contributions by $2.4 billion and to call for public employees to pay more,” Sweeney said in an interview with NJ Spotlight. “But he’s using the 100 percent funding target to inflate the size of the problem and make it look worse than it is for his own political purposes.”

“In the private sector, 85 percent funding is considered the ‘gold standard’ under ERISA,” Sweeney said, referring to the 1974 federal Employee Retirement Income Security Act that sets the guidelines for private pension systems. “That’s manageable. We can get to 85 percent funding, and at that level, we can restore the COLAs (cost-of-living adjustments) for retirees too.”

Sweeney’s plan to change the pension funding formula would save billions of dollars in pension payments in state budgets over the next decade, while still cutting the state’s unfunded pension liability for teachers and state government workers and retirees sufficiently to guarantee the solvency of the pension system. That unfunded liability is now expected to top $60 billion by FY18, up from $54 billion before Christie’s pension cuts.

But John Bury, an actuary that blogs at Bury Pensions, says the plan achieves savings through “manipulating numbers” and doesn’t address any of the real issues facing the state’s pension system. From Bury Pensions:

Most private sector funds (excluding multiemployer plans which are a mess but including ‘one-participant’ DB plans which are thriving) ARE funded at 100 percent and, if not, have to be funded at 100% within seven years under PPA funding rules and the actuarial assumptions that define 100% are legislated (though MAP-21 and HAFTA have watered those down). Apply those private sector PPA factors to public plans and New Jersey’s 54% funded ratio drops to 30%.

A pension system with 30 percent of the funding it needs to cover all accrued pension obligations is clearly regarded as dead to anyone in the business of understanding, and not manipulating, numbers.

New Jersey Blocks Public Release of Pension Pay-to-Play Investigation

In 2011, politician and businessman Charlie Baker made a $10,000 contribution to the New Jersey Republican State Committee. At the time, he was a partner at General Catalyst, a venture capital firm.

Months later, New Jersey’s pension system gave a contract to General Catalyst to manage the state’s pension money.

After the potential conflict of interest was uncovered by journalist David Sirota, New Jersey launched an investigation into the situation.

But the state is now refusing to release the findings of the investigation. From David Sirota:

Christie officials have denied an open records request for the findings of the investigation.

In a reply to International Business Times’ request for the findings of the audit under New Jersey’s Open Public Records Act, Christie’s Treasury Department said the request is being denied on the grounds that the documents in question are “consultative and deliberative material.” Despite officials’ assurances in May that the probe would take only weeks, the New Jersey Treasury said in September that the investigation is still “ongoing” — a designation the department says lets it stop the records from being released.

IBTimes is appealing the open-records denial to the state’s Government Records Council. Neither Baker nor Christie responded to requests for comment on the issue.

General Catalyst and Baker have denied that Baker had anything to do with persuading Christie officials to invest in the firm. To try to verify that assertion, IBTimes filed a separate request for any General Catalyst documents sent to the New Jersey Department of Treasury prior to its investment. Those documents would show whether General Catalyst specifically promoted Baker’s involvement in the firm when pitching its investment to New Jersey.

Christie officials are pushing back the due date to release those documents to Nov. 6 — two days after the election.

New Jersey has fallen into a habit recently of denying public records requests. From the International Business Times:

The denial letters to IBTimes come only weeks after the Associated Press documented a spike in the number of open records requests that have been rejected by Christie officials. Since 2012, Christie’s administration has paid out $441,000 in taxpayer funds to reimburse open-records plaintiffs who were unlawfully denied access to government records.

“Open records requests to the executive branch have become even more highly politicized than usual,” said Walter Leurs, president of the New Jersey Foundation for Open Government. “These documents are subject to the open records laws and they are supposed to be disclosed within seven days, so this is stonewalling. They know that any lawsuit challenging the denials wouldn’t be heard for 60 days — which is well after the election.”

Charlie Baker has denied he worked for General Catalyst when New Jersey decided to give the firm a contract. But the firm’s website listed him as a partner, and Baker himself called himself a partner in documentation related to his $10,000 contribution back in 2011.

New Jersey Pension Panel Faces “Big Test”

When Chris Christie created the Pension and Benefit Study Commission, the skeptics were quick to point out the politics of the decision.

The panel was formed to recommend reforms for the state’s pension system; but when Christie announced his appointees, some thought its real function was to act as a political shield for the governor, who has said benefit cuts are likely on the horizon for state workers.

The panel is set to release its latest report in November. The editorial board of the New Jersey Star-Ledger says the report will be a “big test” for the panel:

The panel is expected to issue its report within a month. If it offers a lopsided solution that relies entirely on a second round of benefit cuts, its report will be dead on arrival. Democrats would not consider a solution like that, and for good reason.

[…]

Democratic leaders say they will not consider more benefits cuts until Christie restores full payments. That can’t be done without a tax increase, which Christie finds equally repugnant.

The job of this panel is to find the political sweet spot, to come up with a repair plan that both sides might accept. If it fails that test, its report will gather dust and its mission will have failed.

In the end, Democrats will have to accept some new benefit cuts. The state’s fiscal condition is much worse than anyone expected when this deal was signed in 2011, thanks mostly to the sputtering economy. If New Jersey had simply matched the average state since the Great Recession, it would have raised roughly $3 billion more in annual revenues and the 2011 reform would probably have survived.

Democrats can’t expect taxpayers to make up the entire shortfall if there are reasonable cuts to be made. One example: In its preliminary report, this panel noted that the state’s health benefits remain generous, and that some might qualify as “Cadillac plans” under Obama care. The state also treats early retirees more generously than Social Security does. The panel, no doubt, will have a long list of soft spots like this.

Christie needs to face reality, too. He can’t expect public workers to bear the entire burden when the state that has shortchanged these funds for so long, and when Christie himself broke his commitment to do better. And after years of fiscal crisis, there is simply no spare money in the treasury. That means a tax increase is needed.

This is a bipartisan panel, but Christie made all the appointments, a big mistake that undercuts its credibility. If its members want to have impact, they will have to declare their independence by offering a balanced repair plan.

If that leaves both sides unhappy, then the panel will have done its job by telling the hard truth about this unforgiving math.

The panel’s first report can be read here.

Union Leader Calls Out Christie, New Jersey For Playing “Fiscal Games” That Led to “Self-Made” Pension Crisis

Patrick Colligan, the president of the New Jersey State Policemen’s Benevolent Association, has written an op-ed piece in the New Jersey State-Ledger expressing his discontent with the report recently produced by the state’s Pension and Health Benefit Study Commission.

In the piece, Colligan chastises Christie for playing “fiscal games” with the state pension system:

The Commission should tell the public about the fiscal games going on behind their backs. Before the ink was dry on the pension reform law the governor began using increased employee contributions to reduce employer pension payments. When the Legislature tried to close that loophole and use the extra contributions for pension funding, the governor vetoed it.

Add that to the failure of the state to make its actuarially required pension contributions and you have the making of a self-made pension crisis. It is worth noting if full PFRS pension payments were made during the last 15 years, it would be funded in the mid-90 percent ratio and no one today would be discussing pension reform.

New Jersey does a great job of shifting costs to employees without ever tackling the reason for those costs. Health benefits are a prime example. If the state were truly interested in reducing their health care costs they can take a number of bold steps. First, cut out insurance companies and administer its own healthcare network.

Second, rein in pharmacy benefit manager costs. How much do these PBMs make off the state? Requests for that information are repeatedly denied. Contracts for prescription costs should be required to show the true costs and rebates for the medicines involved and how much of those costs are enriching the companies brokering the deals.

Finally, the state has too many health plan choices with no real cost containment strategies. The State could consider innovative approaches to control costs like State Health Benefits Program-owned patient care centers, and wellness and disease management.

Contrary to popular belief, no one wants a healthy, well-funded and long-lasting pension and health care system more than the people who pay for it and count on it for their retirement. Put us at the table and have an open mind about our thoughts, and the state would be shocked how fast pension and benefit costs are brought under control.

Colligan also spends a good portion of the piece talking about the funding situation of the Police and Firemen’s Retirement System (PFRS).

Read the whole piece here.

New Jersey Senate Moves To Tighten Pension Pay-to-Play Rules

A New Jersey Senate committee on Thursday approved a bill that would broaden the state’s pay-to-play rules regarding pension investments.

The bill intends to further strip out politics from pension investments: the new rules would prohibit the state’s pension fund from investing in firms that have recently made donations to national political groups.

Reported by NorthJersey.com:

The legislation would broaden the New Jersey conflict of interest restrictions that apply to the pension system to cover national party committees and organizations like the Democratic Governors Association and the Republican Governors Association, an agency that’s being led this year by Governor Christie.

The measure, sponsored by Sen. Shirley Turner, D-Mercer, passed the Senate State Government, Wagering, Tourism and Historic Preservation Committee by a 3-1 vote.

That vote came just weeks after the state Division of Investment, which manages the $80 billion pension system, decided to sell its stake in a venture capital fund with ties to a Massachusetts gubernatorial candidate who donated to the New Jersey GOP. The state Department of Treasury is also in the midst of an internal audit of the investment to determine whether state regulations were violated.

But labor union officials in New Jersey have also questioned other political donations made by investment firms that have been hired by the Division of Investment to manage state pension funds, including several to the Republican National Committee and the Republican Governors Association. Both organizations supported Christie’s successful bid for a second term last year, but are not covered by current state law.

Right now, the Division of Investment regulations bar the agency from investing pension funds in a firm only when the fund management professionals have made contributions to New Jersey candidates and political committees within a two-year period.

Any hint of politics and political favoritism should be kept away from the public employees’ pension funds, Turner said.

“The method of investment should be selected based on performance and merit, not because of campaign contributions,” she said.

The bill would also require the State Investment Council, which oversees the Division of Investment, to provide quarterly reports to the Legislature disclosing the fees being that are paid to the investment management firms. Treasury right now does not list those fees on its website as other states do and requires an Open Public Records Act request, which can be a lengthy process, be filed to obtain the information.

“It’s not their money, nor does it belong to any governor or any other political figure,” Turner said.

The Senate drew up the bill after an uproar caused, at least in part, by a recent series of articles by journalist David Sirota about conflicts of interest within the State Investment Council.

Photo by Truthout.org via Flickr CC License

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