The New Jersey Senate on Monday unanimously approved a bill that would transfer management and administration of the Police and Firemen’s Retirement System to an expanded board of trustees and away from the New Jersey Department of Treasury.
The 37-0 vote came on a bill sponsored by the Senate’s two most powerful politicians, Democrat Stephen Sweeney, the Senate president, and Thomas Kean, the Republican leader. No companion bill has been introduced in the state General Assembly.
The Police and Firemen’s Retirement System is the second largest of the seven pension systems within the $71.2 billion New Jersey Pension Fund, Trenton. For the fiscal year ended June 30, PFRS had $22.8 billion in assets.
The legislation would remove management of PFRS from the Treasury Department’s Division of Pensions and Benefits. The bill would increase the size of the board of trustees to 12 from 11 and give it more power.
The division “provides the administrative services for state-administered retirement systems, including PFRS,” said a March 13 report by the Office of Legislative Services analyzing the bill’s impact.
“The bill requires the board to hire an executive director, actuary, chief investment officer and ombudsman,” the report said. “Any increase in the administrative costs will depend on the board’s decisions” to hire additional staff instead of using the division’s services.
The bill also gives the trustees “all the functions, powers, and duties relating to the investment and reinvestment of money in any fund or account under the control of the board,” the report said. The Treasury Department’s division of investment currently handles those functions for all the retirement systems in the New Jersey Pension Fund.
In a news release issued after the Senate vote, Mr. Kean said unions covered by PFRS “spent two years researching this proposal, including meetings across the country with representatives of other states’ pension systems to learn what works and what doesn’t.”
The current PFRS board of trustees now has “limited advisory power,” Mr. Kean’s news release said. The division of investment has “all functional decision-making authority on investments. Contribution and benefit levels are set in statute.”
The bill would give the PFRS trustees greater control over the pension system, “including decision-making authority on investments, contributions and benefit levels,” the news release said.
The police and fire pension system “is arguably the strongest of the state’s public employee pension funds,” Mr. Kean said in the news release. “With many of the unions that represent the employees of the other pensions systems lacking such a disciplined track record, it’s not surprising that the (police and fire unions) want the power to go their own way with their pension fund.”
Two New Jersey police unions and one firefighters’ union supported the bill; one firefighters' union opposed it.