New Jersey's $70.2 billion pension fund is negotiating reductions in fees and expenses for private managers after paying $125 million last year, said Timothy Walsh, director of the Division of Investment, which oversees seven public retirement systems.
The state is seeking new terms at the same time it's proposing to increase the share of its holdings that can be placed in privately managed assets. The State Investment Council, Trenton, at its Thursday meeting voted to raise the maximum allowable allocation in alternatives to 38% from 28%, and voted to support regulations to enact the change.
The fund hopes to work out a lower fee structure by year-end, Mr. Walsh said in an interview after the meeting.
“We went through a period when general partners were in great demand,” said Chairman Robert Grady. “The pendulum has swung a bit back to the limited partners. I think it's perfectly appropriate and responsible for New Jersey and other states to negotiate the best terms they can.”
New Jersey pays most of its private partners 2% management fees and a 20% share of gains, state records show.
The fund had about 14% of its assets in privately managed alternative investments, according to documents presented by the division at the council meeting. The largest portions of the pension portfolio are domestic fixed income (31.49%), domestic equity (23.95%) and international equity (19.77%).
Once the regulations on the new allocations are prepared, they will be submitted for public comment for 60 days, spokesman Andrew Pratt said. The council will then vote on a final set of rules.
Robert Steyer contributed to this story.
