The New Jersey Division of Investment, Trenton, restated annualized return numbers for the state's public pension fund for the fiscal 2009 and fiscal 2010 years following a review by outside consultants, according to a news release issued Dec. 30 by Timothy Walsh, the division's director.
For the fiscal year ended June 30, 2009, the return was revised to a loss of 15.84%, compared with the original loss of 14.28%, the news release said. For the fiscal year ended June 30, 2010, the return was 13.36%, vs. an original gain of 14.84%.
“None of the changes in these calculations reduces the market value of the total fund or increases the state's pension liability,” Mr. Walsh said in the news release. “The pension funds had $66.824 billion in assets on June 30, 2010, as originally estimated and as verified by the audit of our financial statements.”
The Division of Investment manages investments for seven public retirement systems that comprise the pension fund, whose assets totaled $71 billion as of Oct. 31, according to the Department of Treasury website.
Mr. Walsh ordered the review after becoming director in August because the annual returns had not been verified by outside consultants, the release said. The outside review was conducted by the division's investment consultant, Strategic Investment Solutions, and Ernst & Young, the pension fund's auditor.
“The decision (not to have the numbers verified) was done by the past division leadership,” said Andrew Pratt, a Treasury Department spokesman, said in an interview. “When Tim came in, he said the (outside) auditors should verify the numbers.”
The calculations used for reporting New Jersey's pension performance for fiscal 2009 and 2010 “were conducted internally, using preliminary estimates,” the release said. “In previous years, the reported calculations were based on final, audited financials and verified by the general consultant of the pension fund.”
The Division of Investment will return to using the former system “of calculating returns looking backward at actual final financial statements” because it is “more likely to produce reliable results,” Mr. Walsh said in the release. “We will return to that system for fiscal 2011, and the years thereafter, and we will take other steps to ensure the accuracy of our performance figures.”
