Four pension funds within the $72.1 billion New Jersey public pension system reduced their investment return assumptions to 7.95% from 8.25%, confirmed William Quinn, spokesman for the state Department of Treasury, whose Division of Investment manages pension system investments.
Trustees of the Public Employees' Retirement System and the State Police Retirement System approved the changes June 20, and trustees of the Teachers' Pension and Annuity Fund, and the Police and Firemen's Retirement System approved the changes June 18, Mr. Quinn said. The reductions had been recommended by State Treasurer Andrew P. Sidamon-Eristoff.
The Judicial Retirement System board hasn't met yet to vote on Mr. Sidamon-Eristoff's recommendation to reduce the return assumption, Mr. Quinn added.
The boards voted “to bring returns and wage assumptions more in line with economic reality,” Mr. Quinn said.
The actions included reduced assumptions about public employee wages in the future. For example, a June 12 actuarial valuation report by Buck Consultants for the Public Employees' Retirement System, said assumed salary increases have been cut by two percentage points for each fiscal year from 2012 through 2016 (all fiscal years end June 30). After 2016, the assumed salary increases would be reduced by 0.75 percentage points, the report said.
“These assumptions will remain in effect until such time as the treasurer approves revised economic assumptions,” the Buck Consultants report said.
Two other actuarial valuation reports by Buck Consultants — for the Police and Firemen's Retirement System and for the State Police Retirement System — reported the same revised wage assumptions.
A June 12 actuarial valuation report by Milliman for the Teachers' Pension and Annuity Fund said the 7.95% return assumption “is higher than our best estimate of future returns, but falls within the optimistic end of our reasonable range.”