Chris Christie signs bill requiring stress tests, fee transparency at state pension funds

New Jersey Gov. Chris Christie on Monday signed into law a requirement that the largest pension systems in the New Jersey Pension Fund, Trenton, conduct stress tests to determine how well they can respond to changing market conditions.

The legislation will affect five of the seven pension systems in the $77.5 billion New Jersey Pension Fund — the Public Employees' Retirement System, the Teachers' Pension and Annuity Fund, the Police and Firemen's Retirement System, the Judicial Retirement System and the State Police Retirement System. The teachers, public employees and police/fire systems account for about 97.5% of total New Jersey Pension Fund assets.

"The stress test analyses must provide a forward-looking projection, which considers the effects of long-term conditions and patterns of behavior of the investment market," said the legislation, which codifies practices by the trustees of the pension systems.

The stress-test goal is to "assess how well the investments of each of the state-administered retirement systems are likely to perform in periods when market returns are significantly above or below baseline assumed returns," the legislation said.

The legislation also requires the State Investment Council to report on — and make public — fees charged by external managers to the New Jersey Pension Fund, thus codifying current council practice. The council develops policies for the Treasury Department's Division of Investment, which handles investments for the New Jersey Pension Fund.