New Jersey Gov. Phil Murphy signed a bill transferring management of the Police and Firemen's Retirement System to a revised board of trustees after the Legislature concurred with his recommendations to revise the bill.
The bill, which takes effect immediately, requires an actuary to certify the long-term viability of the pension fund, a critical safeguard to ensure stability. Additionally, the treasurer would continue to the set the rate of return for the pension fund, but the board would set its own internal targets.
The bill also allows for members of the separate board to oversee their own investments of the $26 billion pension fund.
"It is critical that those who have paid into the pension system are comfortable that they will be able to retire with dignity," Mr. Murphy said in a news release issued by his office. "The state must move forward with stable, reliable pension payments and this bill is a good first step toward making sure that our retiring police officers and firefighters feel secure as they move toward retirement, while also protecting the financial interests of taxpayers."
The legislation was passed in March with veto-proof majorities in both the Democrat-controlled Senate and General Assembly. Mr. Murphy originally issued a conditional veto of the bill in May, saying the legislation as it was previously written would "risk immediately destabilizing the value" of the $76.7 billion New Jersey Pension Fund, Trenton.
Mr. Murphy said in his conditional veto message in May that transferring $26 billion in pension assets to an independent PFRS would destabilize the entire system.
He recommended keeping the assets under the auspices of the division of investment within the state Treasury Department. Mr. Murphy also recommended that the legislation require an actuary to certify the soundness of benefits changes enacted by a new PFRS board and objected to the legislation allowing the board to set its own assumed rate of return for investments.
Mr. Murphy wrote, "In relative terms, PFRS is the healthiest of the state's individual pension systems with a total funded ratio of more than 69%," compared to the 60.2% average for the other pension funds.
The legislation transfers the police and firefighters' pension fund from the Treasury Department to a newly constituted board of trustees with 12 members instead of the current 11. Police and firefighter union members will hold seven of the board seats, up from five.