JOHN REITMEYER | JANUARY 26, 2017
New figures don’t negate fundamental funding problems, but they bring some good news for the beleaguered pension system
The board that oversees New Jersey’s beleaguered public-employee pension system received some good news yesterday as new figures showed overall investment returns finished ahead by about 7 percent last year.
While those returns didn’t live up to the 7.9 percent assumption that’s set in state law for the pension system, they marked a significant improvement over the year before, when investments generated less than 1 percent returns.
The new calendar-year figures also suggested a much better outlook for the pension system — which is deep in debt thanks to years of underfunding by the state — after figures released last year for the 2016 fiscal year showed negative returns for the first time in nearly a decade. (The fiscal year runs on a July 1 to June 30 schedule, mirroring the state budget cycle.)
The full dive into the 2016 calendar-year investment returns took place yesterday during a public meeting of the State Investment Council, the board that sets policy for the $72 billion pension system. State officials said the improvement largely occurred during the second part of 2016, with areas like equity and real estate leading the way after a poor start that included plummeting energy prices. They also released new figures for alternative investments like hedge funds and private equity that showed a slight increase in fees but an overall reduction in other costs like bonuses for performance.