New Jersey Gov. Phil Murphy has signed a bill divorcing the state’s $26 billion Police and Firemen’s Retirement System from its current management, handing it to their unions to run.
Effective immediately, the bill transfers control of the police and fireman fund to the plan’s 12-person board of trustees, which in effect gives the public workers’ unions control. Previously the state Division of Pensions and Benefits managed the fund, with the State Investment Council and Division of Investment in charge of its allocations.
The police and firefighter unions feared that their plan might someday be pooled with pensions for teachers and other public workers, which are much weaker, to bail them out. The Police and Firemen’s Retirement System is 73.1% funded. New Jersey’s state funded ratio is 31%, the worst in the country. The unions also weren’t happy with the state agencies’ putting pension money into hedge funds.
The bill requires the police and fire pension to have an actuary to certify the funds’ long-term viability, and the state treasurer will continue to set the fund’s rate of return. The pension plan’s board will set the rest of the fund’s internal targets. Its board of trustees will consist of active and retired police and firefighters as well as state and local government representatives.
Murphy conditionally vetoed the bill in May, calling for some safeguards for taxpayers, which were met in June. He called the new bill “a good first step” toward the personal security of retiring police officers and firefighters, as well as a benefit for taxpayers.