Despite Lopsided Lawmakers’ OK, NJ Pension Bill in Limbo

Although the New Jersey legislature overwhelming approved letting police and firefighters control their pension fund by removing it from state government management, Gov. Phil Murphy could veto bill.

Democrats control both the legislature and the governor’s chair, but they are not of one mind on this issue. Former Goldman Sachs financier Murphy has questions about the bill’s financial ramifications. He worries about how an independently run police-firefighter pension plan would affect other pension programs that the state government continues to run. The entire state pension system, which is well short of being able to meet its obligations, is one reason New Jersey’s credit rating is so low.

Murphy is concerned with potential penalties that all of the Garden State’s pension funds could suffer should the police-firefighter plan be forced to deplete its hedge fund holdings. Some hedge funds lock up clients’ money for years and charge big fees for early withdrawal. According to NJ.com, acting state Treasurer Elizabeth Muoio said that Murphy was “supportive” of the bill’s basic premise, but still is troubled by its possible downsides.

“The fact that we may have to liquidate them could end up costing all of the funds a significant amount of money, and we have a fiduciary duty to look after all of our pension funds,” Muoio said.

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The fund is currently managed by the New Jersey Division of Pensions and Benefits, while investments are controlled by the State Investment Council.

The police and firefighters say they would rather put the fate of their retirement benefits in their own hands than leave it to state management. The fund, due to insufficient contributions and expensive investment decisions, has gone from fully funded to 65% funded in roughly 20 years.

Under the bill, a board of active and retired policemen and firefighters, plus state and local government representatives, would manage the fund. This could potentially overrule a current freeze on cost-of-living-adjustments put in place by former Gov. Chris Christie, a Republican, who opposes the measure. Current law states that COLAs cannot continue until a fund is at least 80% funded and can prove that those payouts would not drop it below the mark.

The legislation passed Monday with a 34-2 vote in the Senate and 67-2 in the state Assembly with seven abstentions. It is currently sitting on Murphy’s desk as anxious pension members wait for the governor’s call.

“We passed both houses almost unanimously, overwhelmingly, and it’s on the governor’s desk and we hope he’s going to sign it,” Eddie Donnelly, president of the New Jersey State Firefighter’s Mutual Benevolent Association, told NJ.com.

Tags: Gov. Phil Murphy, New Jersey, Pension, Police and Firefighter Pension

On top of rising costs and continued troubles with Oregon Public Employees Retirement System’s (PERS) funding, the public pension system has another headache: filling the shoes of several departing executives.

To start, PERS will lose its longstanding executive director, Steve Rodeman, when he retires June 1. Plus, John Thomas, the board’s chair since 2012, will also be leaving, possibly with board member Krystal DeAsis. Rodeman and Thomas will leave the board following its Monday meeting, while DeAsis’ term ends in September. The job announcement for Rodeman’s position closed earlier this week. DeAsis is still deciding if she will leave later this year or stay on for a third term.

This comes as Gov. Kate Brown has been scrambling to find a way to curb the $22 billion unfunded system’s runaway costs. OregonLive reports that it is not known if an internal replacement for Rodeman is lined up, and that the pay may not be high enough to bring in an outside applicant with enough qualifications.

The system consists of four individual retirement programs whose obligations continue to mount, to the vexation of school, state, and local agencies, and other public employers. OregonLive reports that the upcoming legislative session will feature a debate over the fairness of reducing benefits for employees to pay for retiree benefits. And that means there’s a big need to have a new PERS director and board on hand to deal with the issue.

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“One of the things that has been invaluable is that everyone has seen the agency as an honest fact broker,” Portland lawyer Greg Hartman, who represents a coalition of public employees, told the publication. “It’s going to take a new leader some time to build credibility with the legislature and all the other players who get involved. This is a tough job.”

While the retirement plan board will search for Rodeman’s replacement, Brown’s office will be searching for Thomas’s. The Oregonian reports that the candidate is expected to have a background in wealth management, financial planning, or a related field.

Jim Green, executive director of the Oregon School Boards Association, told OregonLive that he hopes the pension system doesn’t simply settle for a state employee without the chops to handle such a highly political job that demands a certain expertise. He said, “When you get into PERS, it’s a whole different animal. The agency’s decisions impact everything across the state of Oregon.”

Tags: John Thomas, Oregon Public Employees Retirement System (PERS), Pension, Steve Rodeman