Billions Lost In NJ Pension Fund Amid Volatile Economy

NEW JERSEY — The state's public worker pension fund took a hit, losing more than $3 billion on investments in April and May. The fund's total market value dropped to $91.5 billion as of May 31 after hitting nearly $100 billion at the end of last year, according to data the New Jersey Division of Investment released Wednesday.

New Jersey's pension fund covers the retirements of about 800,000 active and retired state and local government workers. The Division of Investment continues to finalize results from June, but the state is on track to post a negative return for the fiscal year that ended June 30, Division of Investment Director Shoaib Khan said Wednesday. Preliminary estimates show negative returns of nearly 3 percent from July 2021 through May.

"Markets across the board are having a hard time, and that has been the case throughout the first half of this year," Khan told the State Investment Council, according to NJ Advance Media. "Unfortunately, there are very few hiding spots in these current market conditions."

The poor returns won't immediately impact current retirees' benefits. The fund's five-year return figures also topped 8 percent through the end of May, according to preliminary estimates. But the investment report comes amid a volatile economy and potential rate increases of up to 24 percent for health benefits under proposals the State Health Benefits is considering, according to NJ Advance Media.

Throughout much of the pandemic, many people avoided the doctor's office and other non-COVID health services. But the recent surge in demand has driven an increase in costs, according to Gov. Phil Murphy.

State health boards were set to approve rate increases Monday, but the vote was delayed after criticism from both Democratic and Republican leaders.

State Senate President Nick Scutari, Senate Majority Leader M. Teresa Ruiz and State Senator Paul Sarlo — the Senate Budget Committee chair — called on the treasurer to block approvals on the significant rate increase and ensure more public discussion on the matter.

"This is a staggering increase that will saddle taxpayers, public sector workers and educators with higher costs at a time when we are all contending with inflationary pressures and a possible recession," the Democratic lawmakers said in a joint statement. "We urge those with approval authority to reject the plan that was suddenly scheduled for action with little notification and no real justification."

Republican leadership in the State Legislature called for a special legislative committee to investigate the premium increases.

"Taxpayers, employees and retirees living on fixed incomes cannot afford the anticipated cost increases for state health benefits on top of what they are paying just to live, eat and work in New Jersey," said Assembly Republican Leader John DiMaio. "Much of the blame rests with the Democrats who failed to address the record-high inflation in this year’s massive $50.6 billion spending plan and the Murphy administration for making New Jersey less affordable."

New Jersey's public pension fund has been one of the nation's worst-funded. But the current state budget, enacted last month, includes nearly $6 billion in fund contributions. The pension fund has also averaged more than $1 billion annually over the past five years from lottery contributions, according to NJ Spotlight.

Officials expect that level of funding to continue this fiscal year, pushing the state's budgeted pension contributions to nearly $7 billion. That will help New Jersey mark its second-straight year of "full" actuarially-determined funding, NJ Spotlight reports.