Without a big rally by the end of the fiscal year, New Jersey’s public-employee pension system doesn’t stand a chance of making its 7.5 percent assumed rate of return.
How far off track are the returns? For the first eight months of fiscal 2019 (which runs through the end of June), the pension system’s investments have generated just under 2 percent, according to the latest figures released yesterday at the New Jersey State Investment Council’s public meeting in Trenton.
The investment-performance figures are a little better for the calendar year, with the returns running a little above 6 percent. Meanwhile, long-term investment performance is still strong, with returns over the past 10 years coming in above 10 percent, easily beating the pension system’s annual assumed rate of return.
New Jersey’s $74.9 billion pension system covers nearly 800,000 current and retired government workers. Worker pensions are funded primarily through contributions from employees and government employers, but revenue derived from long-term investment gains also plays a role. And given New Jersey’s long history of underfunding its employer obligation — which has helped make the state pension system one of the worst funded in the country — there’s even more pressure on investment managers to generate strong returns.