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Assembly Passes Mazzeo & Schaer Bill to Improve Investment Council Oversight

(TRENTON) – Legislation prompted by questions surrounding the New Jersey State Investment Council to better protect public worker pensions being overseen by outside manager, sponsored by Assemblymen Vince Mazzeo and Gary Schaer, continues to advance in the legislature.

The bill comes after the council’s chairman announced in mid-November he was stepping down. This came after questions were raised about investment deals with New Jersey pension funds involving allies of Gov. Chris Christie.

“I don’t want to see our investments be based in any way on political favors,” said Mazzeo (D-Atlantic). “Investments should be made objectively and always be based on performance and merit. Sound financial reasoning must be the basis for any investment decision.”

The bill (A-3772) requires the State Investment Council to issue a report by February 1, May 1, August 1 and October 1 of each year listing for the prior calendar quarter, in the aggregate and segregated by asset class, the returns of investments achieved for the funds under the council’s supervision by external managers.

In the report, the council shall disclose the rate and amount, of fees charged by each external manager for the investment of funds in commodities, hedge funds, private equity, real estate, bonds, equities, or any other asset class.
The council shall submit the report to the Governor, the Legislature and the State Treasurer, and shall make it available to the public through the official Internet site of the State.

In addition, the bill provides that regulations adopted by the council that address political contributions shall apply equally to contributions to any federal or national committee or a non-State political committee as to any other committee covered thereby. This provision is to negate an exception to the Council’s regulations addressing political contributions adopted on Feb. 3, 2014.

“Everything the Investment Council does should be transparent and based on smart financial reasoning,” said Schaer (D-Passaic/Bergen). “”In all cases, the interests of retired public workers must be the priority, and if we can accomplish that while removing even the appearance of a conflict, then that’s the right thing to do.”

The full Assembly approved the measure 53-15-4. The bill was released by the Assembly State and Local Government Committee last December.