Bill Sent to Gov’s Desk in February Would Help Guard Against Rising Fees and Bonuses Paid to Outside Investment Managers
Assemblyman Vince Mazzeo on Thursday urged Gov. Christie to sign legislation he has sponsored, which has been sitting on the governor’s desk for two months, that would create greater oversight of state pension fund investments in light of the rising cost of fees and performance bonuses the administration paid out last year.
Mazzeo’s urging comes on the heels of two of the state’s largest public employee pension boards – the Public Employees Retirement System and the Police and Firemen’s Retirement System – voting to conduct a forensic audit of the fund’s expenses after it was reported that the state spent roughly $265 million on management fees and expenses and $335 million on performance bonuses last year.
“I can’t underscore the urgency and necessity for this bill enough. Given the state’s mounting obligations to the pension system, we need assurance that investments are being made objectively and based on performance and merit.
“Rank and file public employees have fulfilled their obligations. They deserve to know the state is not squandering money rewarding political supporters. Sound financial reasoning must be the basis for any investment decisions. I urge the governor to sign this bill and create more transparency and accountability in the state’s pension investment operations,” said Mazzeo (D-Atlantic).
Mazzeo introduced the bill (A-3772) after questions were raised about investment deals with New Jersey pension funds involving allies of the governor. Since then, the State Investment Council’s chairman announced he was stepping down.
The legislature overwhelmingly approved the bill and sent it to the governor’s desk on Feb. 23.
The bill would require the State Investment Council to issue four quarterly reports each year on the returns of investments achieved for the funds under the council’s supervision by external managers. In the report, the council must 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.