TRENTON, NJ — For the first time since 2016, New Jersey’s pension fund investments for government workers fell short, returning 6.27 percent for the 2019 fiscal year ended June 30, rather than long-term assumed rate of 7.5 percent.
But while the state officials maintain that staying above a 6 percent rate of return is a positive sign of the fund’s performance, Assemblyman Edward Thomson (R-Monmouth/Ocean) is not convinced — at a time when the state’s public pension fund is ranked one of the worst funded in the nation.
“There comes a point in time in actuarial mathematics at which you can’t recover, and we’re getting real close,” said Thomson, an actuary for 35 years who represents the 30th Legislative District, which includes Belmar and Lake Como. “Unless we fully fund our pension liability immediately and grow our revenue streams to improve New Jersey’s economy, which neither are being done at this time, then we keep going down that rabbit hole and we will not be able to recover. What happens then? The system freezes and/or fails.”
Thomson opposed Gov. Phil Murphy decision to raise the pension fund’s assumed return rate to 7.5 percent from the 7 percent shortly after he took office. The accounting change lowered the state’s pension payments by more than $235 million.
“The unrealistic rates of return are contributing to the state’s pension crisis. Assuming the investments will earn a high rate makes the pension fund look healthier, but doesn't reflect the reality of the state's investment outcomes, which reduces the value of the pension system, said Thomson, who has spent more than two decades as a trustee of the state Public Employees Retirement System.
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