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Gov. Phil Murphy and Police and Firemen's Retirement System officials at the signing of a bill providing the fund control of its investments. (Photo: Courtesy of the office of the governor)

PFRS board approves rules granting it control over investments

Donnelly: Vote ‘moves us ever closer to removing politics from management of the pension system’

By Nikita Biryukov, March 09 2021 1:09 pm

The Police and Firemen’s Retirement System’s Board of Trustees unanimously approved new rules finalizing the pension system’s split from the State investment Council and the Division of Investments.

The new rules require investment managers involved in overseeing the PFRS to disclose contributions to political parties, with some exceptions, and bars the retirement system from contracting with investment firms or managers who’ve contributed more than $250 to a political party or committee in a given year, to a candidate they can vote for in a given election or given to any candidate for whom they cannot vote.

“This is an extremely important moment for the Police and Firemen’s Retirement System and the over 80,000 active and retired members that we serve,” Police and Firemen’s Retirement System Chairman Ed Donnelly said. “When this process first started several years ago, we made a commitment to the bravest men and women in New Jersey that we would safeguard their retirement savings and provide them with transparent and customized investment strategies. This vote puts us in position to continue to deliver on that promise.”

They also bar investment managers and firms from soliciting, coordinating or funding political contributions and requires firms to disclose each month a list of political contributions made by its employees.

“This vote solidifies the intent of Chapter 55 and moves us ever closer to removing politics from the management of the pension system, donning a new era for the PFRSNJ,” Donnelly said.

Monday’s vote will finalize the transfer of control over the $27 billion fund to the 12-member PFRS Board that began when Gov. Phil Murphy signed a bill in July 2018.

That measure allows the state treasurer to set the fund’s rate of return but allows the board to create internal targets on its own. It also required an actuary approve benefits changes enacted by the board.

“It has been the board’s vision to bring fiscal stability and accountability to the 565 municipalities and 21 counties that contribute to the PFRSNJ system and these regulations are the first step to accomplish that goal,” PFRS Executive Director Gregory Petzold said. “They provide the foundation for a stable and a more transparent system that’s funding status is as healthy as it is, in large part to the commitment of its municipal partners.”

Half of the board must be active police officers or firefighters plus, and the governor has the power to appoint another four members, who must have experience in elected office or as a high-ranking local or county government official. The remaining two seats must be filled by a former police officer or firefighter and a state government representative.

“These regulations serve as the building blocks for all that we are setting out to achieve in managing and guiding the Police and Firemen’s Retirement System,” PFRS Chief Investment Officer Russell Niemie said. “With these now in place, we can further solidify our investment strategy, and I look forward to working with the Board of Trustees as we continue to set up the plan’s investment portfolio.”

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