N.J. lawmakers not shy about pitching pension fund restrictions

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A bill requiring the pension fund to “prioritize” in-state infrastructure projects vs. “comparable” out-of-state projects has been offered in the last five sessions.

Most of these bills never come up for votes. One version of the firearms bill was vetoed in 2013 by then-Gov. Chris Christie. Since then, a firearms bill has been offered in five legislative sessions.

Each of the bills proposed during the current session contains some fiduciary-duty boilerplate language. This “section shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment or withdrawal of an investment,” according to a typical example. The bills don’t contain detailed guidelines.

Each new law requires extra work for the state pension executives to meet their fiduciary obligations.

“Our staff has limited resources to focus on investing,” said Mr. Byrne, who didn’t comment on the current bills. “If a mandate comes down, you have to follow it.”

Mr. Byrne, a Democrat, was nominated by Mr. Christie, a Republican, and confirmed by the state Senate. Mr. Byrne resigned just before the term-limited Mr. Christie left office.

Mr. Byrne said Mr. Christie never interfered.

Still, the New Jersey pension system isn’t free from politics. The governor appoints the state treasurer, who chooses a pension fund CIO in consultation with the State Investment Council. The 16-member council includes nine appointees by the governor, including eight that require Senate confirmation; four appointees by the governor from lists provided by labor unions; and one appointee by the governor from a list provided by the Senate president and speaker of the General Assembly.

Over the years, some bills have become law, often dealing with foreign countries or overseas politics.

In March, Gov. Phil Murphy signed a Russia and Belarus sanctions law that required, among other things, the New Jersey Pension Fund to stop investing in companies on a “prohibited activities” list developed by the state Department of the Treasury. At the time, the pension fund had $50 million in Russia-related investments.

In 2016, Mr. Christie signed a law prohibiting the pension from investing in companies that boycott the goods, products or business of Israel. Since then, the pension fund has made two divestments totaling $92 million.

Still on the books are requirements that the pension fund divest from companies doing business with Sudan – $2.27 billion since the law took effect in 2005 – and from companies doing business with Iran – $1.01 billion since the law took effect in 2007. The pension fund also makes an annual report, based on a 1987 state law, about investments in companies that do business in Northern Ireland to determine if they follow guidelines to reduce employment discrimination known as the McBride Principles.



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