New Jersey

Overview

The New Jersey Division of Pension and Benefits (DPB) is the sole retirement system in the state, administering retirement benefits for employees of the state and its political subdivisions, including public school teachers and employees of cities, counties, and other public entities that have elected to participate. Four counties and two cities sponsor their own retirement system.

The DPB is a division of the New Jersey State Treasurer’s Office; most DPB pension assets are managed by the treasurer’s office Division of Investment. Legislation enacted in 2018 separated the New Jersey Police & Fire Retirement System from the other retirement systems and transferred authority to implement investment policy and oversight to the Police & Fire Retirement System board.

Plan Design

Substantially all employees of state and local government in New Jersey participate in a traditional defined benefit plan.

According to the US Government Accountability Office, 91 percent of employees of state and local government in New Jersey participate in Social Security.

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Authorizing Statutes and Board Structure

New Jersey Revised Statutes Title 43 establishes retirement benefits and their administrative structure. The DPB encompasses nine boards, including four that oversee pension plans; a supplemental annuity collective trust; a deferred compensation board; a defined contribution plan board, and two health benefits boards. 

The 16-member State Investment Council oversees the Division of Investments and is established by New Jersey Revised Statutes Section 52:18A-83 et seq. The director of the council is selected by the state treasurer from a list provided by the investment council. As mentioned above, the Police & Fire Retirement System board manages assets of that system.

Details regarding the composition of these and other retirement boards is accessible via the Retirement and Investment Board Characteristics search tool located at the bottom of this page.

Fiduciary Duty/Prudence Standard

NJ RS Title 52:18A-89 describes the investment standard of care for both the Division of Investment and the Police and Firemen’s Retirement System as follows:

In investing and reinvesting any and all money and property committed to the director's investment discretion from any source whatsoever, and in acquiring, retaining, selling, exchanging and managing investments, the Director of the Division of Investment, and in the case of the Police and Firemen's Retirement System of New Jersey, the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. In making each investment, the director may, depending on the nature and objectives of the portfolio, consider the whole portfolio, provided that, in making each investment, the director shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. The director shall be under a duty to manage and invest the portfolio solely in the interests of the beneficiaries of the portfolio and for the exclusive purpose of providing financial benefits to the beneficiaries of the portfolio.

Legal Protections of Retirement Benefits

Spina v. Consolidated Police & Firemen's Pension Fund Comm'n.,197 A.2d 169 (1964) (holding that pension benefits were not a gratuity but declined to find contractual rights because the retirement fund, to be a contract, must guarantee the solvency "We think it more accurate to acknowledge the inadequacy of the contractual concept."); New Jersey Education Ass'n v. State of New Jersey, 989 A.2d 282 (N.J.Super.Ct. App. Div.201O) (participants do not have a constitutionally-protected right to a particular level, manner, or method of state funding of a pension system); Professional Firefighters Ass'n of New Jersey v. State, 2011WL 3667721 (N.J.Super.A.D. Aug 23, 2011) (NO. A-3681-09T3) (legislation reducing required employer contributions does not violate the Contracts Clause of the state or federal constitution; while vested members have non-forfeitable rights to receive benefits the Legislature discretion to maintain the Plan's funds as it sees fit). (NJ CONST., Article 4, §7, P3) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits

See also the following search tools:

Retirement System Account Interest Policies Economic Actuarial Assumptions Retirement and Investment Board Characteristics
Information about interest rates applied to account balances of inactive plan participants Assumed rates of investment return and inflation Composition and characteristics of public retirement and investment oversight boards
Mortality Assumptions Plan Design Features Post-retirement Employment Policies
Public retirement system actuarial assumptions for mortality Numerous elements of retirement plan design Policies governing return-to-work for retirement system annuitants

More Data

s-serif">Spina v. Consolidated Police & Firemen's Pension Fund Comm'n.,197 A.2d 169 (1964)(holding that pension benefits were not a gratuity but declined to find contractual rights because the retirement fund, to be a contract, must guarantee the solvency "We think it more accurate to acknowledge the inadequacy of the contractual concept."); New Jersey Education Ass'n v. State of New Jersey, 989 A.2d 282 (N.J.Super.Ct. App. Div.201O)(participants do not have a constitutionally-protected right to a particular level, manner, or method of state funding of a pension system); Professional Firefighters Ass'n of New Jersey v. State, 2011WL 3667721 (N.J.Super.A.D. Aug 23, 2011)(NO. A-3681-09T3)(legislation reducing required employer contributions does not violate the Contracts Clause of the state or federal constitution; while vested members have non-forfeitable rights to receive benefits the Legislature discretion to maintain the Plan's funds as it sees fit). (NJ CONST., Article 4, §7, P3) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits
Flag of New Jersey (January 15, 1896)

Population (2024) 9,500,851

New Jersey public pension statistics, per U.S. Census Bureau as of FY 2024

Assets

$101.1 billion

Active Members

453,237

Annuitants

364.170

Benefits Paid

$13.4 billion

Employee Contributions

$2.5 billion

Employer Contributions

$10.1 billion

Systems

One state retirement system accounting for more than 99 percent of all public pension assets and participants in the state. Five political subdivisions maintain their own retirement system.

Other Resources


Become A Member

Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.


 

What's New at NASRA: Public Pension Investment Return Assumption Brief Updated

NASRA’s latest update to standing issue briefs, Public Pension Plan Investment Return Assumptions underscores the critical role the investment return assumption plays in the financial health of public pension plans. Of all actuarial assumptions, it has the greatest impact on plan funding levels and cost. This brief traces how a decade of low interest rates and inflation, beginning in 2009, prompted many plans to reduce their long-term expected returns in line with more modest capital market projections. However, since inflation began rising in early 2021, the trend toward lowering return assumptions has largely paused. While reducing a plan’s assumed return can increase both costs and unfunded liabilities, setting this assumption is a careful, thorough process. It draws on expert input from actuaries and investment professionals and is guided by actuarial standards of practice.