State to invest pension funds in Jersey-based companies Saturday, September 01, 2007 • BY DUNSTAN McNICHOL • Star-Ledger Staff New Jersey officials for the first time have decided to dip into the state's $82 billion public employee pension funds for cash to invest in companies doing business in the Garden State, the state Treasury Department announced yesterday. The New Jersey Directed Investment Fund, bankrolled with $100 million in pension funds, will work with Lehman Brothers to identify investments, including potential placements with companies headquartered in New Jersey or firms considering moving operations into this state. "Investing New Jersey's money in New Jersey companies is a sound business decision that will help to encourage job creation and is consistent with Governor (Jon) Corzine's economic growth strategy," said Gary Rose, chief of the administration's State Office of Economic Growth. A public employee's union official who has been critical of the state's handling of the retirement accounts in the past was less enthusiastic. "We believe this is the scam of the century," said Rae Roeder, president of Local 1033 of the Communications Workers of America, the state's largest public employees' union. "Now they're supposed to steal our pension money and use it for 20,000 other things so it won't be there when we retire." State officials say the new fund will give New Jersey residents a double benefit, by earning healthy returns for the pension fund and by boosting the state's economy. "If ultimately we can identify investments that create jobs for New Jersey residents and ensure a competitive return on the investment, that's something we want to do," said Orin Kramer, chairman of the State Investment Council, the panel set up to oversee the pension fund. According to actuaries, the funds currently contain about $25 billion less than they should to meet the long-term costs of employee benefits. They say taxpayers should be putting more than $2 billion a year into the accounts to make up for past years' skipped payments and investment losses. The Investment Council approved the targeted investment fund in March. The New Jersey fund is the latest development in the state's effort to diversify the holdings of the pension fund to reduce reliance on traditional stocks. Since last year, the state has placed $6 billion into so-called "alternative investments," including real estate, hedge funds and private equity. Specific investments for the $100 million allotted to the new venture have not yet been identified, said Mark Perkiss, a spokesman for the Treasury Department. Dunstan McNichol may be reached at dmcnichol@starledger.com or (609) 989-0341. © 2007 The Star-Ledger. Used by NJ.com with permission.