State pension fund recovers some lost ground

After dismal performances last year, New Jersey's public employee pension funds are starting to bounce back.

The fund gained more than $3 billion last month to $63.9 billion, the State Investment Council was told yesterday. For the year, however, the state lost more than $17 billion -- including nearly $9 billion in October alone.

William Clark, director of the state Division of Investments, said it is to early to say if the recent improvement is a trend.

"The market this week has shown some improvement," Clark said. "Let's hope it continues."

Clark attributed the rise in values to the state's shifting of cash and stocks to high-quality bonds that have yielded returns of up to 10 percent. For now, he said, the division plans to continue that strategy.

"There's more to go. The yields are still attractive," he said.

The public employees' pensions were worth $81.3 billion in December 2007, but by October they had dipped to $58 billion. The state pays out between $3 billion and $4 billion annually in benefit payments.

The fund performances pleased Rae Roeder, president of the public employees' union CWA Local 1033, but she and nearly 40 union members attending the investment council meeting at Rutgers University in New Brunswick remain concerned.

"It's a return, but what about the losses and the fact that nothing has been paid into it by the state?" she said after the meeting.

Gov. Jon Corzine's first two budgets included annual deposits of $1 billion to the pension fund, well below what actuaries say is needed. The state's economic woes may prevent him from making a full contribution this year.

Also, Corzine has proposed allowing local governments to choose whether to withhold half their pension contributions to the fund, a suggestion that has angered the employees.

Roeder suggested the council urge Corzine to direct a portion of New Jersey's share of the federal economic stimulus package to the pension fund. New Jersey's parcel of the federal aid has not been calculated.

Mark Kandrac, a council representative from the police and fire pension system, echoed her suggestion.

The CWA also asked the council to weigh in on Corzine's suggestion of a wage freeze for employees. Michael Rubino, an auditor with the state Division of Taxation, said salary freezes only hurt employees' pension benefits and contributions.

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