The decision to hire SIS comes after an audit last year suggested that the state should hire consulting services to help with investments for its pension funds. Previously, New Jersey had worked with consultants to monitor and benchmark the fund, but never to advise on investment policy. SIS has previously worked with public pension funds in Wisconsin and Ohio, and has helped public funds diversify investments into alternative asset classes.
New Jersey’s pension fund – one of the few managed strictly by employees of the state – has seen its share of troubles. Over the last few years, the fund has experienced losses of $26 billion, which eventually led to the resignation of the chief investment officer (See Jersey Pension Chief Quits, Gets New Assignment). Also, the fund ranked as one of the five worst performers last year according to a Reuters survey (SeeStudy: Public Pension Funds Shedding Underperforming Managers). Last year, as a result of severe underfunding, New Jersey was required to make a $735 million contribution over a five-year period.
New Jersey’s retirement assets are recovering, though; as of December 31, 2003, the overall value of the New Jersey funds had grown back to $66.9 billion, reported Dow Jones. However, New Jersey will not know how much the funding of the plan has recovered until an actuarial report is completed this spring.