"If the unions want the ability to make investment decisions for their members when it comes to their retirement savings, then we should give them that opportunity,” says New Jersey Assembly Speaker Vincent Prieto, D- Secaucus.

New Jersey lawmakers approved legislation to spin off management of the Police and Firemen's Retirement System from the state's struggling $71 billion pension fund.

The Assembly approved the proposed bill 61-4 with 10 abstentions Thursday a week after the measure passed in the Senate on a 37-0 vote. If signed by Gov. Chris Christie, a board of trustees would make investment decisions on behalf of police officers and firefighter unions rather than the State Investment Council. The legislation is similar to policies in Colorado, Ohio and Washington where police and fire pension funds give trustees investment and policy making powers, according to sponsors of the bill.

"If the unions want the ability to make investment decisions for their members when it comes to their retirement savings, then we should give them that opportunity - the same as private sector unions do for their members," said Assembly Speaker Vincent Prieto, D-Secaucus, who sponsored the legislation along with Assembly members Shavonda Sumter, D-Paterson, Lou Greenwald, D- Lindenwold , and Gary Schaer, D-Passaic. "This is their money and they should be able to decide what's best when it comes to investments."

New Jersey's pension system has been in crisis mode with $40 billion in liabilities entering 2016, according to Moody's Investors Service. Underfunded pensions have contributed to 10 credit downgrades under Gov. Chris Christie with its general obligation rating now the lowest among the 50 U.S. states with the exception of Illinois. New Jersey Treasurer Ford Scudder reduced the state's assumed rate of return on pension assets to 7.65% from 7.9% last month in an effort to improve the state's pension health.

New Jersey's Police and Firemen's Retirement System was around 70% funded as of June 2016 with an actuarial value of $26.3 billion and $11.2 billion in unfunded liabilities, according to bill sponsors. The system had 40,789 active members and 46,625 retirees or beneficiaries.

"This bill does nothing to change the fundamentals of the retirement system, but allows police and firefighters to make smart decisions when it comes to investments and doing what they see as necessary to strengthen their system," Assemblywoman Sumter said in a statement. "Letting them determine the appropriate level of risk in the investment portfolio is a reasonable change."

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