A 997 S 1208

Prohibits investment of pension and annuity funds by State in entities that avoid Superfund obligations to State

NJEA opposes A-997 (Rooney, Johnson, Schaer, Pinkin)/S-1208 (Beach, Oroho). This bill would direct the State Investment Council and the Director of the Division of Investment to identify entities that have an equity tie with a responsible party who is not in compliance with its Superfund obligations and to prohibit investment or require divestment of public pension and annuity funds by the State of New Jersey.

While NJEA recognizes the good intent of this legislation, our organization believes investment decisions should be left to the State Investment Council and made for the sole and exclusive benefit of the participants and beneficiaries of those pension systems that they oversee.

NJEA’s policy in opposition to S-3487 and other bills which serve to target the investment of pension funds, is based upon two basic principles:

  1. Investment income from pension funds must inure to the beneficiaries of the fund. Any concessions on rates of return are incompatible with the “prudent person” standard.  The “prudent person” standard requires that those investing funds for others exercise sound discretion with regard to the disposition of the funds, considering income as well as safety of the capital invested.  The federal Employee Retirement Income Security Act of 1974 (ERISA) further emphasizes this obligation by noting that it is the duty of fund trustees to act solely in the interests of the plan beneficiaries.
  2. The State Investment Council, whose members, by law, represent both the public and the pension funds, should be relied upon to invest pension funds without political interference.

For these reasons, NJEA opposes A-997/S-1208.

Text of bill A-997

Text of bill S-1208

 

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