An Act concerning the investment of the assets of the State-administered retirement systems and amending various parts of the statutory law and supplementing Title 43 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. N.J.S.18A:66-61 is amended to read as follows:

18A:66-61. The board of trustees shall be and are hereby constituted trustees of the various funds and accounts established by this article[; provided, however, that all] . All functions, powers and duties relating to the investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities, of or for any fund or account established under this article, shall be exercised and performed by the board, and the Director of the Division of Investment shall act in accordance with the provisions of [chapter 270, of the laws of 1950] P.L.1950, c.270 (C.52:18A-79 et seq.) on behalf of the board with regard to the administration and implementation to the extent and in the manner authorized, approved, or directed by the board. The secretary of the board of trustees shall determine from time to time the cash requirements of the various funds and accounts established by this article and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.

An elected member of the board of trustees to be designated by a majority vote thereof shall serve on the state investment council as a representative of said board of trustees, for a term of three years and until a successor is designated and qualified.

The finance committee of the board of trustees shall be appointed on or before July 1 of each calendar year by the chairman of the board of trustees to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees shall consist of three members of the board of trustees, one of whom shall be the State Treasurer.

(cf: P.L.2011, c.78, s.29)

2. Section 30 of P.L.1973, c.140 (C.43:6A-30) is amended to read as follows:

30. a. The State House Commission shall be and is hereby constituted the trustee of all the various funds established by this act except the group insurance premium fund[; provided, however, that all] . All functions, powers, and duties relating to the investment or reinvestment of moneys of, and purchase, sale, or exchange of any investments or securities, of or for any fund established under this act, shall be exercised and performed by the commission, and the Director of the Division of Investment shall act in accordance with the provisions of P.L.1950, c.270 (C.52:18A-79 et seq.) on behalf of the commission with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board.

b. The secretary of the commission shall determine from time to time the cash requirements of the various funds established by this act and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.

c. The Treasurer of the State of New Jersey shall be the custodian of the several funds. All payments from said funds shall be made by him only upon vouchers signed by the secretary. A duly attested copy of the resolution of the State House Commission bearing on its face the specimen signature of the secretary shall be filed with the treasurer as his authority for making payments upon such vouchers.

d. The administration of the program shall be performed by the personnel of the Division of Pensions of the State Department of the Treasury and the costs of administration shall be borne by the State.

e. A finance committee of the commission shall be appointed on or before July 1 of each calendar year by the chairman of the commission to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the commission shall consist of three members of the commission, one of whom shall be the State Treasurer.

(cf: P.L.1973, c.140, s.30)

3. Section 32 of P.L.1954, c.84 (C.43:15A-32) is amended to read as follows.

32. The board of trustees shall be and are hereby constituted trustees of the various funds and accounts established by this act[; provided, however, that all] . All functions, powers, and duties relating to the investment or reinvestment of moneys of, and purchase, sale, or exchange of any investments or securities, of or for any fund or account established under this act, shall be exercised and performed by the board, and the Director of the Division of Investment shall act in accordance with the provisions of [chapter 270, P.L.1950, as amended and supplemented] P.L.1950, c.270 (C.52:18A-79 et seq.) on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board. The secretary of the board of trustees shall determine from time to time the cash requirements of the various funds and accounts established by this act and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.

The members of the finance committee of the board of trustees shall be appointed at or after July 1 of each calendar year by the chairman of the board of trustees to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees shall consist of five members of the board of trustees, one of whom shall be the State Treasurer, and one of whom shall be the member designated to serve on the State Investment Council. At least three members of the finance committee shall be members of the board of trustees who have been elected by members of the system. A quorum of the finance committee shall consist of three members thereof.

An elected member of the board of trustees to be designated by a majority vote thereof shall serve on the State Investment Council as a representative of said board of trustees, for a term of three years and until a successor is designated and qualified.

(cf: P.L.2011, c.57, s.30)

4. Section 14 of P.L.1944, c.255 (C.43:16A-14) is amended to read as follows:

14. (1) The board of trustees shall be and are hereby constituted trustees of the various funds and accounts established by this act[; provided, however, that all] . All functions, powers and duties relating to the investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities, of or for any fund or account established under this act shall be exercised and performed by the board, and the director of the Division of Investment shall act in accordance with the provisions of [chapter 270, of the laws of 1950] P.L. 1950, c.270 (C.52:18A-79 et seq.) on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board. The secretary of the board of trustees shall determine from time to time the cash requirements of the various funds and accounts established by this act and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.

(2) The Treasurer of the State of New Jersey shall be the custodian of the several funds created by this act, shall select all depositories and custodians and shall negotiate and execute custody agreements in connection with the assets or investments of any of said funds. All payments from said funds shall be made by him only upon vouchers signed by the chairman and countersigned by the secretary of the board of trustees. No voucher shall be drawn, except upon the authority of the board duly entered in the records of its proceedings.

(3) (Deleted by amendment.)

(4) Except as otherwise herein provided, no trustee and no employee of the board of trustees shall have any direct interest in the gains or profits of any investments of the retirement system; nor shall any trustee or employee of the board directly or indirectly, for himself or as an agent in any manner use the moneys of the retirement system, except to make such current and necessary payments as are authorized by the board of trustees; nor shall any trustee or employee of the board of trustees become an endorser or surety, or in any manner an obligor for moneys loaned to or borrowed from the retirement system.

(5) A finance committee of the board of trustees shall be appointed on or before July 1 of each calendar year by the chairman of the board to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees shall consist of three members of the board, one of whom shall be the State Treasurer.

(cf: P.L.2011, c.78, s.31)

5. Section 31 of P.L.1965, c.89 (C.53:5A-31) is amended to read as follows:

31. a. The board of trustees shall be and are hereby constituted trustees of all the various funds established by this act except the group insurance premium fund[; provided, however, that all] . All functions, powers, and duties relating to the investment or reinvestment of moneys of, and purchase, sale, or exchange of any investments or securities, of or for any fund established under this act, shall be exercised and performed by the board, and the Director of the Division of Investment shall act in accordance with the provisions of [c. 270, P.L.1950, as amended and supplemented] P.L.1950, c.270 (C.52:18A-79 et seq.) on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by the board.

b. The secretary of the board shall determine from time to time the cash requirements of the various funds established by this act and the amount available for investment, all of which shall be certified to the Director of the Division of Investment.

c. (Deleted by amendment, P.L.2011, c.78).

d. The Treasurer of the State of New Jersey shall be the custodian of the several funds. All payments from said funds shall be made by him only upon vouchers signed by the secretary and the chairman of the board of trustees. A duly attested copy of the resolution of the board of trustees designating the chairman and bearing on its face specimen signatures of the chairman and the secretary shall be filed with the treasurer as his authority for making payments upon such vouchers.

e. The administration of the program shall be performed by the personnel of the Division of Pensions and Benefits of the State Department of the Treasury and the costs of administration shall be borne by the State.

f. A finance committee of the board of trustees shall be appointed on or before July 1 of each calendar year by the chairman of the board to serve through June 30 of the ensuing calendar year and until their successors are appointed. The finance committee of the board of trustees shall consist of three members of the board, one of whom shall be the State Treasurer.

(c.f: P.L.2011, c.78, s.32)

6. Section 7 of P.L.1950, c.270 (C.52:18A-85) is amended to read as follows:

7. a. The functions, powers and duties vested by law in the [following enumerated agencies:

The Board of Trustees of the Public Employees' Retirement System; the Board of Trustees of the State Police Retirement System; the] Prison Officers' Pension [Commission; the Board of Trustees of the Teachers' Pension and Annuity Fund; the Board of Trustees of the Police and Firemen's Retirement System of New Jersey;] Fund and the Consolidated Police and Firemen's Pension Fund [Commission;] Fund , of, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of such [agencies] fund, are hereby transferred to and shall be exercised and performed for such [agencies] fund by the Director of the Division of Investment established hereunder.

b. The functions, powers, and duties vested by law in the Board of Trustees of the Public Employees' Retirement System, the Board of Trustees of the State Police Retirement System, the Board of Trustees of the Teachers' Pension and Annuity Fund, the trustee of the Judicial Retirement System of New Jersey, and the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, of, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of such boards, shall be exercised and performed by each board, and the Director of the Division of Investment established hereunder shall act on behalf of the board with regard to administration and implementation to the extent and in the manner authorized, approved, or directed by each board. Prohibitions on certain investments set forth in law shall apply to each board.

(cf: P.L.1970, c.57, s.17)

7. Section 1 of P.L.1959, c.17 (C.52:18A-88.1) is amended to read as follows:

1. a. The Director of the Division of Investment, in addition to other investments, presently or from time to time hereafter authorized by law, shall have authority to invest and reinvest the moneys in, and to acquire for or on behalf of the funds of the following enumerated agencies:

The Consolidated Police and Firemen's Pension Fund;

[The Police and Firemen's Retirement System of New Jersey;]

The Prison Officers' Pension Fund;

[The Public Employees' Retirement System of New Jersey;

The State Police Retirement System;

The Teachers' Pension and Annuity Fund;

The Judicial Retirement System of New Jersey;]

The Trustees for the Support of Public Schools;

and all other funds in the custody of the State Treasurer, unless otherwise provided by law;

such investments which shall be authorized or approved for investment by regulation of the State Investment Council.

b. The Director of the Division of Investment, in addition to other investments, presently or from time to time hereafter authorized by law, shall have authority to invest and reinvest the moneys in, and to acquire for or on behalf of the funds of the Police and Firemen's Retirement System of New Jersey, the Public Employees' Retirement System of New Jersey, the State Police Retirement System, the Teachers' Pension and Annuity Fund, and the Judicial Retirement System of New Jersey such investments which shall be authorized or approved for investment by regulation of the board of trustees of each such retirement system, to the extent and in the manner authorized, approved, or directed by each board.

Each board shall formulate and establish, and may from time to time amend, modify, or repeal, such policies or guidelines as it may deem necessary and proper that shall govern the methods, practices, or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the director. All actions and decisions of the director shall be authorized by either general guidelines or specific orders, or by approval by the board or the finance committee of the board of a specific action or decision, as each board shall determine. Each board shall review and take into consideration the determinations of the State Investment Council, and conform to those determinations generally or specifically when each board determines necessary and appropriate. Prohibitions on certain investments set forth in law shall apply to each board.

Each board shall consult from time to time with the State Investment Council regarding the work of the division.

(cf: P.L.2013, c.253, s.39)

8. Section 11 of P.L.1950, c.270 (C.52:18A-89) is amended to read as follows:

11. a. Limitations, conditions and restrictions contained in any law concerning the kind or nature of investment of any of the moneys of any of the funds or accounts referred to herein shall continue in full force and effect; provided, however, that subject to any acceptance required, or limitation or restriction contained herein: the Director of the Division of Investment shall at all times have authority to invest and reinvest any such moneys in investments as defined in subsection c. of this section and, for or on behalf of any such fund or account, to sell or exchange any such investments. The director's actions and decisions shall be performed under the authority and control of the various boards of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1), to the extent and in the manner authorized, approved, or directed by each board.

b. In investing and reinvesting any and all money and property committed to the director's investment discretion from any source whatsoever, and in acquiring, retaining, selling, exchanging and managing investments, the Director of the Division of Investment shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. In making each investment, the director may, depending on the nature and objectives of the portfolio, consider the whole portfolio, provided that, in making each investment, the director shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. The director shall be under a duty to manage and invest the portfolio solely in the interests of the beneficiaries of the portfolio and for the exclusive purpose of providing financial benefits to the beneficiaries of the portfolio.

In investing and reinvesting any and all money and property committed to the investment discretion of each board of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1), from any source whatsoever, and in acquiring, retaining, selling, exchanging and managing investments, each board shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. In making each investment, each board may, depending on the nature and objectives of the portfolio, consider the whole portfolio, provided that, in making each investment, the board shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. Each board shall be under a duty to manage and invest the portfolio solely in the interest of the beneficiaries of the portfolio and for the exclusive purpose of providing financial benefits to the beneficiaries of the portfolio.

c. For the purposes of this section, "investments" means and includes property of every nature, real, personal and mixed, tangible and intangible, and specifically includes, solely by way of description and not by way of limitation, bonds, debentures and other corporate obligations, direct and indirect investments in equity real estate , mortgages and other direct or indirect interests in real estate or investments secured by real estate, capital stocks, common stocks, preferred stocks, diversified pools of venture capital which otherwise could be made consistent with the standard of care required by subsection b. of this section, common trust funds as defined in and regulated by sections 36 through 46 of P.L.1948, c.67 (C.17:9A-36 through 17:9A-46), repurchase agreements, securities loan transactions secured by cash, securities issued by the United States government or its agencies, or irrevocable bank letters of credit, whether directly or through a bank or similar financial institution acting as agent or trustee, mutual funds, and any other security issued by an investment company or investment trust, whether managed or not by third parties, registered under the "Investment Company Act of 1940," 15 U.S.C.s.80a-1 et seq. No investment that is otherwise permissible under this subsection shall be considered to be unlawful solely because the investment is made indirectly or through a partnership, trust, or other legal entity.

(cf: P.L.1997, c.26, s.26)

9. Section 1 of P.L.1970, c.270 (C.52:18A-90.1) is amended to read as follows:

1. Notwithstanding any statute or rule of law to the contrary, the Director of the Division of Investment may, subject to the approval of the State Investment Council and the State Treasurer, establish, maintain and operate one or more common trust funds, in which may be combined for the purpose of investment, money and property belonging to the various funds in the custody of the State Treasurer; provided, however, that there shall not be combined in any common trust fund, excepting the State of New Jersey Cash Management Fund established pursuant to section 1 of this amendatory and supplementary act, moneys and property of any fund the income of which inures to the benefit of the General State Fund and money and property of any fund the income of which inures to the benefit of said fund.

The director shall obtain also the approval of each board of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1).

(cf: P.L.1977, c.281, s.2)

10. Section 13 of P.L.1950, c.270 (C.52:18A-91) is amended to read as follows:

13. a. The State Investment Council and each board of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1) shall consult with the Director of the Division of Investment from time to time with respect to the work of the division. [It] The council and each board shall have access to all files and records of the division and may require any officer or employee therein to provide such information as it may deem necessary in the performance of [its] the functions of the council and each board. The council and each board shall have authority to inspect and audit the respective accounts and funds administered through the Division of Investment. [It] The council and each board shall formulate and establish, and may from time to time amend, modify or repeal, such policies as it may deem necessary or proper, which shall govern the methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the Director of the Division of Investment established hereunder.

b. On or before January first of each year, and at such other times as it may deem in the public interest, the council shall report to the Governor, the Legislature, each board of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1), and the State Treasurer with respect to its work and the work of the Division of Investment. In addition to the reports specified above and in section 14 of P.L.1950, c.270 (C.52:18A-92), the council shall issue a report by March 1 of each year on the investment activities for the prior calendar year, which shall include a summary of the current investment policies and strategies of the council and those in effect during the prior calendar year, a detailed summary for each financial product of the amount invested, whether the investments were made by employees of the Division of Investment or by external managers, performance benchmarks, and actual performance during the calendar year. The report shall be submitted to the Governor, the Legislature, each board of trustees named in subsection b. of section 1 of P.L.1959, c.17 (C.52:18A-88.1) and the State Treasurer, and shall be made available to the public through the official Internet site of the State.

c. The council shall hold a meeting each year that shall be open to the public, and shall accept comments from the public at such meeting. The matters that shall be open to discussion and public comment during this annual meeting shall include the investment policies and strategies of the council, the investment activities of the council, the financial disclosure statements filed by council members, and the certification of contributions filed by external managers, as well as other appropriate matters concerning the operations, activities and reports of the council.

d. An external manager shall be required to file a certification before being retained, and annually thereafter, that discloses the political contributions made, during the 12 months preceding the certification, by the manager or the manager's firm, or a political committee in which the manager or firm was active. The certification shall specify the political contributions made to candidates for elective public office in this State and any political committee established for the support of such candidates, and contributions made for the transition and inaugural expenses of any candidate who is elected to public office. As used in this subsection, "contribution" and "political committee" shall have the meaning set forth in "The New Jersey Campaign Contributions and Expenditures Reporting Act," P.L.1973, c.83 (C.19:44A-1 et al.). This certification shall be in addition to any other such disclosure required by law or executive order of the Governor.

(cf: P.L.2007, c.103, s.51)

11. Section 14 of P.L.1950, c.270 (C.52:18A-92) is amended to read as follows:

14. Not later than fifteen days after the close of each month, the Director of the Division of Investment shall cause to be prepared and make available to the State Treasurer, the State Investment Council, the various boards of trustees, the press and the public, a report of the operations of the Division of Investment during said month. Each report shall include a detailed summary of investment, reinvestment, purchase, sale or exchange transactions, setting forth, among other things, the investments bought, sold and exchanged, the dates thereof, the prices paid and obtained, the names of the dealers involved, and a statement of the funds or accounts referred to herein.

(cf: P.L.1950, c.270, s.14)

12. (New section) a. The Board of Trustees of the Public Employees' Retirement System, the Board of Trustees of the State Police Retirement System, the Board of Trustees of the Teachers' Pension and Annuity Fund, the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, or the trustee of the Judicial Retirement System of New Jersey may elect, at its discretion, to establish a division or unit for the administration and implementation of matters with regard to its functions, powers, and duties vested by law for, or relating to, investment or reinvestment of moneys of, and purchase, sale or exchange of any investments or securities of or for any funds or accounts under the control and management of each board, consistent with applicable law and the policies, procedures, and regulations of the board. If a board makes such an election, the board shall consult and coordinate with the Division of Investment in the Department of the Treasury and the State Investment Council for such transfers as deemed necessary and appropriate. If the board makes such an election, the board shall comply with applicable provisions of P.L.1950, c.270 (C.52:18A-79 et seq.) to the extent not inconsistent with other law.

b. The board shall formulate and establish, and may from time to time amend, modify or repeal, such policies or guidelines as it may deem necessary and proper that shall govern the methods, practices or procedures for investment, reinvestment, purchase, sale or exchange transactions to be followed by the division or unit. All actions and decisions of the division or unit shall be authorized by either general guidelines or specific orders, or by approval by the board or the finance committee of the board of a specific action or decision, as each board shall determine.

c. The board shall review and take into consideration the determinations of the State Investment Council, and conform to those determinations generally or specifically when each board determines necessary and appropriate.

d. For the purposes of this section, "board" shall include the State House Commission.

13. This act shall take effect on the 90th day after the date of enactment.

STATEMENT

This bill vests with the Board of Trustees of the Public Employees' Retirement System, the Board of Trustees of the State Police Retirement System, the Board of Trustees of the Teachers' Pension and Annuity Fund, the trustee of the Judicial Retirement System of New Jersey, and the Board of Trustees of the Police and Firemen's Retirement System of New Jersey all the functions, powers, and duties for, or relating to, investment or reinvestment of moneys, and purchase, sale or exchange of any investments or securities, of or for any funds or accounts under the control and management of each board. These functions, powers, and duties are currently performed by the Division of Investment in the Department of the Treasury. The State Investment Council is retained, although its role is modified. The bill authorizes the director of that division to administer all the activities and implement all the decisions of each board to the extent and in the manner authorized, approved, or directed by each board. However, each board may elect to establish a new division or unit to administer all such activities and implement all such decisions for that board in place of the director.