Police and firefighters would gain control of their now-state-run pension fund under a measure that won final approval in the Assembly Thursday.
The bill (S3040) transfers management of the $26 billion pension fund to an independent panel overseeing investments and benefits. Police and fire union leaders seeking the change said the state wasted their money on costly hedge funds and underfunded the system by billions of dollars.
The Police and Firemen’s Retirement System, while healthier than its counterparts, is $11 billion short of what it would cost to pay for promised benefits, according to actuary reports.
Union leaders said their goal is to fully fund the system and protect police and firefighters’ benefits. The portion funded by local governments is 74.5 percent funded, while the much smaller share funded by the state is 41.2 percent funded.
“The fact is that almost 20 years of pension gimmicks have reduced the funded value of of the PFRS … and the steps we are taking to gain control of our financial future are critically important to all of our members and their families,” Patrick Colligan, president of the Policemen’s Benevolent Association, said Thursday after the vote.
The Assembly passed the measure 61-4, with 10 abstentions.
Assembly Speaker Vincent Prieto (D-Hudson), who sponsored the bill in the lower chamber, defended it from allegations that it allows a newly created board of trustees to gamble with taxpayers’ money.
Decision-making would be vested with “the people who care most about it,” Prieto said. And beneficiaries, both retired and active, would become “the stewards of their future.”
The board of trustees could change members’ contributions to their pensions, the formula for determining payouts and retirement age. They could also enhance or cut benefits.
The Division of Pensions and Benefits currently manages the fund, which is part of a $72 billion government worker pension fund, while the State Investment Council directs the investments.