Sweeney bill would enable state pension system to invest in infrastructure assets

A new bill introduced by state Senate President Steve Sweeney would enable public employee pension systems to add infrastructure assets such as water utilities to their holdings.

Sweeney (D-West Deptford) said in a news release that the bill would allow pensions to diversify and stabilize themselves, as well as spurring infrastructure investment and providing savings for taxpayers.

“Forward-looking pension systems are increasingly looking to invest in revenue-generating infrastructure to diversify their portfolios in the face of high stock market volatility and minimal return on cash and bond funds due to historically low interest rates,” Sweeney said in a prepared statement.

Revenue-generating assets that would be allowed under the legislation could include toll lanes and parking lots, among others.

“State and local governments own water systems, reservoirs, real estate and parking lots that could generate stable revenue for pension systems in the same way that the New Jersey Lottery revenues we dedicated to the pension system provided stability amid the market turbulence of 2020,” Sweeney said. “Pension systems could also contract for the construction and maintenance of High Occupancy Toll lanes like those in Maryland and Virginia.”

The bill is S3637, and would create the Retirement Infrastructure Collateralized Holdings Fund, or “RICH,” as an infrastructure trust fund to hold and manage assets transferred to the public corporation by governments to benefit public employee pension funds.

The release noted the Economic and Fiscal Policy Workgroup, co-chaired by Senate Budget Chair Paul Sarlo (D-Wood-Ridge) and Sen. Steve Oroho (R-Sparta) recommended leveraging assets as a strategy to stabilize the state’s underfunded pension system.

The value of any assets would be determined by third-party evaluators, the bill says.