Credit: (John Mooney/NJ Spotlight News)For the second straight fiscal year, double-digit investment returns have lifted the value of the pension fund covering the retirements of many public workers in New Jersey.
Preliminary performance totals released Wednesday by the state Division of Investment indicate pension fund investment returns reached nearly 11% during the 2025 fiscal year, which ended June 30.
While still subject to final auditing, that investment performance bested the returns earned during the prior fiscal year of more than 10%, as well as the pension fund’s overall 7% assumed annual rate of return.
As a result, the market value of the share of pension fund assets managed by the Department of the Treasury’s investment division hit $76.5 billion as of the end of the 2025 fiscal year.
“What an incredible year,” said Deepak Raj, chair of the New Jersey State Investment Council, when the latest annual returns were reviewed in detail during the council’s Wednesday public meeting.
“I just want to thank all of you for doing a great job,’ Raj told employees of the Division of Investment who attended the meeting.
The report on the boost from investments came after state Lottery officials reported over the summer that the share of Lottery revenues dedicated to funding public-worker pensions in New Jersey totaled roughly $1 billion during the 2025 fiscal year.
New Jersey began dedicating a portion of the Lottery system’s annual revenues to the pension fund under a policy change enacted in 2017 by then-Gov. Chris Christie.
Meanwhile, the pension fund has also benefitted in recent years from funding policies implemented by Gov. Phil Murphy and state lawmakers, including the repeated full funding of what actuaries have calculated as state government’s annual employer pension contributions.
That funding policy reversed a prior practice that saw governors and lawmakers from both major political parties repeatedly short the state’s annual pension obligations as other fiscal policies, such as tax cuts, were prioritized.
Due to the underfunding previously carried out over more than two decades, the pension fund has a significant unfunded liability that the state’s actuaries have estimated will take decades to fully address.
But with full state pension contributions now being made on an annual basis, officials say the state’s fund managers have been able to take full advantage of the favorable market conditions that have boosted investment returns in recent years, easing pressure on taxpayers, who, along with the workers themselves, contribute to public-employee pensions in New Jersey.
During the 2025 fiscal year, total state pension contributions topped $7 billion, counting the dedicated Lottery revenues. The state contributions are projected to top $7 billion once again during the 2026 fiscal year, which began July 1, according to budget documents.
The pension fund assets managed by the Division of Investment help cover the benefits owed to thousands of retired teachers, judges and many other public workers in New Jersey. But not the retirements of most police officers and firefighters, whose benefits are covered by a separate fund that is managed by a different panel.
“This just further strengthens the plans on which all of our retirees depend,” — state Treasurer Elizabeth Maher Muoio
During Wednesday’s investment council meeting, state Treasurer Elizabeth Maher Muoio praised officials from the Division of Investment for generating overall annual returns of 10.96%
“This just further strengthens the plans on which all of our retirees depend,” Muoio said.
Among the asset classes that contributed to the strong year for investment returns were international small cap equity, 24.0%; non-U.S. developed market equity, 18.9%; emerging markets equity, 16.3%; and U.S. equity, 15.2%, according to the Division of Investment’s performance data.
In the fixed-income category, high yield delivered 9.9% returns, and within private markets, real assets generated 11.1% returns, according to the data. Risk mitigation strategies delivered 8.9% returns, and private credit produced 7.7% returns, according to the data.
Meanwhile, over the last five years, overall pension fund investment returns have totaled 9.7%, easily besting the fund’s 7% assumed rate of return.
However, the latest estimates included in documents prepared for a recent state bond sale highlight the damage done to the pension system’s broader stability by the years of state government skipping its full actuarially determined pension contributions.
In all, the state’s net pension liability, as of the 2025 fiscal year, was nearly $80 billion, according to the bond documents issued earlier this month.
Meanwhile, the latest long-range projections indicate it will take until the 2050s to restore the pension system’s funded ratio to near 100%, assuming the current funding policies are continued.
And despite a surge in inflation that’s occurred in recent years, annual cost-of-living adjustments for retired government workers in New Jersey have been suspended for more than a decade under another reform that was enacted by Christie, in 2011.
