PFRS Trustee Board looking ahead to ‘monumental’ year

Members of the Police and Fire Retirement System (PFRS) Trustee Board continue to huddle each month, working on their game plan and keeping the ball moving. Even with the pandemic and even though the meetings have been Zoomed, they have not missed approving retirements and making sure
the pension checks get out to members as they should.

But the planning continues to drive toward the ultimate paydirt. Following a 2020 of adding system-changing building blocks in a structure that started from the ground up less than two years ago, 2021 is set up for finally making the moves that will give the PFRS the autonomy it was designed to achieve
when Chapter 55 was signed in 2018 to make it independent.

The push this coming year will move the system’s nearly $7 billion in assets from under the increasingly unreliable thumb of the NJ Division of Investments (DOI) to PFRS control. This is the moment members have been waiting for, and though considerable clean-up will be needed, analysts insist that when the assets are transferred, it will be historic.

“We are leaps and bounds ahead of where many thought we would be,” assures PFRS Trustee Board Chair Ed Donnelly, the president of the NJ FMBA. “I think 2021 is going to be a monumental year for New Jersey cops and firefighters.”

And why is that?

“We are going to be able to make the changes necessary to increase the funding of the pension system,” adds James Kompany, the trustee board’s vice-chair and a member of Roselle Park Local 27. “That’s why we’re here. That’s what this is all about.”

The foundation of the PFRS infrastructure has been an unprecedented meshing of management and labor on the trustee board. Looking back to July 2018 when Governor Murphy signed the bill that crated Chapter 55, there was considerable concern, even conflict, over whether the trustees representing the state’s municipalities would try to incessantly battle the
board members from public safety.

But this dedicated dozen bolstered by the municipal management expertise of Retired Members Trustee Bruce Polkowitz, a former State Delegate for Edison Local 75 and president of it’s SOA as well as a former mayor of Franklin Township in Hunterdon County, has put the team in teamwork. That has helped maintain the mindset of getting the pension to be solvent
and funded at the highest level. This has been the most significant progress toward the most important goal Donnelly set for the initiative other than full funding.

“To take politics out of the pension system,” he reiterates.

And how is that?

“It hasn’t been a partisan group,” Kompany confirms of the trustee board. “Each situation we come across, whether a member’s disability, general business or hiring for a position, it’s been straight across the board. Everybody has been cohesive on that.”

Building up from there, the independently run PFRS also has recently retained its own actuarial firm. Such a presence will enable the board to get an unbiased report on the value of the fund, something that has not been wholly reliable with assets under DOI control.

And under the leadership of Executive Director Gregory Petzold for the past year, the PFRS office is now running at peak efficiency. That has only added to the timeliness of day-to-day matters such as processing pension payments.

The latest acquisition, however, has the PFRS even more primed to embark on the full-funding journey. New Chief Investment Officer Russ Niemie joined the team, brining unprecedented pension management prowess to the system.

Niemie emerged from a group of nearly a dozen finalists. His experience includes a seven-year stint turning the Texas state pension from underfunded into being rated as one of the top public pension funds in the country. Following that. Niemie ran the pension for the New York Nurses Association and led it to a funding level of 112 percent that made it the top performing public pension fund in the country.

“Obviously, his resume speaks for itself,” Kompany relates. “But what impressed me is that he has a presence about him. He won’t be intimidated coming into the situation he’s coming into.”

Niemie’s presence comes from a work ethic that was spawned working on fishing boats in California starting at 9 years old. His father was a law enforcement officer in Morro Bay, California, who went on to serve as a California State corrections officer.

“My mother still lives off that pension,” he quips. “I come from a blue-collar family and many of them served in public service. None of them would have been able to retire if not for their pensions.”

The situation Niemie is walking into will be sorting out the assets that will be transferred in 2021. By March, the board plans to have control of the Common Pension Fund D, which includes equity and fixed-income portfolios – primarily stocks and bonds. By the end of the 2021, the transfer of Common Fund E that includes alternative investment portfolios should
be complete.

And so begins the cleaning up process that will increase the funding level. The DOI has so many investment contracts that more than 100 managers are currently involved in the assets. Kompany explains that an evaluation process will take place under Niemie’s direction to determine which of those managers will be green-lighted and which underperforming ones will
be red-lighted. Niemie adds that thinning out some of those managers could contribute to creating efficiencies that bring in nearly $500 million a year in additional revenue. Some of those investments are under long-term contracts, so Niemie warns that the turnaround will take some time.

“We will have that time because we are fortunate to have a board that is supportive and wants to take the time to understand what we’re doing,” Niemie emphasizes. “There are going to be some bumps along the way, but because of this board we won’t have to waste our time putting out fires. We also have people like Ed and [NJSPBA President] Pat Colligan, who know
that this is their cause. And it’s a just cause. If we’re successful, it will be historic.”