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March 3, 2016

As Gov. Chris Christie’s administration has continued a practice of making annual state contributions into the public-employee pension system that are far less than the totals calculated by actuaries each year, increasing criticism has been levelled at those managing the pension system for hiring outside fund managers who charge the state millions in fees and performance bonuses.

The fees, expenses, and profit allocations for the hedge funds, private equity, and other so-called alternative investments that were paid by the state during the 2015 fiscal year were outlined in a report recently released by the New Jersey State Investment Council, which sets policy for the pension system.

Those costs totaled $701.4 million during the 2015 fiscal year, according to a box on page 28 of the report. That total included $373 million in fees and expenses, and $328.4 million in profit allocations.

The report also stressed that New Jersey’s pension managers were able to negotiate fees and performance bonuses at rates that were generally less than industry standards. But officials from the AFL-CIO said those costs still ate up too much of the pension system’s overall returns. And the labor organization said by its own analysis the alternative investments cost the state $728 million.

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