r1,~ ' ,} l' f2- PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF NEW JERSEY 1974 Annual Report •t DEPARTMENT OF DIVISION OF THE TREASURY PENSIONS PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF NEW JERSEY 20 West Front Street Trenton, New Jersey 08625 BOARD ANTHONY M. ORECCHIO, Chairman RICHARD C. LEONE, State Treasurer, Custodian LESTER H. GRUBMAN MARTIN LIPSCHUTZ CHARLES E. WAGNER JOSEPH J. SQUILLACE JOSEPH C. WERNER THEODORE SIENICKI THOMAS EVANS CHRISTOPHER F. CARSON, Secretary GEORGE B. BUCK CONSULTING ACTUARIES, INC. MEDICAL BOARD WILLIAM COLEMAN, M.D. DAVID ECKSTEIN, M.D. MURRAY SHEPP, M.D. To His Excellency Brendan T. Byrne Governor of the State of New Jersey Dear Sir: The Board of Trustees of the Public Employees' Retirement System is pleased to present its Twentieth Annual Report in compliance with the provisions of N.J .S.A. 43: l 5A-2 l. Respectfully submitted, ANTHONY M. ORECCHIO Chairman 2 Annual Report As a result of the annual election Mr. Charles E. Wagner and Mr. Anthony M. Orecchio were re-elected to three-year terms commencing July l, 1973. Mr. Theodore Sienicki was elected to a three-year term and Mr. Joseph C. Werner a two-year term, both also commencing July l, 1973. 3 MEMBERSHIP A summary of the membership activity for the fiscal year ended June 30, 1974 follows: 30,310-enrollments 2,960- retirements 16,381 - active accounts terminated through separation from employment 795 - deaths before retirement Comparative data on membership for selected June 30 periods since 1955 follows: Retirants & June 30 Active Beneficiaries Total 1955 34,087 2,649 36,736 1960 50,576 7, 116 57,692 1965 68,086 10,445 78,531 1968 93,257 11,662 104,919 1969 101,703 12,420 114,123 1970 113,866 13,298 127, 164 1974 157,626 19,637 177,263 Retirements By Type & Option July 1, 1973 -June 30, 1974 Ordinary Accidental Accidental Service Early Deferred Disability Disability Veteran Death 2, 156 151 32 97 39 483 2 Maximum Option I Option II Option Ill Option IV 1,403 712 406 409 30 4 Retirement Payroll June 30, 1974 Regular Allowances - 19,637 retirants and beneficiaries $3,590,692.40 Pension Increase Act- 11,553 286,671.71 Gross Payroll, month of June 197 4 $3,877,364.11 Comparative data on retirement payroll and average allowances for selected June 30 periods follows: June 30 No. Pa~roll 1955 2,649 $ 2,848,923.68 1960 7, 116 *8,876,808.67 1965 10,445 * 16,737,419.06 1970 13,298 *24,036,226.58 1974 19,637 *45,867,844.58 *Includes benefits paid under the provisions of the Pension Increase Act. Group Life Insurance Claims: ACTIVE MEMBERS No. Settlement Amount 692 Cash Lump Sum $14,596,865.83 15 Reserve - Monthly Annuities 320,251.26 707 Total active member death claims $14,917,117.09 RETIRED MEMBERS 788 Regular Retirants (Death after age 60) - Lump Sum $1,054,7 46.33 15 Disability Retirants (Death before age 60) - Lump Sum 184,795.41 803 Total death claims - retirants $1,239,541.7 4 1,510 Total claims- active and retired members $16, 156,658.83 Summary of Claim Charges NONCONTRIBUTORY PLAN: Active Members 707 $ 8,507,055.15 Reti rants 803 1,239,541.74 1,510 $ 9,746,596.89 CONTRIBUTORY PLAN: Active Members 552 $ 6,410,061.94 $16, 156,658.83 5 Return of Contributions: a) 16,381 members withdrew from the System and received a return of the pension contributions totaling $10,557,283.30 b) The survivors of 795 members who died before retirement received a return of the member's contributions totaling $ 2,261,566.74 c) Settlement of inactive accounts $ 209,990.69 Loans: 17,728 members applied for and received loans on their accounts totaling $11,437,233.84 6 INVESTMENTS HOLDINGS: June 30, 1974 Avg. Percent Par Value Book Value Eff. Rate By Type U. S. Government $ 4,500,000 $ 5,089,132 6.21 0.5 U. S. Government Agencies 7,278,900 7,207,320 6.89 0.8 Municipal General Obligations 1,261,500 1,237, 110 2.75 0.2 Municipal Revenues 1,035,000 1,030,481 2.82 0.1 Industrials 204,297,085 203,469,244 7.01 21.5 Gas & Electric 212,553,000 212,908,467 5.63 22.3 Te le phone 83,927,000 84,093,038 5.24 8.8 Water 1,750,000 1,749,155 4.70 0.2 Rai Iroad Equipment Obi igations 3,877,837 3,881,475 6.27 0.4 Commercial Paper 25,300,000 25,290, 139 11.58 2.7 Merchant Marine (U. S. Gov't. Ins.) 2,550,000 2,550,000 5.54 0.3 Finance Companies - Senior Debt 35,308,000 34,828, l 06 5.68 3.7 Bank Debentures 3,750,000 3,728,862 5.26 0.4 Time Certificates of Deposit 8, l 00,000 8, 100,000 11.56 0.8 Convertible Debentures 2,890,000 2,885,940 5.03 0.3 lnter 0 American Development Bank 3,250,000 3,229,910 5.30 0.3 International Bank 7 ,871,000 7,891,856 6.43 0.8 Government of Canada 1, 950,000 1,945,189 6.18 0.2 Provinces of Canada 12,850,000 12,773,999 6.71 1.3 Canadian Provine ia I Guaranteed 8,425,000 8,367, 957 5.55 0.9 Farmers Home Administration 6,254,162 6,254,162 7.04 0.6 Preferred Stocks 2,775,744 2,775,744* 5.89 0.3 Common Stocks - Banks 157, 161 157, 16 l * 8.19 nil Common Stocks - Public Utilities 16,559,918 16,559,918* 5.66 1.7 Common Stocks - Other 12,512,756 12,512,756* 3.80 1.3 Capehart Mortgages (Guar. by U.S.) 14,890, 154 14,833,655 4.30 1.6 FHA Mortgages 3, 782,328 3,649,632 6.55 0.4 VA Mortgages 5,318,564 5,141,511 6.57 0.6 Rea I Estate 5,888,713 5,888,713 4.00 0.6 Multi°Family Mortgages 12,265,415 l 0,578,087 7.12 1.3 Mortgage Backed Certificates 7,278,702 6,957,542 7.53 0.8 Units - Common Pension Fund A ·i> 72,330,411 72,330,411 3.29 7.6 Un its - Common Pens ion Fund B 158, 954,259 158,954,259 8.00 16.7 TOTALS $951,692,609 $948,850, 931 6.36 l oo.o *Market Values on June 30, 1974 were: Preferred Stock $ 992,039,40 Common Stocks - Banks l 04,492.37 Common Stocks - Public Util. 7,713,402.93 Common Stocks - Other 2, 929 ,223. 76 7 PURCHASES TYPE Average Long 0 Term Par Value Effective Rate U.S. Government Agencies $ 90,000 6.57 Te le phone 45,000 7.65 Finance Co. - Sr. Debt 125,000 7.69 SUB 0 TOTAL $ 260,000 7.30 Short, Term U. S. Government $ 28,920,000 8.51 Time Certificates of Deposit 47 ,625,000 10.17 Commercial Paper 202,872,000 9.90 SUB 0 TOTAL $279,417,000 9.80 Convertible Securities Banks $ 1,000,000 4.75 SUB~TOTAL $ 1,000,000 4.75 TOTAL PURCHASES $280,677,000 9.78 --- SALES Long" Term Industrials $ 25,000 Mortgages 41,079 $ 66,079 Short, Term U. S. Government $ 16,380,000 SUB= TOTAL $ 16,380,000 Stocks Common $ 213,426* Rights 3,758* $ 217, 184* Convertible Debentures $ 1,850,000 $ 1,850,000 TOTAL SALES $ 18,513,263 *Book Value 8 REDEMPTIONS AND PREPAYMENTS Par Value U. S. Government Agencies $ 81; l 00 Industrials 591,584 Gas & Electric 48,000 Telephone 11,000 Finance Co. - Sr. Debt 24,000 Merchant Marine (U.S. Gov.-t. Insured) 11,000 Farmers Home Administration 793,850 Provinces of Canada 20,000 Mortgages 652,880 TOTAL REDEMPTIONS AND PREPAYMENTS $ 2,233,414 MATURITIES U. S. Government $ 12,940,000 Municipals 236,500 Corporate 1,378,217 Commerc ia I Paper 197,072,000 Time Certificates of Deposit 44,425,000 Capehart Mortgages 1,069 ,078 Insured Mortgages 505,836 Farmers Home Administration 202,114 Real Estate 520,290 ----- TOTAL MATURITIES $258,349,035 EXCHANGES During the year ended June 30, 1974 the Fund exchanged the following~ Bonds having a par value of $40,669,000. for other bonds having a par value of $40,694,000. UNITS ACQUIRED IN COMMON PENSION FUND A No. of Un its Cost Un its Purchased 13,950 $16,071,330 TOTAL 13,950 $16,071,330 UNITS ACQUIRED IN COMMON PENSION FUND B Un its Purchased 91,845 $86,081,229 TOTAL 91,845 $86,081,229 9 STATEMENT OF ASSETS JUNE 30, 1974 Ledger Assets Cash in Banks $ 1,893,997.94 Cash in Trans it-Investment Purchases 1,200,000.00 Investment Hald in gs 947,302,879.10 Accrued Interest on Investments 11,477,092.06 Investment Hald ings - Contr. Grp. Ins. Prem. Fund 1,566,239.56 Employees' Contributions Receivable 5,046,014.75 Loans to Members 11,569,645.93 Local Employers' Contributions Receivable 18,979,603.19 Local Non°CGIPF Receivable 3,516, 139.00 Local Expense Fund Receivable 553,314.00 Receivable from Employers - Delayed Enroll. 294,678.38 Dividends Receivable 164,461.34 Accounts Receivable --- ---2.,l_l_~~~~ Total $ l ,003,573,777.80 Miscellaneous Liabilities Contingent Res. Fund Payable-Chapt. 156 $ 13,833,495.00 Pens ion Payrol I Payable 3,590,692.40 Pens ion Increase Payrol I Payable 286,671.71 Non-Contrib.