Best estimates of arithmetic rates of return for each major asset class included in PERS’s target asset allocation as of June 30, 2022 are summarized in the following table:
| Target | Long-Term Expected Real |
|
|---|---|---|
| Asset Class | Allocation | Rate of Return |
| U.S. Equity | 27.00% | 8.12% |
| Non-U.S. Developed Market Equity | 13.50% | 8.38% |
| Emerging Market Equity | 5.50% | 10.33% |
| Private Equity | 13.00% | 11.80% |
| Real Estate | 8.00% | 11.19% |
| Real Assets | 3.00% | 7.60% |
| High Yield | 4.00% | 4.95% |
| Private Credit | 8.00% | 8.10% |
| Investment Grade Credit | 7.00% | 3.38% |
| Cash Equivalents | 4.00% | 1.75% |
| U.S. Treasuries | 4.00% | 1.75% |
| Risk Mitigation Strategies | 3.00% | 4.91% |
| 100.00% |
Discount Rate – The discount rate used to measure the total pension liabilities of PERS was 7.00% as of June 30, 2022. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers and the nonemployer contributing entity will be based on 78% of the actuarially determined contributions for the State employer and 100% of actuarially determined contributions for the local employers. Based on those assumptions, the plan’s fiduciary net position was projected to be available to make projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all projected benefit payments to determine the total pension liability.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of PERS calculated using the discount rates as disclosed above as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate.
| 2022 | At 1% decrease (6.00%) |
At current discount rate (7.00%) |
At 1% increase (8.00%) |
|---|---|---|---|
| PERS | $5,771,284 | $4,492,296 | $3,403,825 |
Plan Fiduciary Net Position – The plan fiduciary net position for PERS including the State of New Jersey at June 30, 2022 was $32,568,122,309. The portion of the Plan Fiduciary Net Position that was allocable to the Local (Non-State) Group at June 30, 2022 was $25,810,084,045.
Additional Information
Collective Local Group balances at June 30, 2022 are as follows:
| Collective deferred outflows of resources | $1,660,772,008 |
| Collective deferred inflows of resources | 3,236,303,935 |
| Collective net pension liability – Local group | 15,219,184,920 |
| Borough’s Proportion | 0.0298862292% |