New Jersey Pension Fund Beats Target in 2026 Amid Public Calls for Divestment

The New Jersey State Pension Fund posted investment returns of nearly 15% for the 2026 fiscal year, significantly exceeding its assumed rate of return. These preliminary figures were reviewed by the State Investment Council during a public meeting held on Wednesday. The fund, which manages assets for more than 800,000 current and retired government workers, had previously set a 7% benchmark for its expected annual growth.

Deepak Raj, chair of the investment council, praised the performance during the meeting. He stated that the results provide comfort given the exceptionally volatile market environment. The strong returns allowed the state to fully fund its annual employer obligation, a total exceeding $7 billion when including contributions from the New Jersey Lottery. This marks the fourth consecutive year the fund has outperformed its target, with the 2026 return beating the assumption by 7.82%.

Despite the strong annual performance, momentum has slowed in the current fiscal year. Investment gains through the end of September totaled less than 1%, according to preliminary estimates. State officials attributed the lower returns to unfavorable market conditions and the uncertainty surrounding upcoming midterm elections. They noted that it is still early in the fiscal year, which began on July 1.

Public pressure remains intense regarding specific asset holdings. During a lengthy public comment period, numerous attendees urged the council to divest from Israeli bonds and shares in Palantir Technologies. Critics cited human rights concerns, pointing to Israel's handling of Palestinians in Gaza and the West Bank, as well as Palantir's role as a federal contractor in immigration enforcement under President Donald Trump. Abdul Rehman Khan, a law professor at Seton Hall University, argued that states and localities must step up when international bodies fail, advocating for the sale of the fund's Israeli bond holdings.

The fund’s asset classes all generated positive returns during the 2026 fiscal year. Emerging markets led the gains at 39.53%, followed by U.S. equity at 23.20% and international developed market equity at 21.61%. Over the last three fiscal years, the pension fund has achieved an annualized return exceeding 12%. This performance follows net returns of nearly 11% in both the 2025 and 2024 fiscal years and 9% in the 2023 fiscal year.

State Treasurer Aaron Binder said in a statement that the strong results and the administration's commitment to full payments represent a major step in restoring the fund's financial health. Governor Mikie Sherrill and the Legislature continued the practice of fully funding annual employer contributions this year, a streak that began under former Governor Phil Murphy. This policy reversed decades of underfunding, which actuaries estimate will take years to fully correct.

The improved fiscal management contributed to a recent credit rating upgrade by KBRA. The New York-based firm raised New Jersey's debt grade to AA-, citing the state's increasingly well-established track record of full actuarial pension funding. This is the highest grade New Jersey has received from KBRA since the firm began issuing such ratings in 2015. Sherrill described the upgrade as great news for the state.

The Division of Investment manages the fund's assets alongside outside professionals. The investment council does not handle day-to-day management but formulates investment policies. Council members serve as volunteers, including appointees from the governor, legislative leaders, and representatives from labor organizations.