The New Jersey Senate Budget Committee has advanced legislation that would explicitly allow pension fund money to be invested in startup businesses in the state.
The measure clears up some language in the law that already allows some pension fund money to be invested in venture capital to help small companies in New Jersey, said Sen. Paul Sarlo, chairman of the budget committee.
“The return on the investment has been about 4 percent, if you look at the past history of these investments. It’s a lot better than you’re going to get at any local bank, that’s for sure,” Sarlo said.
Sen. Joe Pennacchio, however, questioned the wisdom of that type of investment.
“It may be a good program now, a worthy program. But two years from now, 10 years from now, it may be a program that is not so good, and not so worthy,” he said. “I think we’re putting pensioners’ money at risk.”
Sen. Michael Doherty concurred with the need for caution.
“We have a lot of folks who are relying on those pensions and we have examples of various governmental entities investing a lot of money in startup new businesses,” he said. “We just saw it at the federal level with Solyndra where they lost a half a billion dollars.”
It’s not clear when the full Legislature might vote on the measure.