The pension fund for public workers in New Jersey piled nearly $10 billion onto its already-towering debt last year.

The pension system’s unfunded liabilities continue to grow, even as the state makes record contributions to the fund, which is considered the worst funded in the U.S.

As of July 1, the system had enough assets — $102 billion — to cover 58.6% of its $174 billion in liabilities, according to the latest actuarial reports released Monday. That leaves it $72 billion short of what it would need to pay retirement benefits to 800,000 active and retired public workers.

A year prior, the system’s $100 billion in assets covered 61.8 percent of its liabilities, which were at $162 billion.

The big drivers behind the year-over-year growth in the system’s liabilities were the Murphy administration’s decision to expect the fund will earn less than previously projected from its investments and revisions to how long public workers would stay on job, costs for disability, how long retirees are expected to live, salaries and inflation, fund actuaries said Monday.

“The changes in valuation take into account a number of realities, including the planned reduction in the rate of return (from 7.5% to 7.3%) for the upcoming fiscal year and the recently completed experience study, which takes into account, among other things, increased member longevity, a factor that inevitably increases employers’ liability," a spokeswoman for the Treasury Department, Jennifer Sciortino, said Tuesday.

The experience study increased the system’s liabilities by about $3.5 billion, and the change in the assumed rate of return increased liabilities by about $3.6 billion, according to an NJ Advance Media analysis of actuary reports.

“This particular experience study, we had to do a lot of adjusting and that did put some serious downward pressure on our funding ratio,” said Tom Bruno, chairman of the PERS Board of Trustees.

The assumption rate is the rate the pension system assumes it will earn on investments over the long term. The treasurer cut the rate from 7.5 percent to 7.3 percent to bring the rate more in line with what experts say the system could actually expect to earn on its investments. Expecting less in investment returns means governments would have to contribute more.

The rate is scheduled to drop to 7 percent in fiscal year 2023.

The state portion of the pension fund remains much weaker than the local portion, as the state has for decades contributed less than is recommended by actuaries while local employers were required to make full payments.

The state-paid portion of the fund has enough assets to pay 50.7% of its liabilities, compared with 69.6% for the local portion.

The health of individual funds vary, as well. The teachers’ pension fund is 55.3% funded, while the Public Employees’ Retirement System — state and local combined — is 56.5% funded, and the Police and Firemen’s Retirement System — state and local combined – is 67.7% funded, according to an NJ Advance Media analysis of actuary reports.

The state has been increasing its contributions to the pension system each year by one-tenth of what’s recommended by actuaries. Despite record-setting annual contributions, the state is still contributing less each year than actuaries say is required to avoid growing the unfunded liabilities.

The state is scheduled to kick in $3.8 billion this year, or 70% of the recommended contribution.

When measured according to national accounting standards that are important for public financial disclosures and for comparing New Jersey’s system to other states, New Jersey’s pension system is getting healthier, as unfunded liabilities dropped by nearly $6 billion to $124.8 billion. The ratio of assets to liabilities increased by 1.3 percentage points to $39.7 percent in the fiscal year that ended June 30.

This picture of the pension system’s health as of July 1, 2019, does not reflect economic conditions and volatility since the start of the coronavirus crisis, the actuaries noted. Between July 1 and March 23 — the most recent reporting period data available — investments fell more 13 percent.

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