Prohibits investment by State of pension and annuity funds in hedge funds and derivative contracts.

New Jersey's S 2486 prohibits state pension and annuity funds (managed by the Division of Investment) from investing in hedge funds or derivative contracts. The bill defines these as high-risk investments, including hedge funds using "absolute return strategies" and financial instruments like options or swaps. Funds must divest existing holdings within three years of the law's effective date, with annual reports to the Legislature on progress. This applies to all state pension funds under the Division of Investment, including the Police and Firemen's Retirement System. The law aims to eliminate investments deemed too risky based on historical market events.