New Jersey is rated three steps below benchmark debt, with a negative outlook. A one-step downgrade would place it with California and Illinois in the single-A category.

The city will ask a judge to let it send the disclosure statement to creditors to solicit their votes on the debt-reduction plan. The plan calls for cutting public worker pensions and some bond payments.

The highest-ranking state for workplace retirement plan participation in 2012, Iowa, had only 54 percent of private employees participating in a pension or 401(k).

While, like all institutional investors, public pension plans were hit hard by the Great Recession, they have experienced a robust recovery due to increasing market returns and operational reforms.