Gov. Phil Murphy's administration is rolling back a change to New Jersey's public worker pension system that Chris Christie slipped in during the waning days of his administration that raised government contributions by more than $800 million.

Murphy's acting state treasurer, Elizabeth Muoio, said Christie's surprise reduction in the pension system's assumed rate of return from 7.65 percent to 7 percent placed a "undo stress" on the governments that would have to find the extra cash.

Muoio said she would phase in the rate cut over five years.

The state uses the assumed rate of return to calculate how much money state and local governments will need to pay out benefits to nearly 800,000 active and retired workers.

Christie's administration slashed the rate in December in a move that increased local governments' bills by $422.5 million and the state's by $390.3 million, according to actuary reports. If the state only contributes 60 percent of what actuaries recommend next year, as expected, the revised payment would have been $234 million higher.

A spokesman for Murphy, a Democrat who took office in January, said then that Christie, a Republican, was "playing politics with the pension fund by rushing this decision at the 11th hour."

The pension fund actuaries have said a 7 percent assumed rate of return is a more conservative estimate of what pension investments can achieve over the long term and is in line with other large funds.

In contrast, assuming the investments will earn a high rate makes the pension fund look healthier than it really is and doesn't reflect the reality of the state's investment outcomes, actuaries say.

The fund returned 13 percent in the fiscal year that ended in June, but lost nearly 1 percent the year before. It returned 4.16 percent and 16.9 percent in the years prior.

In a statement Thursday, Muoio said it was too much, too fast.

Instead, Muoio said she will set the rate at 7.5 percent for the fiscal year beginning in July, otherwise known as fiscal year 2019, and fiscal year 2020.

A spokeswoman for the Department of Treasury, Jennifer Sciortino, said the move from 7.65 percent to 7.5 percent will mean an additional $52 million in costs for the state and $91 million for local employers.

The rate will drop to 7.3 percent for 2021 and 2022 and then finally land at 7 percent in 2023.

The California Public Employees' Retirement System, the largest public pension fund in the U.S., is in the process of gradually moving from 7.375 percent to 7 percent over three years.

"A gradual path to a lower rate will help mitigate the undue stress that would otherwise have been placed on local governments to address the significantly increased contributions required of them and the consequences this would have on their structural budget, reserves, and ultimately, their taxpayers," Muoio said.

Michael Cerra, assistant executive director of the state League of Municipalities, called it a welcome correction that will spare local governments that would have struggled to absorb the added costs.

"You can make the case that it's appropriate to reduce the rate, but doing it in one year, I think it resulted in sticker shock for local governments," he said Thursday. "To phase it in over five years is prudent and beneficial to taxpayers and the local governments who are operating under a 2 percent (spending) cap."

Christie reduced the assumption rate gradually during his time in office, from 8.25 percent and then from 7.9 percent to 7.65 percent.

But experts said that was still too high.

Fund actuaries predicted the pension investments were likely to beat the 7.65 percent assumed rate only a third of the time but could beat 7 percent 45 percent of the time.

State Sen. Anthony Bucco, R-Morris, said unrealistic rates of return contributed to New Jersey's pension crisis and it's a mistake to walk back Christie's changes.

"We need to stay the course and keep making the biggest pension payments that we can," he said in a statement.

Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.