N.C. Pension Fund Posts Gains, Though Earnings have Slowed, Treasurer Says | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

    The state pension fund posted overall gains of 7.3 percent for the 2017-18 fiscal year just ended June 30, outpacing the assumed rate of return on investments. But earnings have slowed to date for the 2018 calendar year, State Treasurer Dale Folwell reported.

    "For the first six months of 2018, the plan has paid out more than $3 billion in benefits, [and] $300 million in Wall Street fees while earnings were essentially flat" at 1.3 percent, Folwell said in a news release Thursday, Aug. 2. The nearly $1 billion N.C. Retirement Systems fund is managed by the N.C. Department of State Treasurer. It has more than 900,000 public employee members.

    The 20-year average of investment gains now stands at 6.1 percent. That misses the 7 percent assumed rate of return set in April, Folwell said.

    The Teachers' and State Employees' Retirement System and Local Government Employees' Retirement System boards of trustees unanimously approved lowering the rate, which was 7.2 percent.

    The change is closer to the investment portfolio's actual performance. But Folwell's push for more accurate accountability meant the funded status of the affected systems dropped by 2 to 3 percentage points. That's because the plans were showing assumed gains on paper that never materialized in the market and weren't corrected in the funded status.

    Folwell hopes to continue ratcheting down the assumed rate of return to more closely reflect real earnings.

    Following are the fiscal 2017-18 retirement system returns net of all fees and expenses:

  • Public equity rose 12.5 percent.
  • Private equity increased 16.3 percent.
  • Non-Core Real Estate and Opportunistic Fixed Income gained 15.9 percent and 6.7 percent, respectively.
  • The multi-strategy portfolio returned 6.3 percent for the 12-month period.
  • Inflation-sensitive and diversifier investments increased by 6.8 percent.
  • Investment-Grade Fixed Income was down 0.4 percent while cash holdings increased 1.4 percent.

    Click here for a full listing of asset classes.

    The earnings report comes as a national benchmarking survey confirmed North Carolina continues to have the second-lowest administrative costs among any U.S. public pension fund in its peer group. It also is among the five best-funded state retirement systems in the country.

    Pension administration costs for North Carolina are $23 per member, while the peer average is $93 per member. Compared annually, the state spends more than $55.3 million less due to that $70 difference.

    "We still have a long way to go," in reducing unfunded liabilities in the retirement and health plan systems, Folwell told reporters during his monthly Ask Me Anything teleconference in July.

    Nearly 50 percent of state assets will be managed in house by the end of this year, totaling about $50 billion, he told reporters. That will reduce fees paid to Wall Street investors. He said he would continue to crack down on fraud, waste, and abuse in the pension and health systems, including rooting out participants who've committed criminal acts.

    Fees paid to Wall Street investment managers have been cut by $86 million since January 2017, for a projected savings of about $344 million over four years. That figure is more than three times Folwell's original pledge to cut fees.

    Folwell advocated for a solvency fund to begin reducing unfunded liabilities, and legislative Republicans in the midst of an election year have been promoting on Twitter the GOP-led General Assembly's creation of that one-of-a-kind fund.

    Folwell convened a health-care roundtable in July to urge medical providers to find ways to cut $300 million in costs to hold down spending in the State Health Plan, which has $35 billion in unfunded liabilities. The retirement system has $15 billion in unfunded liabilities.
Go Back


Leave a Guest Comment

Your Name or Alias
Your Email Address ( your email address will not be published)
Enter Your Comment ( no code or urls allowed, text only please )




President Donald J. Trump's Administration is Working to Provide More Flexible, Affordable Healthcare Options for All Americans Statewide, Government, State and Federal Remarks by President Trump at Workforce Development Event


HbAD0

Latest State and Federal

Former President Donald Trump suggested this week that if he becomes president again, he might allow Prince Harry to be deported.
Vice President Kamala Harris will visit a Minnesota Planned Parenthood clinic, reportedly the first time a president or vice president has visited an abortion facility.
Sen. Ted Cruz (R-TX) said this week that the only campaign promise President Joe Biden has delivered on as president is the complete dismantling of the U.S. southern border.
Hamas is reeling after losing two of their most cherished leaders on the same day: military commander Saleh al-Arouri, and Harvard President Claudine Gay.
President Joe Biden’s brother told the Internal Revenue Service that Hunter Biden told him he was in business with a “protege of President Xi,” referring to the leader of China, according to notes by an IRS investigator that were divulged during a congressional interview of Jim Biden.
That’s the question Marguerite Roza of Georgetown University’s Edunomics Lab sought to answer in a recent webinar on the topic.

HbAD1

The University of Florida has fired all of its diversity, equity, and inclusion (DEI) employees and shut down its DEI office.
Glenn Beck: 'When the United States government can come after individuals, that's when you know our republic is crumbling.'
Rep. Mark Green (R-TN) reportedly blasted Homeland Security Secretary Alejandro Mayorkas for “stonewalling” details about the illegal immigrant accused of murdering Laken Riley, a 22-year-old Georgia college student.
“The Biden administration's plan in the Middle East is to hand over power to the Palestinian Authority, which literally pays the families of terrorists who murder Jews.”
Two Democratic members of North Carolina’s congressional delegation are ranked among the most likely to be picked off in 2024, according to a new analysis from Roll Call.

HbAD2

Former President Donald Trump dominated the North Dakota Republican Caucus on Monday as he continues to inch closer to officially securing the party’s presidential nomination.

HbAD3

 
Back to Top