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February 17, 2014

NC pension fund returned 12 percent last year

The North Carolina pension fund reported a 12.28 percent gain on investments thanks largely to the strong performance of its stock portfolio.

The North Carolina pension fund reported a 12.28 percent gain on investments last year thanks largely to the strong performance of its stock portfolio.

The state Treasurer’s office reported that assets of the pension fund, which provides retirement benefits for teachers and state employees, were $86.02 billion as of Dec. 31, up from $83.1 billion three months earlier and $78 billion at the end of 2012.

The stock portfolio rose 7.6 percent in the third quarter, and was up 26.24 percent for the year. Stocks account for just over 48 percent of the pension fund’s investments.

Bonds, which account for nearly 31 percent of the portfolio, lost 0.18 percent in the quarter, and fell 3.49 percent for the fiscal year.

The real estate portfolio rose 1.81 percent in the third quarter and 11.56 percent for the year. The alternatives portfolio, which consists mostly of private equity funds, rose 4.16 percent in the quarter and was up 11.54 percent for the year.

The results come as the state is considering making changes to its pension structure. Last month, State Treasurer Janet Cowell announced the creation of an independent, bipartisan commission to review the state’s governance structure for investment management.

The commission, which is expected to makes its recommendations to Cowell and the General Assembly by April 30, will look the state’s current sole investment trustee structure and whether it should be replaced with an investment advisory committee model.

North Carolina is currently one of just four states with a sole fiduciary – the state treasurer – who makes all investment decisions in consultation with staff.

The State Employees Association of North Carolina, meanwhile, also announced early last month that it has hired a forensic investigator to look at the state pension investments for “conflicts of interest related to TSERS investments and potential violations of the federal securities laws.”

SEANC, a frequent critic of Cowell, argues that the pension fund ought to be managed by a stakeholder board and not the state treasurer.

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