The North Carolina state pension fund’s 10-year investment returns were below average over the past 10 years, according to a new report by The Pew Charitable Trusts.
The state’s annualized 10-year return through mid-2015 was 6.2 percent, below the 6.6 percent average for comparable public pension funds, the report found. Returns from comparable funds ranged from 4.7 percent to 8.1 percent.
The report found that North Carolina’s pension fund rated 29th out of 41 comparable public funds that report returns after accounting for fees paid to money managers. More than one-third of public pension funds report returns without deducting fees.
Nationwide, state pension funds paid more than $10 billion in fees and investment expenses in 2014, up about 30 percent over the past decade as states have expanded their allocations to alternative investments such as hedge funds and private equity funds, according to Pew.
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In addition, Pew estimates that unreported fees could total more than $4 billion a year nationwide.
Some of those unreported fees stem from accounting standards and practices. For example, private equity funds charge funds “carried interest” — a share of the profits from investments — but some states account for that as “partnership profit” rather than a fee.
State Treasurer Dale Folwell, a Republican who took office in January, has promised to slash the state’s management fees by $100 million a year.
Last year North Carolina’s $89.1 billion pension fund reported returns of 6.3 percent. The fund provides retirement benefits for more than 950,000 teachers, state employees and other public employees.