(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, announced today that the state pension plan reported losses of 1.47 percent for calendar year 2018, underperforming its actuarial assumed rate of return of 7 percent. Pension fund assets were valued at $94.2 billion, down from $98.3 billion at the end of 2017. At the same time, the pension plan paid out over $6 billion in benefits – an amount that exceeds the state's debt.
The pension plan, known as the North Carolina Retirement Systems, is managed by the N.C. Department of State Treasurer. Results were reported during the February Investment Advisory Committee (IAC) meeting.
“The data we have available shows that for the past 21 years we have not hit, on average, our assumed rate of return." said Treasurer Folwell. “We've now added $2 billion to the pension plan's unfunded liability."
The following 2018 performance figures are reported net of all fees and expenses:
- Public equity, which makes up almost 40 percent of the total fund, lost 9.3 percent
- Private equity rose 18.3 percent
- Non-Core Real Estate and Opportunistic Fixed Income returned 13.3 percent and 5.7 percent respectively
- The Multi-Strategy portfolio lost 4.8 percent for the twelve-month period
- Inflation-Sensitive and Diversifiers portfolio increased by 6.3 percent
- Investment-Grade Fixed Income lost .6 percent
Treasurer Folwell and the investment management team continued to significantly cut costs in 2018. During the IAC meeting, it was reported that over $92 million in annual savings have been executed for a four-year savings rate of almost $400 million.
During 2018, the department also moved $15.2 billion to passive indexing funds under in-house management as a means of further reducing fees while maintaining performance as measured by the Russell Top 200 index strategy and the Russell Mid Cap index strategy. The total amount managed in-house for the pension plan, inclusive of both public equity and fixed income, is approximately $45.7 billion.
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The North Carolina Retirement Systems is the tenth largest public pension fund in the country. It provides retirement benefits and savings to more than 900,000 members, including teachers, state employees, firefighters, police officers and other public workers. For more information, visit www.nctreasurer.com.