Treasurer Folwell Announces Record Online Retirements Less People Paying into the System Than Are Not
(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, and the Retirement Systems Division (RSD) reported that retirement applications initiated online have gone from 0 to 38% in less than two years. Prior to the introduction of the online system in 2018, members had to go to the ORBIT system, print and manually fill out an application.
“I think that the issues surrounding the pandemic have accelerated the use of online retirement,” said Treasurer Folwell. “We’ve managed this incredible increase with no additional staff. The teams at the retirement and information technology divisions have done unbelievable work to make sure that the process goes as smoothly as possible using online tools and our call center.”
Interestingly, retirements seem to be accelerating for the fall with year-over-year retirements up 28%, but they are currently trending downward for the first part of 2021. While retirement applications for February are just coming in, it appears as though retirements for the first two months of 2021 will be down more than 35% over the same period in 2020.
“People don’t call us to book a cruise,” said Treasurer Folwell. “They call us about life-changing events. We want to make sure that the system is funded and running efficiently for all when they decide to retire.”
The North Carolina Retirement Systems (NCRS) is widely regarded as one of the best funded in the nation. In fact, Moody’s Investors Service recently reported that NCRS, which includes state and local government employees, is the best funded in the nation when looking at its Adjusted Net Pension Liability.
Additionally, a recent “stress test” by The Pew Charitable Trusts concluded that North Carolina’s state pension fund is well-positioned to maintain solvency during tough economic times.
The NCRS achieves these results with one of the lowest cost structures of any public retirement system in the country. According to CEM Benchmarking Inc. (CEM), NCRS’s $23 per active member and annuitant pension administration cost was $75 below the peer average of $98 and among the lowest in CEM’s global universe.
During the fiscal year ended June 30, 2020, NCRS paid out over $6.6 billion in retirement and other benefits to more than 363,000 retirees and beneficiaries. Treasurer Folwell noted that for the first time in the state’s history, there are more people eligible to receive retirement benefits than there are paying into the system.
It is a trend that is reflective of the fact that the population is retiring earlier and living longer with less workers coming into the system to support the retirees. In fact, Social Security is on a similar trend. In 1950, there were 16.5 workers for each Social Security beneficiary. Today, there are only 2.8 workers for each Social Security beneficiary. That number is expected to substantially decline in the future.
“We’re in the check delivery business,” said Treasurer Folwell. “But with interest rates near zero, people retiring earlier, living longer and a volatile stock market, we need to preserve and strengthen the system for the current and next generation of public service workers.”
The NCRS is the ninth-largest public pension fund in the country and is currently valued at more than $108 billion. It provides retirement benefits and savings for more than 950,000 North Carolinians, including teachers, state employees, local government employees, firefighters, police officers and other public workers.
For more information, visit www.nctreasurer.com.