RALEIGH — North Carolina State Treasurer Dale Folwell has announced that the state’s pension plan gained 11% in 2020 and achieved a “record $114.9 billion valuation entering 2021,” despite the shifting and uncertain economic climate due to the COVID-19 pandemic.
“The performance is all the more remarkable when considering its value dropped to an estimated $93.6 billion on March 23, 2020, at the height of the pandemic scare, but rebounded by nearly 23% to record-setting numbers just nine months later,” Folwell said.
Folwell said the credit belongs to the department’s two chief investment officers, Christopher Morris and Jeff Smith, for “their oversight of one of the most seasoned teams in the nation.”
“The largeness and strength of the state pension plan and staying the course on a decades-long conservative management strategy instead of panicking and chasing risky get-rich-quick investment schemes led to a phenomenal year for the state employees, retirees and taxpayers who are stakeholders in the pension plan,” said Folwell.
The pension plan’s original target rate of return for 2020 was 7%. According to the N.C. Treasurer’s office, for the first six months of the fiscal year, beginning July 1, 2020, the pension plan earned an estimated 11.6% rate of return. Under Folwell, the pension plan’s actuarial rate of return for three of the past four years has exceeded its target expectations.
The monthly auditing process is expected to be completed by the end of this month and the figures may change slightly.
North Carolina’s state pension plan is considered among the best funded in the nation, however, the Teachers’ and State Employees’ Retirement System (TSERS) has an $11.5 billion unfunded liability. The Local Governmental Employees’ Retirement System is underfunded by $3.3 billion.
“By exceeding the investment return goal in 2020, an additional $3 billion is available to help offset $11.5 billion in unfunded liabilities in the Teachers’ and State Employees’ Retirement System,” Folwell’s release states. “It will add about $1 billion above expectations to help offset $3.3 billion of unfunded liabilities in the Local Governmental Employees’ Retirement System. Those higher earnings are critical as the interest on the unfunded debt continues to accumulate.
“Our ability to grow an already secure pension plan that is the 26th largest pool of public money in the world not only puts current and future retirees at ease, but ensures that North Carolina’s coveted Triple-A bond rating is not jeopardized,” Folwell said.