Value of North Carolina’s pension plan for state employees rebounds, sets record in 2020

(The Center Square) – Despite the economic downturn resulting from the response to the COVID-19 pandemic, North Carolina’s pension systems experienced a $9.3 billion year-over-year gain in 2020, North Carolina Treasurer Dale Folwell said.

The state pension plan had an estimated market value of $114.9 billion at the end of December, surpassing its value of $105.6 billion in December 2019. The earnings were $20.7 billion more than the 2018 year-end figure of $94.2 billion.

“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,” Folwell said.

The state pays about $500 million from the systems each month to more than 320,000 retired state employees. A total of 661,652 employees currently contribute to the system, and taxpayers cover about $1.9 billion a year, according to the state’s June 2019 financial report. According to the treasurer’s office, one-third of the state’s pension portfolio is invested in public stocks.

The plan’s value dropped to about $93.6 billion last March but rebounded by nearly 23% in December, Folwell said. The estimated return on investment for the 2020 calendar year was 11% – more than the 7% actuarial rate of return target, officials said. Return numbers were 14.88% in 2019. For the first six months of the fiscal year that started July 1, the pension plan earned an estimated 11.6% rate of return.

Folwell said that by surpassing the return goals in 2020, his office was able to offset $3 billion of Teachers’ and State Employees’ Retirement System’s $11.5 billion in unfunded liabilities, and $1 billion of the Local Governmental Employees’ Retirement System’s $3.3 billion in unfunded liabilities.

“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.

The treasurer’s office said the 2020 estimates could change depending on the results of an official audit, scheduled to be completed by the end of the month.

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