Who Should Run NC Pension Fund: State Treasurer? Or Board Of Trustees?
There's a good chance Treasurer Janet Cowell will give up sole control of the state pension fund.
A commission set up to review North Carolina’s Retirement Systems investment program has recommended the state shift how the pension fund is run.
The North Carolina Investment Fiduciary Governance Commission recommends the state move from a sole fiduciary investment system to a model governed by a board of trustees.
Michael Kennedy chairs the commission and is also chairman of the Federal Retirement Thrift Investment Board in Washington D-C. He said Treasurer Cowell’s job has become a lot more complicated.
“And in the current treasurer’s case, she now has the state health plan underneath her, and my fear is, that going forward, her job is going to only become more complex, and more overwhelming which would preclude her from being as hands on and providing the oversight needed," said Kennedy.
There are only three other states with a sole fiduciary structure like North Carolina’s: Michigan, New York and Connecticut.
Kennedy is Managing Director of Korn Ferry International in Atlanta and was a recent member of the Board of Trustees of the Georgia Employees Retirement System. Kennedy said he is optimistic Cowell will accept the commission's recommendation and pas it along to the General Assembly.
"From a 'best practices' standpoint, this is what we see across the country," said Kennedy. "The timing is actually good to take a look at changing the structure while you're in a position of strength instead of waiting for something negative to show up."
The decision to recommend a board of trustees model to oversee the state pension was not unanimous. Four of the 11 commission members would like the sole trustee governance model to continue and not "rush to a new model."
"It has produced solid outcomes to date, indeed landing repeatedly in the top 5 in the nation in most objective return measures," a draft commission minority report stated.
Kennedy said the majority commission’s decision to push for a board of trustee model had nothing to do with a report released this week by the State Employees Association of North Carolina (SEANC) questioning how North Carolina’s highly regarded pension fund is managed.