Retired state employees could soon see their pension benefits increase. State Treasurer Brad Briner told legislators Tuesday that more profitable pension investments could lead to long overdue cost-of-living adjustments.
"We've been promising a 6.5% rate of return but have failed to deliver on that promise for too long," he said during a legislative oversight hearing. "We've held the dubious distinction of being either 49th or 50th in our nation for pension returns over time, and that just isn't acceptable."
Starting in January, pension investments will be controlled by a newly appointed committee of experts known as the N.C. Investment Authority. The committee includes Dan Ward, the former chief investment officer for the Virginia Tech Foundation; Mark Roberts, CIO for Ironsides Asset Advisors; Stephanie Lynch, former CIO for the Duke Endowment; and Sallie Shuping-Russell, a former managing director of BlackRock Private Equity Partners.
"With their impressive track records, we're in good hands," Briner said.
Briner says he's already overseen billions of dollars in additional returns. He plans to release third-quarter numbers soon.
"An 80-year-old should have a very conservative portfolio, and many people think that a pension system, because they send checks to 80-year-olds, should also," he said. "But the truth is, the pension system will be around for hundreds of years. So we have the benefit of time to allow compounding to work in our favor. We can allow some volatility into the program."
Briner argues that the pension fund set aside too much money in cash under previous state treasurer Dale Folwell.
"Those improvements give the new Investment Authority a good place to start their work on Jan. 1, while we've already deployed a material amount of the excess cash," Briner said.
