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North Carolina State Pension Hits Record $108.5 Billion Market Value

The fund’s portfolio has added nearly $15 billion in value since markets tumbled in March.
By Michael Katz

North Carolina’s state pension fund reached a record-high market value of approximately $108.5 billion as of Aug. 28, marking an increase of 16%, or $14.9 billion, since the markets tumbled in March due to the COVID-19 pandemic, according to data provided to CIO by the state treasurer’s office.

After losing 6.5% during the first quarter, the pension fund rebounded with a 6.38% return during the second quarter, followed by gains of 2.8% and 2% for July and August, respectively. As of Aug. 28, the fund’s investment portfolio had returned 4.4% for the calendar year to date and 4.9% for the fiscal year to date.

“A 6.38% return during one of the most volatile markets I’ve ever seen is a testament to the great work done here by our investment management team,” North Carolina State Treasurer Dale Folwell said in a statement. “We don’t have a crystal ball and we don’t gamble with the money of those who teach, protect, and otherwise serve the people of North Carolina.”

Over the past couple of years, Folwell has shifted approximately $11 billion worth of equities in the fund to fixed-income investments. 

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“We continue to focus on cutting costs to maximize the value we get from our investments,” Folwell said. “We cannot let Wall Street drag the plan into risky and dangerous investment schemes that increase fees and jeopardize the solvency of a plan that exists to benefit those that teach, protect, and serve.”

While many of the world’s largest pension funds took a big hit when the global markets tumbled in March, North Carolina’s state pension fund fared better than its peers. In a March interview with CIO, Folwell attributed the fund’s ability to withstand the tumbling markets to conservative investing strategies from his investment team. And the state pension fund’s high funded level is a major reason why it has been able to take a conservative approach, he said.

“This has been a very conservatively managed plan, and, for the most part, as our equities have declined, our fixed-income portfolio has gone up to offset much of that,” he told CIO.

According to Moody’s Investors Service, North Carolina’s Retirement Systems, which includes state and local employees, is the best funded plan in the US in terms of its adjusted net pension liability. And, according to the Pew Charitable Trusts, North Carolina “shows especially well” in stress test analysis due to a strong funding policy and funding levels.

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Home > News > Pensions > Ohio Teamsters Pension Fund Seeks Benefits Reduction
Pensions

Ohio Teamsters Pension Fund Seeks Benefits Reduction

The Building Material Drivers Local 436 pension plan is expected to run out of money by 2023.

 

By Michael Katz


The Teamsters’ Building Material Drivers Local 436 Pension Fund of Valley View, Ohio, has applied to the Treasury Department for a reduction in benefits under the Multiemployer Pension Reform Act of 2014 (MPRA). The pension’s trustees say that without the cuts, the fund will run of money to pay benefits by 2023.

Under the board of trustees’ proposed reduction plan, the benefits of all plan participants would be reduced to 110% of the Pension Benefit Guaranty Corporation (PBGC) guarantee, which is the maximum reduction in benefits allowable by law.

Excluded in the benefits reduction under federal law are disabled participants and their beneficiaries, and participants who are at least 80 years old on May 31, 2021. The benefits of participants who are at least 75 years old as of that date, and their beneficiaries, are partially protected, and the older the person is, the less the benefits can be reduced.

According to the application, the PBGC’s guarantee is equal to 100% of the first $11 of the plan’s monthly benefit rate, plus 75% of the next $33 of the monthly benefit rate, multiplied by the participants’ years of benefit service.

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“The proposed suspension will remain in effect indefinitely and will not expire by its own terms,” said the fund in its application. “These reductions, combined with a partition, are projected to keep the plan from running out of money.”

The pension fund details in its application how the proposed reductions would affect various participants.

For example, a member who has 32 years of credited service who will be 70 years and 5 months old as of May 31, 2021 would see their $2,148.24 monthly benefit reduced to $1,258.40 beginning on May 1, 2021, under the proposed reduction plan. However, it notes that without a reduction, the plan will run out of money and their benefit would be reduced to $1,144.00 once the PBGC took over.

A plan member who will be 58 years and 9 months old as of May 31, 2021, with 30.07 years of service would have their current monthly benefit of $1,011.92 reduced to $927.70, which would be cut even further to $843.37 if the plan is not accepted, according to the pension’s trustees.

And a participant who will be 41 years and 9 months old as of May 31, 2021, with 12.811 years of service, who would start receiving retirement benefits on Sept. 1 2044, would see their monthly benefit reduced to $503.80 from $794.53 under the plan, and to $458 without the plan.

The Treasury Department is currently reviewing the application to see whether it meets all of the legal requirements under federal law, and has until February 10 to make a decision. The pension fund’s application is the only one currently under review by the Treasury.

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Treasury OKs Benefits Cuts for Ohio, NY Union Pensions

 

 

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