NC treasurer touts millions in savings for state pension plan as SC manages massive pension shortfall

NC treasurer touts millions in savings for state pension plan as SC manages massive pension shortfall

CHARLOTTE, NC (WBTV) - North Carolina Treasurer Dale Folwell says he has already accomplished a key campaign promise, less than six months after taking office.

During his campaign for office in 2016, Folwell pledged to gut $100 million in fees paid to Wall Street investment funds that manage portions of the state's pension fund.

The state's pension fund totals more than $90 billion and is managed by the state treasurer, who is the sole fiduciary of the funds.

During his campaign, Folwell criticized outgoing Treasurer Janet Cowell for her decision to invest more of the pension fund's money in more risky, alternative investments. At the time, Folwell said the investments were not providing a good return and cost too much in management fees.

In a recent interview with WBTV, Folwell said he has cut more than $33 million in annual fees.

"If you multiply that by four years, we're well in excess of over $100 million of savings but we're not stopping there," Folwell said. "We just got approval to refinance almost $500 million worth of state debt, which, potentially, will save almost $50 million in interest."

Folwell said he was able to cut those fees by re-negotiating or cancelling agreements between the state and Wall Street firms that had been hired under Cowell.

Early into his time in office, Folwell described making a series of short, rapid-fire phone calls he was having with fund managers to determine whether to keep the retirement system's money invested with those companies.

"We've received some pushback but, to their credit, some of them have come to us voluntarily. Before I got to the 175th phone call, people heard about how the first ten went and they've actually offered to cut fees on their own," Folwell said.

Folwell said he was taking steps to re-structure the types of investments in which the pension fund money is invested now so that North Carolina's fund does not end up with the same problem that lawmakers and state leaders in South Carolina are currently grappling with.

In April, South Carolina Governor Henry McMaster signed legislation aimed at shoring up the Palmetto State's $24 billion hole in its pension fund.

The new bill will require local and state agencies whose employees draw from the pension plan to increase contributions into the pension fund, a cost that will ultimately be passed along to taxpayers.

"Unfortunately, the only means available today to immediately begin reducing the state's unfunded liability is to increase employee and employer contributions for the South Carolina Retirement System and Police Officers Retirement System," McMaster said in a statement at the time of the bill's signing.

For his part, Folwell said he is focused on simplifying the types of investments used to house the state's pension fund, including by moving away from alternative investments and re-investing that money into bonds, which are managed by the state.

"We have way too many money managers who have underperformed their benchmark index and have been charging the citizens of North Carolina way too much," Folwell said.

"We're reducing that complexity and making sure that value stays in the pension plan, not just for the benefit of the members of that pension plan but as your viewers very well know, any time that we save a dollar in interest, save a dollar of fees, generally speaking that's a dollar that's
not going to have to be appropriated to the pension plan, which can go to build roads, build schools and all the other important functions of state government," Folwell said.

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