Despite economic uncertainty NC Treasurer says state pension fund remains strong

NORTH CAROLINA (WBTV) - More people across the state working in the public sector are retiring or leaving government jobs for other careers, it’s a problem that has been addressed by Governor Roy Cooper and employers across the state.

The troubles recruiting employees and retaining them is a challenge for several reasons but it also presents a strain on North Carolina’s state pension fund because once people quit or retire they no longer pay into the plan and many start receiving their benefits.

It’s a situation that State Treasurer Dale Folwell and staff within the state’s retirement office acknowledge.

“There are now less people paying into this pension plan than are not because of the huge number of retirees,” Folwell said.

COVID-19 caused what has come to be known as ‘The Great Resignation’ and that has played a role in retirements and people leaving, but that’s not the only factor Folwell cites.

“Even before COVID people were retiring earlier and living longer and so this doesn’t have a lot to do with the employment crisis and the vacancy crisis … But it is a mathematical fact, especially for your female viewers, who are now expected, if they go into public service out of college, they’re now fully expected to earn more retirement checks than paychecks,” he said.

Related: State employee organization breaks ties with union amidst employment ‘crisis’

Despite the increased withdraws on the fund and the current uncertainty in the national and global economy Folwell said it remains strong.

“Even given that, and even given the fact that we’ve had the most stock market and bond market volatility of our lifetimes, even given the fact that that our plan is paying out nearly $7 billion per year in gross benefits, even given all that, it still remains one of the best funded pension plans in the United States, if not the world,” he said.

With nearly $7 billion in payouts each year the pension fund isn’t just strong Folwell said, it’s massive.

“This pension plan by itself is over four times the size of the North Carolina budget, four times larger, and is the 27th largest pool of public money in the entire world,” he said.

Despite the economic uncertainty Folwell said state employees pensions are safe and the investments made by those tasked with managing the fund have adapted to downturns in the market in order to ensure its security.

“It held up last year because leading into 2022 this plan had the highest levels of cash equivalents and the shortest duration of bonds in the history of North Carolina. In the stock in the bond market, the only two places that you could have hidden is cash equivalents and short duration of bonds,” Folwell said.

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