North Carolina's public pension funds saw a combined return of 6.38% on investments during the second quarter of this year, according to state Treasurer Dale Folwell.
The pension fund, formally the North Carolina Retirement Systems, contained assets valued at $103.9 billion on June 30, up $5.6 billion from the end of the first quarter of 2020. The value is net of fees and expenses, including paying $1.5 billion in gross benefits during the three-month period.
As of Aug. 14, the fund was valued at $107.3 billion. That exceeds a high of $106.9 billion in February, which was prior to the state's COVID-19 shutdown.
“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,” Folwell said in a statement. “We’ve maintained the conservative investment strategies of previous state treasurers, allowing us to minimize losses during the down market, and to also see substantial gains when the market rebounded."
As the ninth-largest public pension fund in the country, North Carolina's system is comprised of five pension plans. Collectively, the plans have 950,000 members and include teachers, state employees, local governments, firefighters, and police officers.
Moody's Investors Service, which rates the state's general obligation bonds AAA with a stable outlook, said in an August 2019 credit report that North Carolina's "very strong credit quality" includes a low pension burden.
North Carolina's adjusted net pension liability, or ANPL, "is the lowest of any state when compared to own-source governmental revenue," the report said. The ANPL is Moody's measure of the government’s pension burden and reflects adjustments to improve comparability of liabilities.
Moody's said the state "takes a very proactive approach" to addressing its pension and liabilities associated with other post-employment benefits.
Moody's also noted that in 2018, Gov. Roy Cooper signed the Unfunded Liability Solvency Reserve Act into law, which established a reserve to address the state's unfunded pension and OPEB liabilities.
North Carolina's GOs are also rated triple-A by Fitch Ratings and S&P Global Ratings. Both have stable outlooks and lauded the state for its well-funded pension system in rating reports last year.
