Sunday, September 22, 2013

North Carolina Retirement System Returns Lag Median Pension Returns BADLY

The North Carolina Retirement System (NCRS) return of just 9.5% for the fiscal year ending June 30, 2013 lagged the median pension plan very badly according to an analysis by Pensions & Investments Magazine and Wilshire's Trust Universe Comparison Service (TUCS).  The median large public pension earned returns of 12.6% for the year ending June 30, 2013, or 3.1% higher than NCRS.  Considering the NCRS plan is approximately $81 billion, the 3.1% of under-performance translates into $2.5 billion in lost returns for 2013.  

Median Pension Return = 12.6%
NCRS 2013 Return = 9.5%
Difference = -3.1%
NC Tax Payer Cost = $2.5 Billion 

Striving for average usually isn't something to shoot for.  But, from a North Carolina tax payer's perspective, at this point I would be thrilled with average returns. The $2.5 billion in lost returns also translates into an opportunity cost of $250 for each man, woman, and child in North Carolina based on a population of roughly 10 million people.  Thus, if you have a typical family of four, your share of the shortfall is a cool $1,000.  You'll fund the shortfall in the form of higher taxes.    

You can send your complaints to North Carolina Treasurer Janet Cowell by clicking here.

You will find North Carolina Retirement System return in the table of the Pensions & Investment Magazine report by clicking here (hint: look at the very bottom of the table).

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