Now compare the investment results ending June 30, 2016:
Now consider this, the difference between 7.7% and 6.0% returns amounts to $10 Billion in lower returns over just the past 5 years for North Carolina's $90 Billion pension fund. That $10 Billion shortfall will need to be made up by North Carolina tax payers and lower payouts to retirees. The result is, taxes will need to be higher and less money will be available for services such as education and healthcare. Considering North Carolina's entire state budget is just $22 Billion each year, the $10 Billion in lower pension returns is a silent fiscal catastrophe the burden of which will be felt for generations.
It is brutally clear, that the North Carolina pension should aim to emulate Nevada. North Carolina needs to quit investing in expensive investment strategies that do not work. North Carolina needs to follow Nevada's example and invest 100% in passive indexed strategies and quit squandering money on private equity, real estate, hedge funds, commodity funds, and other expensive actively managed investments.