State pension fund built for hard times

These are designed to be the good times for North Carolina's public pension fund.

The roughly $70 billion fund for retired state government workers – among the largest in the country – is also more averse to risk than many of its peers. When the stock market soared in recent years, it lagged behind with a heavy tilt toward bonds and other conservative holdings.

Now that turmoil has overtaken Wall Street, officials with the State Treasurer's Office say they expect to see the benefits. They say pensioners shouldn't worry about their savings.

“This is actually what we manage for – downside protection,” State Treasurer Richard Moore said this week on CNBC. “And we've done well. Our treasuries, our other long bond positions, have appreciated in value roughly as much as the S&P 500 has gone down.”

That doesn't mean, though, that there won't be losses.

The fund faces the potential for hundreds of millions in losses associated with stocks such as insurer AIG, which agreed to a federal rescue package this month, and investment bank Lehman Brothers, which filed for bankruptcy. The pension fund also invests in hedge funds and real estate funds, which are considered riskier and more difficult to value.

Moore's office has given few details about recent losses, arguing that the numbers change daily, can be difficult to measure and might cause undue concern among pensioners.

“I don't want to get into a spot where people are trying to take their money out of the pension system because they're scared,” said spokeswoman Sara Lang.

Lang said the pension fund's staff is talking more often with money managers and others to keep abreast of changes in the markets.

The pension system provides benefits to 820,000 current and retired employees of state and local government, including teachers, prison guards and firefighters.

The State Employees Association of North Carolina says it is not satisfied with the amount of information coming from Moore's office.

The 55,000-member group sued Moore, a Democrat who was running for governor, for access to public records this year.

A judge dismissed the lawsuit and SEANC was forced to reimburse Moore's office for legal fees.

“We really, to this day, don't know where everything is and how much it's making,” said SEANC's lobbyist Ardis Watkins. “I think (retirees) have reason to be concerned.”