N.C. pension fund down 12%

The value of North Carolina's public pension funds has fallen by at least $6 billion since July 1 as the stock market has plunged, but retirees don't need to fret about their government income, State Treasurer Richard Moore said Monday.

The state's public employee retirement system remains sound, Moore said, despite a 12 percent loss on investments for the year ending Sept. 30.

“I think most people would feel pretty good if their personal portfolios were down 12 percent over that period of time,” the treasurer said at a news conference designed to allay fears for current and retired workers.

“The retirees out there can rest assured that we've got plenty of money … we can lay our hands on to make their retirement checks come every month like they're supposed to,” Moore said.

The pension funds for 820,000 state and local government employees, teachers, emergency officials and retirees, were valued at around $66 billion as of Sept. 30, compared to $72 billion on June 30 and $78 billion last September, according to Moore's office.

For the year ending Sept. 30, North Carolina's retirement system had a 24 percent loss on its equity returns, compared to a 3 percent increase in bonds. The plan value is even lower than $66 billion because of October's stock market freefall, but Moore didn't provide an amount.

Moore said all the Sept. 30 figures were estimates because it takes time to finalize quarterly returns. The treasurer's office doesn't keep a daily monetary value on its holdings, like a mutual fund, because of low staffing levels and because they are focused on the long term.

“Why would you devote resources of time and money to a specific tool that you don't need to do your job?” he asked. “We're 30-year investors. We act like 30-year investors.”

The State Employees Association of North Carolina, a frequent critic of Moore and his sole authority to direct investments, said it was disconcerting that Moore couldn't provide more updated figures.

“State employees have every reason to watch their retirement system returns more closely than ever,” said Ardis Watkins, the association's legislative affairs director.

The plan still outperforms other government pension funds and remains fully funded, Moore said, meaning there is money available to pay off all retirees. Only a handful of government pension funds nationwide are fully funded.

“We have short-term losses, but those losses are smaller than most funds of our size because of our conservative asset allocation,” Moore said. For example, the Massachusetts public pension fund has lost 15 percent during 2008, he said.

This restrained philosophy of investing less in stocks and more in fixed-income securities such as bonds compared with other public pension funds tempers not only losses but gains.