North Carolina Retirement Systems, Raleigh, won final legislative approval to increase its share of alternative investment assets. The Senate voted 43-3 late Thursday to approve legislation, passed Wednesday by the House, that is now headed for the governor's signature.
State Treasurer Janet Cowell, the pension fund's sole trustee, pushed for the legislative change.
The legislation lets the pension fund raise its overall alternatives allocation to 35% from the current 34%, less than the 40% Ms. Cowell originally sought.
Acknowledging concerns about increased investment risk, Ms. Cowell said in a statement, “The risk in its most fundamental sense is for our fund to not be able to pay out promised pensions over the long term. This legislation improves our ability to protect and grow the pension fund while keeping its long-term cost to the taxpayers at a reasonable level.”
The legislation also increases limits in specific categories, with new caps of 10% on real estate, 8.5% on hedge funds, 8.75% on private equity and other private investments, and 7.5% on inflation protection and 7.5% on credit strategies.
The $81.1 billion pension fund's current asset limits on alternatives are 10% real estate, 6.5% hedge funds, 7.5% other alternatives including private equity, 5% inflation-protection portfolio and 5% credit strategies.