North Carolina Treasurer Janet Cowell is asking the state Legislature to change some investment and reporting practices of the $86 billion North Carolina Retirement Systems, Raleigh.
In a letter sent Monday to legislative leaders, Ms. Cowell, the sole trustee of the pension system, asked lawmakers to implement four changes unanimously recommended by the Investment Fiduciary Governance Commission, which included four members of the Legislature.
Ms. Cowell did not ask legislators to consider changing the governance structure to a board of trustees from a sole trustee. With commission members split on that issue, those changes will need to wait until the state Legislature convenes in January 2015 for a full session. “It's clear to me that we have some conversations and some design work to do, to get some buy-in. I want to do this right,” Ms. Cowell said in an interview.
For the remaining 2014 legislative session, Ms. Cowell proposed four reforms. One would allow the investment management division to add 14 staff positions to handle more investments in-house. Some of the new positions would be assigned to risk management, Chief Investment Officer Kevin SigRist said in an interview, while he also wants to do more in-house private equity, real estate, opportunistic financing, inflation-sensitive strategies, and to eventually do more in public equities. “We continue to have a higher reliance on fund of funds than we would prefer. The real costs savings over time would be in restructuring and avoiding those,” Mr. SigRist said.
Another suggested reform would make it legally possible to disclose more information about investment practices and costs, including sunset clauses for some confidential information. “One of the challenges in North Carolina statute is that it is not very clear as to what should be provided and what should be kept confidential,” Mr. SigRist said. Codifying that into law “would just be better in everyone's mind … so it doesn't have to be subject to interpretation.”
Other recommended reporting changes include an annual third-party audit of the investment program, and an independent performance review of investment practices every four years, a practice started by Ms. Cowell in 2009 but which is not statutorily required.
