As North Carolina Retirement Systems officials celebrated reaching $90 billion in assets this month, they also prepared to look more like their peers when it comes to internal asset management.
Until now, the ninth largest U.S. public pension fund by defined benefit assets came in 13th among state pension plans for assets managed internally, according to Pensions & Investments data as of Sept. 30.
But in a budget bill signed into law Aug. 7 by Gov. Pat McCrory, state Treasurer Janet Cowell, sole trustee for the Raleigh-based state pension system, won approval for 10 of the 14 new investment staff positions she had sought. It also gives the treasurer's office some flexibility in hiring procedures and paying market rates for salaries. Legislators agreed with Ms. Cowell's argument that managing more investments internally would make the overall investment program more cost-effective. The personnel costs of the new positions would be returned 10 times over, Ms. Cowell projected, despite the pension system already being in the 40th percentile of peer funds in total investment management costs, according to its investment consultant, Hewitt EnnisKnupp.
The priority after filling the positions will be to review funds-of-funds contracts “and other legacy relationships” for possible restructuring or termination, said Schorr Johnson, spokesman for Ms. Cowell.