The state’s pension boards
voted unanimously on Thursday to lower the investment return assumption for the North Carolina Retirement Systems. Their vote lowers it from 7.20 percent to 7 percent. The Teachers' and State Employees' Retirement System (TSERS) and Local Government Employees' Retirement System (LGERS) Boards discussed how that action would place the assumption more in line with actuarial expectations of what the median 20-year and 30-year returns will be in light of the state’s investment portfolio -- with Treasurer Dale Folwell noting that “lowering this assumption will provide the best opportunity to meet the state's long-term obligations as well as maintain its AAA bond rating.”
The reduction will occur immediately; however, any potential impact of the change on employer contribution rates will be phased in over a three-year period. Municipal employers that participate in LGERS and provide the pension benefit to their employees support the system financially through their employer contributions to ensure the system is well-funded and can support what is owed to employees and retirees. The employer contribution is one of only three sources of pension plan funds -- contributions made by employees, contributions made by employers, and investment gain -- so when a retirement system lowers its expected investment gains, additional funding for the pension system comes from the employer through its contributions.
The boards’ action to lower the investment return assumption will not have an impact on the already approved FY 2018-19 employer contribution rates for local government employers. The LGERS Board voted in January to increase the employer contribution rate to 7.75 percent for general employees and 8.50 percent for law enforcement officers for FY 2018-19, which was in line with the Employer Contribution Rate Stabilization Policy (ECRSP) that the board
approved in 2016. Per the policy, LGERS employer contribution rates increase 0.25 percent annually through FY 2020-21. The League continues its support of the ECRSP because it makes employer contribution rates more consistent, provides budgeting certainty to local governments, and supports the financial integrity of the system. Local government employers should receive letters from the state treasurer’s office by next week that will clearly list information regarding their specific FY 2018-19 employer contribution rate, including information about the death benefit contribution portion that isn’t consistent across employers.
In other news,, Council Member Allen Buansi of Chapel Hill was sworn-in to the LGERS Board on Thursday, serving in the capacity of “municipal official” and appointed by Gov. Roy Cooper.
A PDF from the treasurer's office includes Information regarding the investment return assumption as presented to the TSERS and LGERS boards. The
treasurer's website has all documents from Thursday's meeting. Contact:
Sarah Collins
Six initial partnerships are on deck with Hometown Strong, Gov. Roy Cooper's rural-focused economic improvement program, according to the governor's office. Burke, Edgecombe, Lenoir, Madison, Pasquotank, and Robeson counties will be the first in what coordinators say will bring "local leaders together with officials from across state government to remove barriers, increase communication and identify long-term opportunities and needs." An "action team" of representatives from state cabinet agencies are slated to hold roundtable discussions with these partners, "creating new templates for leveraging the resources of state government to benefit rural North Carolina." Hometown Strong facilitators consulted or coordinated with numerous groups, including the League, ahead of the rollout. More partnerships will be announced, according to a press release. More information is at hometownstrong.nc.gov.