State pension funds lost $4B in latest quarter

Raleigh, N.C. — State Treasurer Janet Cowell said Tuesday that North Carolina's public pension funds lost about $4.1 billion in the first three months of 2009.

The negative 6.4 percent return, which left the funds valued at $55.9 billion, was about average for pension funds during the quarter, Cowell said.

About 41 percent of the funds are invested in stocks, with another 47 percent in bonds, 6 percent in real estate and the remainder in other investments.

The funds lost $17 billion in value last year, and Cowell urged lawmakers to put $358 million into the system over the next two years to make up for the losses and for years of small state contributions.

The state contributed 8 to 10 percent of annual payroll to the retirement system in the 1980s and 1990s. In recent years, that contribution has been between nothing and 3 percent because investment gains covered the system's obligations.

A projected $3 billion budget deficit makes it unlikely lawmakers will put as much into the pension funds as Cowell suggests.

Still, she said, the funds have enough money to make payments to retired state workers and teachers.

“North Carolina has available capital and is well-positioned to take advantage of future investment opportunities,” Cowell said in a statement. “I strongly support legislation currently in the General Assembly that would help mitigate pension fund losses by providing the investment team with the flexibility and tools to increase portfolio returns and better manage risk.”