North Carolina’s pension system continues to underperform when compared to its national peers.

This week, state Treasurer Janet Cowell released the results of the state pension fund performance for fiscal year 2013-14. The numbers showed, despite her attempts at a positive spin, that her investment efforts continue to come in below the national median and that North Carolina’s returns were more than $1 billion behind its peers.

For the fiscal year ending June 30, North Carolina’s pension fund saw a 15.88 percent return, with assets valued at $90.14 billion. Those numbers sound pretty good, right?

The problem is, they could be – and they should be – even better.

SEANC has long advocated for the state pension system to be more closely indexed to the stock market, which saw a 24.66 percent gain this year.

Instead, Cowell continues to insist on putting more and more retirement dollars at risk by turning your hard-earned financial security over to high-risk and lower-yielding real estate and alternative investments. By her own numbers, North Carolina saw only a 12.03 percent return on real estate, a 12.9 percent return on credit strategies, and another 17.41 percent on alternatives, which includes hedge funds – all far behind the stock market.

Still, how poor is 15.88 percent?

Not only does it fall short of what Cowell could have received, it falls below most other pension plans in the United States.

Across the nation, pension funds last fiscal year saw a median return of 16.86 percent. More importantly, those with assets greater than $1 billion saw an average return of 17.44 percent. That means North Carolina essentially lost approximately $1.5 billion from what the pension could have – and should have – returned.

Of course in her press release, Cowell pointed at the size of the pension fund – 11^th largest in the country with assets totaling more than $90 billion. However, as SEANC has noted before, that is thanks to the 6 percent of each state employee’s paycheck that is contributed, as well as the General Assembly’s 9 percent.

The bottom line is that for all her pride and self-applause this week, Cowell’s record continues to be well below average. As SEANC Legislative Affairs Director Ardis Watkins said, “It’s not the size of the fund that matters. It’s the performance of the fund.”

But that’s not all.

Remember her actions in the General Assembly this year?

Not only does the state pension perform below average, but Cowell pushed – unsuccessfully thanks to SEANC – for the General Assembly to give a legislative stamp of approval to her practices of keeping secret those losing investment contracts and the hundreds of millions of dollars in fees paid to those money managers.

In our ongoing effort to improve the future financial security of hundreds of thousands of state employees and retirees, SEANC will continue to advocate for an end to the sole fiduciary model that allows the state Treasurer to continue to make such poor investment decisions, as well as an end to the secrecy that surrounds those decisions. True pension transparency is the best – and the only – way to ensure that North Carolina’s defined benefit pension fund continues to remain fully funded and well maintained.