N.C. Pension May Be Allowed To Boost Alternatives

Jul 19 2013 | 9:29am ET

A North Carolina pension may soon get the greenlight to up its investments in alternative assets beyond the current 34% limit.

State Treasurer Janet Cowell, the sole trustee of the $81.1 billion North Carolina Retirement Systems, is seeking legislative change that would allow the increase. On Wednesday, an N.C. House committee agreed to the change by a vote of 14-13. The Senate had approved the change on May 6.

The two chambers disagree on the limits to be imposed on the pension's allocation to alternatives; the Senate set it at 40% while the House set an overall limit of 35% with higher limits for some categories. If the two agree on the House version, the bill would go immediately to the governor for signing. If they disagree, there will be further negotiations.

“As the treasurer told the committee this morning, diversification is key to managing long-term risk to the pension fund, and ultimately taxpayers,” spokesman Schorr Johnson told Pensions & Investments in an e-mail. “The decline in the pension fund's bond portfolio over the last two months points to the importance of diversification and the need for passage this session.”

The pension fund's current asset limits on alternatives are 10% real estate, 7.5% other alternatives, 6.5% hedge funds, 5% inflation-protection portfolio and 5% credit strategies.

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