North Carolina’s Teachers’ and State Employees’ Retirement System (TSERS) reported a funded level of 90.4%, while the Local Governmental Employees’ Retirement System (LGERS) was 95.2% funded through Dec. 31, 2016, making the Tar Heel state one of the five highest-funded state pension plans in the US, according to S&P Global.
“We are very pleased with the valuations relative to our peers,” said North Carolina State Treasurer Dale Folwell in a statement. “However, given the fact that life expectancy is increasing and interest rates are at historic lows, we must focus on not just preserving and strengthening these plans, but sustaining them for the future as well.”
Annual valuations on the overall percentage of funding for each pension plan directly impact the amount of money employers must contribute. Each October, the boards of trustees receive valuations for each of the seven state-sponsored retirement, disability, or death plans managed by North Carolina’s Department of State Treasurer (DST).
“Even with our assumptions that in aggregate are more conservative, the North Carolina Retirement Systems continue to be well-funded relative to our peers,” said Steve Toole, executive director of the Retirement Systems, a division of DST.
The DST said that the high funded status of TSERS and LGERS is a direct result of the state’s general assembly fully funding the recommended contribution requirements, assumptions that tend to be more conservative than other similar public systems, and a funding policy that aggressively pays down unfunded liabilities over a 12-year period.
“We’re thankful that the general assembly, through North Carolina taxpayers, has fully funded the pension plus millions more,” said Folwell.
Confirming North Carolina’s high funded status is a new report from S&P Global that says proactive management and funding discipline have placed the state among the five highest-funded state pension plans in the country. S&P Global gave the North Carolina Retirement Systems an AAA/Stable rating, citing the state’s ability to effectively manage pension liabilities over the long term.
“While the long-term outlook for most US state pensions remains sluggish, we believe that these five states’ exposure to weak market returns and growing pension costs are significantly limited and manageable, improving our view of their overall credit quality,” said S&P in its report, adding that North Carolina is “positioned to remain at very healthy funding ratios through strong funding discipline.”