North Carolina’s governor has signed into law the 2025 Investment Modernization Act, which shifts investment decisions for the $127 billion North Carolina Retirement Systems from the state’s treasurer to a new five-member board.
The creation of the North Carolina Investment Authority is intended to increase investment returns from its portfolio, which State Treasurer Brad Briner said “has underperformed for years.”
Briner, who will chair the investment committee said, prior to this law, North Carolina was one of only three states where the investment decisions lie solely with the state’s treasurer.
“This process will be stronger when more voices are involved.” Governor Josh Stein said in a statement.
According to the text of the act, the Investment Authority will be part of, but independent from, the control of the state treasurer. Among some of its eligibility rules, the board members, other than the state treasurer who will be an ex officio member, are not allowed to hold any other public office in North Carolina, they must have “expert knowledge of investments” and a minimum track record of 10years of experience managing a pension, endowment, or in other relevant investment roles.
Meanwhile, the authority’s CIO must receive votes from a majority of the board to be appointed, and must have “expert knowledge of investments” and a successful track record of at least 15 years managing pension, endowment, or other large asset manager’s investments. Although the term will be limited to five years, the CIOs will be eligible for multiple terms without interruption and can be removed from office by the board.
One of the new board’s members will be appointed based on the recommendation of the General Assembly’s Speaker of the House of Representatives, with another appointed by the General Assembly based on the advice of the Senate’s President Pro Tempore. Another will be appointed by the governor, with a fourth board member appointed by the Treasurer.
The law also requires the board to provide a monthly report that includes the performance of all investments, and the market value of each investment program, deposits, or withdrawals. The report must also contain rate of return, net of all fees, and expenses for various time periods, including benchmark comparisons. It is also expected to include the asset allocation of each investment program and compliance with any statutory limitations or limitations, or those set by the board.
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