PW special report: NC treasurer’s love for cash in the pension fund hobbled returns during the stock market boom  

Key takeaways:
* The pension fund holds much more of its money in cash than other comparable state pension funds and more than its allocation policy suggests. State Treasurer Dale Folwell routinely overrides the policy to prevent “rebalancing.”
* Folwell emphasizes steeling the pension plan against stock market downturns. That’s led to the plan missing out on the big stock market gains of the last few years. Returns for the state pension fund are far lower than comparable public pension funds.
* Folwell repeatedly liquidated stock to shift money to bonds and cash.
*He has lowered the pension fund’s assumed rate of return in stages, which means the state and local governments have had to increase their contributions.

State Treasurer Dale Folwell addresses members of the NC Council of State on August 2, 2022. (Photo: Screen grab from video stream)

State Treasurer Dale Folwell refers to himself as the “Keeper of the Public Purse.” And since he was elected to the job that includes managing pension funds for state and local government employees, Folwell has been stuffing that purse with cash. 

Public pension investments are a complex mix of domestic and international stocks, private equity, real estate, bonds and commodities. Under Folwell’s direction, the pension fund holds more of its money in cash than the department’s own guidelines direct, and has considerably higher cash holdings than similar public pension funds. The department’s own reports show cash was a drag on returns when the stock market was booming.  

North Carolina’s pension fund is among the 10 largest public pensions in the country. None of the other nine holds close to as great a proportion of their assets in cash as North Carolina does, according to their most recent financial reports.  

In terms of its value compared to how much it owes current retirees and the value of accrued benefits for active workers, North Carolina’s…

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