North Carolina should put aside at least $100 million per year to ensure the long-term sustainability of its pension fund and reduce its pension debt, state Treasurer Dale Folwell suggested in a recent report released by the Debt Affordability Advisory Committee.
“This is not political or emotional, but mathematical,” Folwell said in a statement. “We have almost $40 billion in unfunded pension and health care liabilities. That bill will come due much sooner than people realize. We’re doing what’s necessary at this point in the state’s history because others didn’t.”
The $100 million would be deposited into the state’s Unfunded Liability Solvency Reserve through fiscal 2025 in an effort to reduce its unfunded liabilities and to support pensions and other post-employment benefits like healthcare. While that figure is a drop in the bucket compared to North Carolina’s total pension debt, it’s still a responsible first step on the part of the treasurer.
Folwell also announced in February that the North Carolina Retirement Systems Fund would lower its assumed rate of return from 7% to 6.5%. It was the third time in four years that number was reduced, and represents the largest percentage decrease during that time, according to Carolina Coast Online.
North Carolina will likely have to keep lowering its investment assumption— the recent shift was actually just changing their inflation assumption.