North Carolina

Overview

The North Carolina Retirement Systems is the sole state retirement system in North Carolina, administering eight retirement plans or funds:

Teachers' and State Employees' Retirement System (TSERS)
Local Governmental Employees' Retirement System (LGERS)
Consolidated Judicial Retirement System (CJRS)
Legislative Retirement System (LRS)
Firefighters' and Rescue Squad Workers' Pension Fund (FRSWPF)
North Carolina National Guard Pension Fund (NCNGPF)
Disability Income Plan of North Carolina (DIPNC)
Register of Deeds Supplemental Supplemental Pension Fund (RODSPF)

NCRS is a division of the North Carolina Office of the State Treasurer. The state treasurer is sole trustee of the assets and the treasurer’s Investment Management Division manages state pension funds at the treasurer’s direction.

Plan Design

Most North Carolina public employees participate in a defined benefit plan as their primary retirement benefit, including all participants in plans administered by the NCRS.

According to the US Government Accountability Office, 98 percent of employees of state and local government in North Carolina participate in Social Security.

Access plan design detail

Authorizing Statutes and Board Structure

North Carolina General Statutes Chapter_135/GS_135-6 establishes the Retirement System for Teachers and State Employees and its governing board.

General Statutes Chapter 128-28 establishes the Local Government Employees Retirement System and its governing board.

Details regarding the composition of these and other retirement boards is accessible via the Retirement and Investment Board Characteristics search tool located at the bottom of this page.

Fiduciary Duty/Prudence Standard

North Carolina General Statutes Chapter 147, Chapter 69 prescribes the treasurer’s authority to invest certain state funds, including pension funds. That section states in part:

§ 147-69.7. Discharge of duties to funds.
(a) The State Treasurer shall discharge his or her duties with respect to each fund or investment program held by the State Treasurer, including each of the funds, enumerated in G.S. 147-69.2 as follows:
(1) Solely in the interest of the intended beneficiaries of the fund, if any.
(2) For the exclusive purpose of carrying out the purpose of the fund, including providing benefits to participants and beneficiaries, and paying reasonable expenses of administering the fund.
(3) With the care, skill, and caution that a prudent investor would use after considering the purposes, distribution requirements, and other circumstances then prevailing.
(4) Impartially, taking into account any differing interests of participants and beneficiaries.
(5) Incurring only costs that are appropriate and reasonable.
(6) In accordance with a good-faith interpretation of the provisions of G.S. 147-69.2 and any other applicable law governing the fund.
(b) In investing and managing assets of the fund pursuant to subsection (a) of this section, the State Treasurer:
(1) Shall consider the following circumstances:
a. General economic conditions.
b. The possible effect of inflation or deflation.
c. The role that each investment or course of action plays within the overall portfolio of the fund.
d. The expected total return from income and the appreciation of capital.
e. Needs for liquidity, regularity of income, and preservation or appreciation of capital.
f. With respect to the Retirement Systems defined in G.S. 147-69.2(b)(8) and any other pension plans, the adequacy of funding for the Retirement Systems based on reasonable actuarial factors.
g. The purpose of the fund, if established.
(2) Shall diversify the investments of the fund unless the State Treasurer reasonably determines that, because of special circumstances, including applicable investment restrictions, it is clearly prudent not to do so.
(3) Shall make a reasonable effort to verify facts relevant to the investment and management of assets of the funds.
(4) Shall invest only in those investments authorized by law consistent with the provisions of Article 6 of Chapter 146 of the General Statutes.
(5) Shall, in the evaluation of an investment, or evaluation or exercise of any right appurtenant to an investment, consider only pecuniary factors [in accordance with the following]:
a. For the purposes of this section, a pecuniary factor is a factor that has a material effect on the financial risk or financial return of an investment based on appropriate investment horizons consistent with the purpose of the fund, if established.
b. Environmental or social considerations are pecuniary factors only if they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories. The weight given to those factors shall solely reflect a prudent assessment of their impact on risk and return.
(6) May, in the evaluation or exercise of any right appurtenant to an investment, reasonably conclude that not exercising such a right is in the best interest of the fund's beneficiaries.
(c) Compliance by the State Treasurer with this section must be determined in light of the facts and circumstances existing at the time of the Treasurer's decision or action and not by hindsight.
(d) The State Treasurer's investment and management decisions must be evaluated not in isolation but in the context of the portfolio of the fund as a whole and as part of an overall investment strategy having risk and return objectives reasonably suited to the fund.

Legal Protections of Retirement Benefits

Wiggs v. Edgecombe County, 632 S.E.2d 249 (N.C. App. 2006) (recognizing contractual right to rely on the terms of the retirement plan when retirement rights vest); Simpson v. N.C. Local Gov't. Employees' Retirement Sys., 363 S.E.2d 90 (1987}, affirmed per curiam, 372 S.E.2d 559 (1988) (holding that relationship between the retirement system and vested state employees is contractual). Article I, Section 19 of the North Carolina Constitution is known as the "law of the land clause" and provides that "no person shall be disseized of his freehold, liberties, or privileges, or deprived of his property, but by the law of the land." (N.C. CONST., Article 1, §19) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits

More Data

Population (2024) 11,046,024

North Carolina public pension statistics, per U.S. Census Bureau as of FY 2024
Assets	$123.7 billion
Active Members	496,811
Annuitants	361,815
Benefits Paid	$7.7 billion
Employee Contributions	$1.7 billion
Employer Contributions	$4.5 billion
Systems	One state system overseeing four retirement plans and four funds, including a disability benefits fund, that together account for more than 99 percent of public pension assets and participants in the state. There are approximately 50 small local plans providing retirement benefits predominantly for police officers.

Other Resources

History of the North Carolina Retirement System

Become A Member

Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.

What's New at NASRA: Public Pension Investment Return Assumption Brief Updated

NASRA’s latest update to standing issue briefs, Public Pension Plan Investment Return Assumptions underscores the critical role the investment return assumption plays in the financial health of public pension plans. Of all actuarial assumptions, it has the greatest impact on plan funding levels and cost. This brief traces how a decade of low interest rates and inflation, beginning in 2009, prompted many plans to reduce their long-term expected returns in line with more modest capital market projections. However, since inflation began rising in early 2021, the trend toward lowering return assumptions has largely paused. While reducing a plan’s assumed return can increase both costs and unfunded liabilities, setting this assumption is a careful, thorough process. It draws on expert input from actuaries and investment professionals and is guided by actuarial standards of practice.

Retirement System Account Interest Policies	Economic Actuarial Assumptions	Retirement and Investment Board Characteristics
Information about interest rates applied to account balances of inactive plan participants	Assumed rates of investment return and inflation	Composition and characteristics of public retirement and investment oversight boards
Mortality Assumptions	Plan Design Features	Post-retirement Employment Policies
Public retirement system actuarial assumptions for mortality	Numerous elements of retirement plan design	Policies governing return-to-work for retirement system annuitants