NC pension fund gains as Social Security insolvency concerns loom

North Carolina’s public pension fund posted a strong year, earning an estimated $17 billion and returning 12.4% during the year ending June 30.

The report from the North Carolina Investment Authority (NCIA) chaired by State Treasurer Brad Brinerwas presented in a July 30 joint meeting of the Teachers’ and State Employees’ Retirement System and Local Governmental Employees’ Retirement System trustees. The gains strengthen the retirement system serving teachers, state employees and other public workers.

“The main message here is we’re closing that gap, which is one of our objectives over time, to materially and expeditiously improve the returns on the retirement system,” NCIA chief investment officer Kevin SigRist explained to the trustees.

In an interview after the meeting with Carolina Journal, Briner said even a stronger state pension cannot make up for a major reduction in federal Social Security benefits. According to a new report from the Committee for a Responsible Federal Budget, Social Security trustees project that the federal program which pays retirement and survivor benefits, will exhaust its reserves in six years. That would not end benefit payments, but continuing program revenue would cover only about 78% of scheduled benefits, leaving a 22% shortfall unless Congress acts.

While he believes Social Security’s financial problems are serious, he does not expect Congress to allow benefits to be cut because of the political consequences.

“There’s just no real math where the state could make the retirees whole from a 22% Social Security cut,” Briner told Carolina Journal after the July 30 meeting of the state and local retirement-system boards.

“But no one’s going to let this happen,” Briner added, saying lawmakers on Capitol Hill would likely act under intense pressure by either adjusting the eligibility age or the inflation index used to calculate annual benefit increases.

The Committee for a Responsible Federal Budget report proposes those same two policy changes to head off insolvency, but also points to collecting more in payroll taxes or increasing the amount of income subject to those taxes.

While the state pension program and federal social security programs are funded and administered separately, they serve many of the same people. More than 20% of North Carolina’s population, 2.4 million residents, collects federal Social Security, up from 18% in 2010.

state pension plan grows

At the July 30 meeting, SigRist told trustees that the state pension fund had earned approximately $17 billion during the previous year. The fund, valued at $147.4 billion in May, returned an estimated 12.4% after fees.

Public equities drove much of the gain, returning 21.9%.

North Carolina’s recent performance has also moved closer to that of other large public pension funds. Its one-year return before fees was 12.7%, compared with an average of 13.2% among its large peers.

The state still trails the peer average over longer periods. Its five-year annualized return was 5.8%, compared with 6.9% for the average large public pension fund. But NCIA’s presentation showed that the state’s relative performance improved during 2025 and the first half of 2026.

NCIA is also beginning to reduce some investment risk after the strong stock-market gains. Briner said current returns on relatively safe investments allow the state to lower risk while still pursuing the pension system’s required return.

“At this stage in the economic cycle, and given how much the stock market in the US in particular has risen, this is why we’re starting to reallocate a bit and take some money off the table,” SigRist said in the meeting.

The General Assembly created NCIA through the 2025 State Investment Modernization Act. The five-member board, chaired by the treasurer, replaced the previous system in which the state treasurer served as the sole fiduciary over state investments. The authority manages pension investments, but neither NCIA nor the state government controls Social Security.

“Social Security is a lot bigger,” Briner said. “So any cut to Social Security, we would have to more than double the increase in the pension to make our retirees whole.”

“We got the math wrong 70 years ago”

Many public employees receive Social Security in addition to a state or local pension, although coverage varies by employer and position. The effect of a federal benefit reduction would also vary. Retirees who depend heavily on Social Security would face greater pressure than those with pensions, retirement accounts or other sources of income.

For younger workers, Briner said the uncertainty underscores the importance of saving through supplemental retirement plans rather than relying entirely on Social Security or a pension.

“I think you need to take responsibility for your retirement,” he said.

Speaking more broadly about the assumptions behind government retirement programs, Briner said previous generations promised benefits without fully accounting for their long-term costs.

“We got the math wrong 70 years ago, and we’re still kind of dealing with that,” he said.

“The only way to deal with that is to make the next generation pay, and that’s essentially what we’ve done, unfortunately,” Briner added.

Briner also praised Trump Accounts, a new type of individual retirement account for children. Eligible children born from 2025 through 2028 may receive a one-time $1,000 federal contribution, but the accounts do not address Social Security’s current financing shortfall. Briner said their value is in helping young Americans build private savings and giving them a financial stake in the economy.

“I think it’s a fantastic idea,” he said, adding,“The Trump Accounts accomplish the same thing without touching Social Security.”

He also commended Michael and Susan Dell’s $6.25 billion charitable commitment to expand the reach of the accounts.

administering NC retirement system

The July 30 meeting also focused on improving the administration of North Carolina’s retirement systems.

The retirement boards authorized a new employee to oversee the state’s governmental Social Security coverage responsibilities. That work includes maintaining records, helping public employers determine which workers are covered and coordinating with federal agencies.

The boards also authorized up to six additional retirement counselors as demand for assistance continues to grow. Their data shows that average monthly call volume at the Retirement Systems Division’s Counseling Center increased 17% between 2024 and 2025. In March, callers waited an average of more than 25 minutes, and approximately 30% hung up before receiving assistance.

State officials are also working to modernize ORBIT, the computer system used to manage pension records and online services for members.

“The big state government software projects are notorious, and we’re determined not to be one of those poster children,” Briner said.

Congress still has several years to address the projected Social Security shortfall, but federal officials have been warning about the program’s long-term imbalance for at least 35 years. In 1991, Social Security’s trustees projected that the combined trust funds would be exhausted in 2041.

In the meantime, North Carolina’s pension fund is showing stronger results, while Briner is urging workers to supplement those public benefits with savings of their own.

“NC pension fund gains as Social Security insolvency concerns loom” was originally published on www.carolinajournal.com.