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North Carolina Pension Disclosure Bill Fails to Satisfy Critics

June 18 (Bloomberg) -- North Carolina would release information about its $87 billion pension fund’s private-equity investments after five years, according to a bill under consideration in the legislature.

The records are now kept secret in perpetuity. A House of Representatives committee today approved the measure to improve disclosure, and also cut the time that records could be kept secret years from the original 10 years the bill proposed. The legislation now goes to the appropriations committee.

Representatives for public workers, who contribute 6 percent of their salaries toward their retirements, said the time limit remains too long for workers to now know how their money is invested or to recover losses if there is fraud.

“The bill enshrines secrecy,” said Ardis Watkins, legislative affairs director with the State Employees Association of North Carolina, in a phone interview.

Controversy about disclosure has risen in North Carolina and other states as they expanded into alternative investments that include real estate, hedge funds and private equity. The firms that provide the investments often insist on secrecy because they consider information about their strategy to be trade secrets, Stephen Ross, a Burlington Republican who sponsored the bill, said during the hearing.

North Carolina, which has the third-best-funded state pension in the U.S. according to Morningstar Inc., has about $18.7 billion of alternative investments, or 21.5 percent of its investment fund.

The state paid $416.2 million in fees in the 2012-2013 fiscal year, according to Treasurer Janet Cowell’s annual report. A footnote says that it didn’t disclose all fees, such as those held in fund-of-fund investments.

Cowell, a Democrat who supports the legislation, favors the shortened period for keeping records secret, according to a statement from Schorr Johnson, a spokesman.

To contact the reporters on this story: Darrell Preston in Dallas at dpreston@bloomberg.net; Margaret Newkirk in Atlanta at mnewkirk@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum

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