An innovative plan to boost the portfolio of South Carolina’s pension fund needs further study, the state’s chief financial officer said.
There’s a proposal on the table to create an independent investment company that would manage a portion of the state’s finances.
It would oversee the pension fund’s private equity holdings, allowing the fund to avoid the usual fees associated with the investments. It’s similar to the direct investment funds created by two of Canada’s biggest pension plans – Ontario Teachers’ Pension Plan and the Canada Pension Plan Investment Board – but is believed to the first of its kind in the United States, according to a report in the New York Times.
Treasurer Converse Chellis said last week he agreed with the idea of saving on fees as a way to boost the state’s return on investment and reduce the potential cost of retirees’ pensions to taxpayers and employees, though he requested more details.
But Chellis has been less enthusiastic, saying recently the proposal lacks details.
“We need many more sets of eyes examining the possible formation of a new company,” Chellis said. “A decision of this magnitude cannot be rushed.”
The state Retirement System Investment Commission voted unanimously on Sept. 23 to commit up to $15 million to what could be the first investment firm of its kind nationally.
Chellis said he plans to ask for a delay.