Written by Jim Perry

Rarely has there been a more challenging or intimidating climate to grow old and retire in. Inflation, public health crises, and looming geopolitical conflicts remind many pensioners and retirees of the turbulent late 1960s and early 70s. This volatile, unstable climate means that many are relying more and more on their pension checks to make ends meet. As a North Carolina State Senate’s Pensions and Retirement and Aging Committee member, I’m intimately familiar with how vital these pension checks are. Unfortunately, I cannot say the same about my colleagues in Washington. 

Certain policymakers and regulators appear content to sacrifice their constituents’ pension checks for political grandstanding, which is precisely what they’re doing by targeting hedge funds. Pensions and retirement funds, including those in North Carolina, rely on hedge funds to expand their balance sheets and ultimately increase the amount of money they can deposit into each beneficiary’s account. Misguided policies that are ignorant of this relationship and allow the government to overreach into the free market will only hurt pensioners during a time when they can scarcely afford it.  

Some of North Carolina’s largest retirement systems rely directly on hedge funds. In total, pension funds invest over $14 billion on behalf of over one million total plan participants. In North Carolina, the Department of State Treasurer invests over $3.5 billion directly for more than one million plan participants. These participants include our state’s first responders, teachers, and other essential public-sector workers. We’ve asked so much of them during such trying times that the least our policymakers can do is ensure their pension checks don’t go up in flames due to regulatory overreach. In addition to the State Treasurer, the Reynolds American Defined Benefit Master Trust and the Charlotte-Mecklenburg Hospital Authority retirement plans each invest hundreds of millions of dollars on behalf of the tens of thousands of participants relying on them. 

All of these retirement plans place so much trust in hedge funds because they are sophisticated investment vehicles that grow their clients’ money over time and have proven themselves repeatedly in the face of wildly volatile market conditions. Hedge funds and active managers utilize sophisticated, complex investment strategies that are tailored to the needs and parameters of each of their clients. If regulators force their way in between hedge funds and their investors, pension funds’ investments and the balance of the overall free market will be at stake. 

There’s never a good time for this type of overreach to happen but now is undoubtedly the worst time with record living costs and geopolitical uncertainty. Suppose those elected and appointed in Washington truly stand for working-class Americans. In that case, they need to understand that millions of Americans rely on their pension funds to make ends meet and that these pensions funds are made possible by hedge funds.   

North Carolina State Senator Jim Perry is the State Senate Majority Whip and is on the Senate Pensions and Retirement and Aging Committee.