Winter Edition 2026 | Living Power Magazine
By Jackson Cozort, RGEA Director of Government Relations
North Carolina’s Local Government Employees’ Retirement System (LGERS) is entering a new chapter, with some changes already showing encouraging results.
As a reminder, by law, the LGERS Trustees can only award cost-of-living adjustments (COLAs) or bonuses when the system exceeds its three-year average target return of 6.5%. The last time local government retirees received a 2% bonus from additional earnings based on this law was 2022. Over the past two decades, the system has struggled to clear that hurdle consistently. Initially, this was due to external factors, as the funds worked to recover from losses stemming from the 2008 recession. In recent years, returns were most impacted by the funds’ above-average cash holdings, which lowered returns. That cash-heavy strategy has now shifted. Treasurer Brad Briner and his investment team have redeployed much of that idle cash into higher-yielding assets, while still managing risk responsibly. The early results are positive: as of December, LGERS’ earnings are approaching 12%. While this still falls short of the five-year average required for a 2026 increase, it positions 2027 as a real possibility and improves the odds of more regular post-retirement adjustments going forward.
Modernizing Pension Governance
A significant step toward strengthening the pension’s long-term health was the passage of the 2025 State Investment Modernization Act (HB 506). This legislation shifts North Carolina away from the “sole fiduciary” model first established by the General Assembly in 1784. The responsibilities of the Treasurer have evolved considerably since those early days, and this change was overdue. RGEA played a leading role in supporting this reform, informed by our own extensive financial modeling to examine the factors affecting LGERS’ ability to provide cost-of-living adjustments over such an extended period. This new law transitions the state from a sole fiduciary model to an appointed investment authority board, aligning North Carolina’s governance with 48 other states’ and it provides the Treasurer with the structure that many of the higher-performing public pension systems across the country have had at their disposal.
This five-member investment authority board, which includes the Treasurer as a voting member, adds broader expertise, stronger oversight, and more stability during political transitions. A research study published by The National Conference of Public Employee Retirement Systems shows that improved governance can increase returns by about 1% annually. For LGERS, that could mean nearly $400 million in additional yearly revenue, roughly the cost of a 2% COLA. These are meaningful improvements, and RGEA is proud to be part of this change process.