State Treasurer Dale Folwell says the state pension plan hemorrhaged $4.1 billion in 2018.

Officially known as the N.C. Retirement Systems, the plan reported losses of 1.47 percent for the just-completed calendar year, underperforming its actuarial assumed rate of return of 7 percent.

The pension plan paid out more than $6 billion in benefits for the year. That amount exceeds the state’s debt, a news release from Folwell says.

During a Feb. 11 public presentation at the John Locke Foundation, Folwell said state agencies send about 13 percent of their payroll to his office to cover their employee pension costs. The percentage will go even higher soon, with retirement payments expected to rise to $9 billion.

North Carolina has the 10th largest public pension fund in the country, and 26th largest public pension in the world. It provides retirement benefits to more than 900,000 people. Its public assets were valued at $94.2 billion at the end of last year, down from $98.3 billion the previous year.

The state eliminated its mandatory minimum retirement age, and that’s a big part of the problem, Folwell has said. Participants can retire sooner and collect longer. That drains money from the retirement system because those extra years weren’t calculated into projections for the state’s pension debt.

Folwell was instrumental in the General Assembly’s passage of an Unfunded Liability Solvency Reserve Fund to begin attacking the pension debt.

Folwell also reduced the assumed rate of return slightly from its previous 7.2 percent benchmark. He hopes to continue reducing the rate and make the numbers reflect true investment performance. Overstating the assumed rate of return can mislead investors and the public of the actual value of pension assets.

“The data we have available shows that for the past 21 years that we have not hit, on average, our assumed rate of return,” Folwell said in the news release. “We’ve now added $2 billion to the pension plan’s unfunded liability.”

The losses occurred despite cost-cutting measures implemented last year. The Investment Advisory Committee reported in February more than $92 million in annual savings were seen, amounting to a four-year savings rate of almost $400 million.