South Carolina delays direct effort

The $24bn pension has cancelled plans to create an external management company, known as Devco.

The South Carolina Retirement System has cancelled its plans to establish an independent firm to oversee the fund’s private equity investments, a source close to the situation told PEO.

South Carolina had originally anticipated creating the external management company, known as Devco, as early as 1 October, but Governor Mark Sanford and a number of state executives requested to delay development of the firm to allow for more time to review the proposal. Pension executives decided last month to terminate the initiative, as the pension is no longer moving forward with the option, the source said.

South Carolina’s push for an in-house investment model came as pensions across the US have been looking to increase transparency and reduce costly fees paid to private equity firms. The state's pension would have been the first American pension to cut out the middleman by creating its own investment firm, Investment Commission chairman Allen Gillespie told Pensions & Investments in October.

Canadian pensions such as the Ontario Teachers' Pension Plan and the Canada Pension Plan Investment Board, however, have been investing directly for years.

South Carolina’s $24 billion pension has a 2010 target allocation to private equity of 7 percent and an actual allocation of 4.2 percent, as of 30 June.