Public Funds and Private Capital Markets: The Investment Practices and Performance of State and Local Pension Funds
This paper addresses the question of whether a government entity can invest money on behalf of employees or constituents in a manner comparable to the private sector. We focus on the experience of pension funds operated by state and local governments on behalf of their employees. Using data from a sample of public plans, we find some evidence that after controlling for differences in asset allocation certain types of political interference lead to a sacrifice of returns on plan assets. Combining data from public and private plans, it appears that public plans earned a significantly lower rate of return than private plans in 1998, the year for which data was available for both types of plans.
Volume (Year): 56 (2003)
Issue (Month): 3 (September)
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