In it for the Long Haul: The Investment Behavior of Public Pensions
The current financial crisis brings renewed attention to the issue of retirement security. Today, employees and retirees alike are watching their 401(k) savings plans shrivel as the financial markets continue to plummet.
Meanwhile, beneficiaries of public pensions learn that the performance of their retirement plans are not immune to financial market volatility.
Investment losses in public pension plans, if they persist, may have to be made up with additional contributions from employers and (in some cases) employees and taxpayers. That’s why taxpayers and employees alike have legitimate concerns about future commitments required to ensure the long-term integrity of public pensions.
So how do pubic pensions react to market ups and downs? Using economic tools and government data, this report finds that public pension plans:
Exhibit prudent investment behavior by regularly rebalancing their portfolios;
Adopt best investment practices of industry leaders, another prudent practice;
Avoid moral hazard. Public pensions may have been overly cautious in some cases;
Avoid employer conflicts. Public pensions tend to hold smaller amounts of stocks when employers face higher contributions.
Evolution and Growth: How Public Pension Plans Have Diversified Their Investments Amid Changing Markets
A report from the National Institute on Retirement Security (NIRS) and Aon examines the changes public pension plan investing has undergone throughout the twenty-first century.
Pensionomics 2025: Measuring the Economic Impact of Defined Benefit Pension Expenditures
Pensionomics 2025: Measuring the Economic Impact of Defined Benefit Pension Expenditures finds pending powered by U.S. private and public sector defined benefit pensions contributed significantly to the economy. In 2022, retiree spending of public and private sector pension benefits generated $1.5 trillion in total economic output, supporting 7.1 million jobs across the nation.
In partnership with AARP and NRTA, NIRS has developed a series of state-by-state infographic fact sheets regarding the public employee and teacher retirement systems across the country.
These fact sheets present a snapshot of these retirement systems along with key data from NIRS research and other sources.
