The Status of U.S. Public Pension Plans

Abstract

The pension plans of U.S. state, county, and municipal employees play a large role in capital markets and corporate governance debates. Recent studies have investigated the governance, management, and performance of these plans, as well as their role in corporate governance. Informed by the findings of its integrative literature review, the article outlines several key considerations regarding the plans, including ones regarding the bearing of investment risk, public and private plan differentials, the presence and responsibilities of boards of trustees, and investment policy. The outlined considerations favor an appropriate balance between political and economic controls of the plans and recognize that the activism of public pension plans as institutional investors might improve the corporate governance system for all investors.