Issue Brief: How Do Public Pensions Invest? A Primer (National Institute on Retirement Security)

January 2013

KEYWORDS: Institutional Investors, Public Pension, alternative investment, portfolio diversification, risk management, Equity markets, equity risk, Volatility, investment management, stock, bonds, chief investment officer, asset allocation


Ronnie G. Jung, CPA and Nari Rhee, Ph.D.

  • National Institute on Retirement Security


A new primer provides a comprehensive overview of the public pensions investment process, which has garnered increased attention in the wake of economic shocks that recently have impacted all investors.

This issue brief focuses on how public pensions allocate assets and set expected rates of return including:

  • Distribution of investments across stocks, bonds, and other asset classes in order to maximize returns and minimize risk.
  • Principles that guide how public pension funds invest and the institutionalized practices through which plan trustees set investment policies.
  • Evaluation and management of investment related risk.
  • Investment return assumptions among public pension funds in comparison to historical performance and the future outlook.

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