The effect of state and local public pension plan governance on system funding and investment performance.

摘要

This study explores the key determinants of state and local public pension funding capacity and investment performance. Using a sample of U.S. public retirement systems for 2001-2007 that combines data from the Public Fund Survey with new independently collected governance information, this research improves upon previous examinations of plan performance by including board turnover as a covariate of interest. A three equation empirical model is specified with actuarial funding ratio, percent of actuarially required contributions paid and investment rate of return used as the three outcome measures.;The regression results present mixed evidence to support the hypothesis that pension governance impacts plan performance. While board turnover and investment council both had the expected effect on actuarial funding ratio, neither of these covariates significantly impacted investment rate of return. Instead, behavioral persistence and investment asset allocation appear as the most critical explanatory factors for pension performance.