In It for the Long Haul: The Investment Behavior of Public Pensions

Source: Christian Weller, Jeffrey Wenger, National Institute on Retirement Security, November 2008

A new NIRS report finds that public pensions exhibit prudent investment behavior, even during turbulent markets. The results are contained in the study, “In It for the Long Haul: The Investment Behavior of Public Pensions” released on November 24, 2008.

The analysis is based on U.S. Federal Reserve and U.S. Census Bureau data from 1993 to 2005 and concludes that public pension plans are prudent investors because they:

  • Actively rebalance investments in response to price changes.
  • Do not get caught up in a “herd mentality,” but rather follow the best investment practices in the industry.
  • Hold higher risk assets when funding levels are higher, and assess their financial situation before modifying the plan’s asset allocation.
  • Hold smaller amounts of stocks when employers face higher contribution rates.

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