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Investment Practices of State and Local Pension Funds: Implications for Social Security Reform

Boston College Center for Retirement Research Working Paper No. 1999-01

57 Pages Posted: 29 Nov 2000  

Annika E. Sundén

Stockholm University - Swedish Institute for Social Research (SOFI)

Alicia H. Munnell

Boston College - Center for Retirement Research

Multiple version iconThere are 3 versions of this paper

Date Written: April 1999

Abstract

The investment practices of public pension funds have become a topic of major interest in the wake of President Clinton's 1999 proposal to invest a portion of the Social Security Trust Funds in equities. This study explores four possible avenues through which social or political considerations could enter the investment decisions of state and local pension funds. The first section focuses on economically targeted investments (ETIs), those investments that are designed to meet some special need within the state. The second section looks at instances of pension fund activism, whereby the fund managers attempt to influence corporate behavior to improve profitability or other aspects of corporate performance. The third section investigates the extent to which state and local pension plans have avoided or divested certain holdings in order to make a political or ethical statement. The fourth section investigates the extent to which states and localities have used pension funds as an escape valve for general budget pressures.

Keywords: Social Security, retirement

JEL Classification: H70, H55

Suggested Citation

Sundén, Annika E. and Munnell, Alicia H., Investment Practices of State and Local Pension Funds: Implications for Social Security Reform (April 1999). Boston College Center for Retirement Research Working Paper No. 1999-01. Available at SSRN: https://ssrn.com/abstract=252054 or http://dx.doi.org/10.2139/ssrn.252054

Annika E. Sundén (Contact Author)

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Kyrkgatan 43B
SE-106 91 Stockholm
Sweden

Alicia Munnell

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States
617-552-1762 (Phone)

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