Protecting and Politicizing Public Pension Fund Assets: Empirical Evidence on the Effects of Governance Structures and Practices

46 Pages Posted: 15 Jun 2005

See all articles by David Hess

David Hess

The Stephen M. Ross School of Business at the University of Michigan

Abstract

This article contributes to the debate on public pensions by considering empirical evidence on the systematic impact of different governance structures and practices on pension fund performance. After an introduction to public pension governance in Part I, the next section discusses the growing evidence that political influence has a significant impact on pension systems' funding decisions and on the selection of actuarial assumptions that affect the sponsor government's required contributions to the plan. Part III provides a review of the research on pension funds' investment performance and the potential for political influence to cause lower returns. Part IV presents an empirical analysis that further investigates the findings of previous studies and considers additional governance factors that may have a significant impact on pension fund performance and strategic actions. Part V discusses the policy implications, including the importance of member-elected trustees and the need for improving the training of trustees.

Keywords: Public Pensions, Governance

JEL Classification: G23, H55

Suggested Citation

Hess, David, Protecting and Politicizing Public Pension Fund Assets: Empirical Evidence on the Effects of Governance Structures and Practices. Available at SSRN: https://ssrn.com/abstract=743165

David Hess (Contact Author)

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-9779 (Phone)

HOME PAGE: http://https://michiganross.umich.edu/faculty-research/faculty/david-hess

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