What Explains Differences in Public Pension Returns Since 2001?

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The brief’s key findings are:

  • Investment returns for state and local pension plans varied over 2001-2016 from 6.3 percent for the top quartile to 4.6 percent for the bottom.
  • The variation could be due to differences in asset allocation and/or to the returns by asset class.
  • The analysis found that asset allocation – in equities, fixed income, and alternatives – was broadly similar across plans, while asset class returns showed more variation.
  • Therefore, asset class returns turned out to be the primary reason for the disparities in overall returns.

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