Study says most U.S. pensions are poised to recover

December 1, 2008
Last week, IBJ reported that Indiana's public pensions have lost billions of dollars as U.S. markets soured. But a new national analysis of U.S. public pension funds suggests most invest prudently, even in volatile times.

On Nov. 24, the Washington, D.C.-based National Institute on Retirement Security released a report titled, "In it for the Long Haul: The Investment Behavior of Public Pensions." It studied public pensions' patterns from 1993 to 2005. The report suggests most pensions follow well-established practices for long-term investing, even during market plunges like the one in 2001.

NIRS reports that U.S. pensions actively rebalance their investment assets in response to price changes. But it argues they don't follow a "herd mentality" that chases returns. Instead, NIRS reports most pensions are cautious and follow their industry's best practices.

"I've heard [the economic] turmoil referred to as a Category 5 hurricane. In that, everybody gets a little wet," NIRS Executive Director Beth Almeida told IBJ. "But are you the house replacing a few roof tiles because it was built to weather the storm? Or a smaller structure that can't weather it as well? Pensions have professional asset management and large pools of capital to enhance diversification."
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