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CRR Issues Brief on the Impact of the Public Pension Board on Investment Returns
On August 6, 2019, the Center for Retirement Research at Boston College (CRR) released its brief, Does Public Pension Board Composition Impact Returns? According to the study, there is a positive and statistically significant relationship between investment performance and the best practices recommended by public plan governance experts.
The key findings include:
- The oversight of state and local pension funds is critically important to government officials, plan participants and taxpayers;
- The effectiveness of pension boards depends on their structure, member composition, size, and member tenure;
- Based on the best practices for each factor, CRR developed a “Board Effectiveness Index” (BEI) for 145 pension funds; and
- The results indicate that a higher BEI score is associated with a higher 10-year investment return on fund assets.
CRR concludes, “These findings reinforce existing research that suggests that a board designed purposefully and effectively can have positive and long-term benefits for public pension plans.”
The brief is available here.