Public Pension Plans - U S Government Accountability Office

Pursuant to a congressional request, GAO reviewed economically targeted investments (ETI), focusing on the: (1) amount and types of ETI being invested by nonfederal public employee pension plans; (2) realization of competitive returns by ETI programs aimed at business development; and (3) economic effects of business development ETI programs. GAO found that: (1) public pension plans have invested billions of dollars nationwide in ETI; (2) in a survey of large public pension plans, 50 of the 119 respondents indicated that they had invested a total of $19.8 billion in ETI to promote housing, real estate, or small business development; (3) ETI that promote business development include private placements, venture capital investments, and bond, loan, and certificate of deposit purchases; (4) the performance of ETI by the public pension plans studied was generally similar to the returns of comparison investments; (5) the performance of ETI venture capital programs sometimes lagged behind the comparison investments; and (6) no definitive conclusions have been reached regarding the economic effects of ETI programs due to insufficient data.