More Public Pensions Turn to Private Equity to Deliver Strong Returns for Retirees
CalPERS CEO: “[Private equity is] an asset class we have conviction in, and we think it will outperform the public markets over the long term, and why shouldn’t our members have access to those outsized returns?”
Washington, D.C. – Recently, AIC released its 2025 public pension study, which provides new data about private equity’s strong record of performance year after year. With more than 90% of institutional investors planning to maintain or increase their allocations to private equity over the long term, private equity continues to deliver strong, reliable returns for retirees.
Two of the nation’s largest public pension funds, the California Public Employees’ Retirement System (CalPERS) and the New York State Common Retirement Fund, are expanding their commitments to private equity as it continues to outperform other asset classes.
- CalPERS, the nation’s largest pension fund serving more than 2 million beneficiaries, has increased its private equity allocation to nearly 18% of its total portfolio. In an interview with the Financial Times, CalPERS CEO Marcie Frost said private equity was “an asset class we have conviction in, and we think it will outperform the public markets over the long term, and why shouldn’t our members have access to those outsized returns?”
- The New York State Common Retirement Fund, which serves over 1.2 million beneficiaries, dramatically increased its private equity commitment to more than $1.4 billion. This sum represents nearly half of its total $3.1 billion in new commitments.
In AIC’s recent public pension study, several officials from top-performing pensions explained why they are investing in private equity:
- Eric Henry, Chief Investment Officer, Vermont Pension Investment Commission: “We are thrilled with our private equity performance and honored to top the list for a second consecutive year. Vermonters, especially the members and beneficiaries of the Vermont State Employees’ Retirement, the Vermont State Teachers’ Retirement System, and the Vermont Municipal Employees’ Retirement System, stand on strong financial footing thanks, in part, to our private equity program.”
- Farouki Majeed, Chief Investment Officer, School Employees Retirement System of Ohio: “Private equity has been the highest returning asset class in the Ohio SERS portfolio for the past ten years and longer, and has contributed to enhancing the funded ratio and sustainability of our pension fund. SERS allocation to private equity has steadily increased and now stands at 14%.”
The increased allocation of public pension funds to private equity investments represents significant confidence in private equity’s ability to deliver returns that will outpace public markets and other asset classes over the long-term.
Read the full 2025 Public Pension Study to learn how private equity supports millions of Americans who rely on public pensions.
