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CRR Reports on the Increase in Alternative Investments in Public Pension Plans
On September 8, 2026, the Center for Retirement Research (CRR) at Boston College published its issue brief, Explaining the Rise in Alternative Investments in Public Pension Plans. From 2001 to 2021, the brief indicates that the investment trend for U.S. public pension plans has decreased for public equities and fixed-income assets whereas it has increased for alternative assets (such as private equity and real estate) from about 10% to 30%.
Other key findings include:
- Since the early 2000s, public pensions have allocated more investments toward alternative assets like private equity and real estate, which have varied greatly among different pension plans.
- The analysis investigates the changes in plans’ beliefs about the future investment returns for alternative assets and their risk tolerance.
- The findings indicate that there is a growing belief that alternatives will outperform public equities mainly due to consultant views, peer behavior, and plan experience during the 1990s.
- In contrast, other factors related to plans’ risk-seeking motives, spending needs, and governance have a more limited effect.
The CRR concludes, “the primary driver behind the increased allocation to alternatives is the growing belief among plan managers that alternatives will outperform public equities on a risk-adjusted basis.”
The brief is available here.