Disappointing private equity returns in 2022, and the lag in reporting those returns, may represent a threat not just to investors, but to pension plans’ ability to pay retirees in 2023. More specifically, private equity returns are typically reported with a lag of up to six months. This means that the degree to which pension plans are currently funded (or more correctly, underfunded) likely does not reflect potentially large losses incurred in the difficult second half of 2022.

This issue is especially important because private equity comprises about 11% of the assets of public pension portfolios, per a 2022 study by the American Investment Council, which analyzed 176 public pension funds representing more than 30 million public sector workers and retirees. READ MORE