Friday, September 25, 2009

Pension fund assets

The particular assets held as investment by pension funds depend heavily upon whether the fund is government controlled or private. Private funds emphasize investments in corporate stock, which represented about three fifths of their assets at year-end 1979. Corporate bonds ranked a distant second, accounting for almost one fourth of all financial investments. With few liquidity needs, private pensions held relatively small amounts of cash, time deposits, or government securities.
Corporate stock is far less important in the portfolios of government pension funds. State and local government pension programs held almost $44 billion in corporate stock at year-end 1979, which represented about one quarter of their financial assets. However, stock investments were far outweighed by corporate bonds, which amounted to $86 billion-close to half the assets of public pensions.
Under the pressure of strict regulations and more-frequent benefit claims, public plans hold a larger proportion of cash and liquid government securities than do private plans. For example, investments in U.S. Treasury and federal agency securities, demand deposits, and currency represented a full 20 percent of total financial investments at year-end 1979. Government pensions also place moderate amounts of funds in state and local government securities-often IOUs issued by their own governmental unit.

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