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Policy in Brief is now Talkin’ (Policy) Shop! On this episode, Oren and Chris discuss the problems that arise when chronic pension underfunding pushes public pension managers to seek unrealistic returns, pushing them toward risky, opaque, and illiquid alternative investments like private equity and hedge funds. These investments charge enormous fees while avoiding disclosures that would allow the public to evaluate their performance. When these gambles go bad, taxpayers are on the hook.

Capital imbued with public purpose, like state and local pension funds, should be invested transparently. Congress should pass legislation requiring reasonable public reporting standards for private funds that invest and collect fees on public-purpose capital.

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