Private Pension Funds

The largest category of institutional investors is pension funds managed for the benefit of employees of private companies. ERISA, the law that governs private pension funds, was intended to encourage private companies to create pension plans and to protect the money in those plans once they were created. The statute was designed to resolve questions of conflict of interest and liability that had left the private pension system uncertain, even chaotic. The two public interest problems it was designed to solve were under-funded pensions and unvested pensions. “These are the institutions then that create the distinctive ERISA problems: funding, with managerial direction of the funds, and under-funding, with government guarantees of performan....¹⁸²