Managing Corporate Pension Plans:The Impacts of Inflation (studies in Social Security and Retirement Policy

Do the effects of inflation threaten the nation's private pension plans? The answer given by the authors of this study is no, although some pension plans have failed to compensate investors for the erosion of the purchasing power of their funds.

To find out why, the authors examined 119 pension funds in the US investment market. To gain insights into alternative portfolio policies, they also made a case study of the experience of one anonymous Fortune 500 corporation. Their analysis shows that portfolios fail to keep pace with inflation less because their financial assets fail to provide a hedge than because their managers switch funds among product categories too frequently. Adherence to one investment strategy provides the best means of countering inflation, according to the authors, who also consider the pros and cons of investment in real estate and commodity futures.