Defined Benefit Pension Plans: Recent Developments Highlight Challenges of Hedge Fund and Private Equity Investing

Defined benefit pension plans are intended to pay retirement benefits that are generally based on an employee's years of service and other factors. The financial condition of these plans-and hence their ability to pay retirement benefits when due-depends on adequate contributions from employers and sometimes employees, and prudent investments that yield an adequate rate of return over time. Poor investment choices can have serious implications for both the plan sponsor and, potentially, pla...