Allison Schrager, Columnist

Pension Funds Share Blame for Private Equity’s Horror Stories

The promise of high returns — whether true or not — has encouraged retirement funds to pour money into PE investments, with terrible results.

May 8, 2023 at 10:00 AM UTC

By Allison Schrager

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

Steve Schwarzman, CEO of Blackstone Inc., a big beneficiary of pension fund money. — Steve Schwarzman, CEO of Blackstone Inc., a big beneficiary of pension fund money.
Photographer: Andrew Harrer/Bloomberg

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Private equity is the latest economic boogeyman. And there are good reasons for that.

Assets in the private market have grown exponentially in the last 20 years, especially in North America, and now amount to nearly $12 trillion. The number of companies backed by private equity more than doubled between 2006 and 2020, while the number of public companies shrank. Private equity firms are buying up companies that provide services we use and depend on: hospitals, nursing homes, real estate, chain restaurants and even prisons.