What Did Your State Pension Agree To?
The Most Troubling Terms Buried in Private Equity Contracts—and Why Public Pension Participants Have a Right to Know.
By Edward Siedle September 21, 2026
America’s state and local pension funds have committed hundreds of billions of dollars of workers’ retirement savings to private equity and other private-market investments. Yet the contracts governing many of these investments—Limited Partnership Agreements, Private Placement Memoranda, subscription agreements and side letters—are generally not available for meaningful public scrutiny. That creates an extraordinary accountability problem.
A teacher, firefighter, police officer or other government worker may be told that private equity is an important component of his or her retirement portfolio. Taxpayers may ultimately be responsible for making up pension funding shortfalls.
But neither group can ordinarily answer some remarkably basic questions:
What exactly did the pension agree to? What fees can the manager charge? What conflicts did the pension consent to? What fiduciary protections were waived or weakened? Can expenses benefiting other investors be charged to the pension? Can the manager transact with its own affiliates? Can some investors secretly receive better rights than others? Who determines the value of investments that have no observable market price? And who at the pension actually read, understood, negotiated and approved these provisions?
These are not mere theoretical concerns. The SEC’s enforcement history shows that fees, expenses, valuation practices and conflicts of interest in private equity have repeatedly created serious investor-protection problems. The Institutional Limited Partners Association—whose members include supposedly sophisticated institutional investors—has itself urged Limited Partners to reject certain contractual provisions that weaken fiduciary duties and permit overly broad conflicts.
The public therefore has good reason to ask a simple question:
If public pension fiduciaries are investing public retirement assets under contracts the public cannot inspect, how can workers and taxpayers determine whether those fiduciaries are prudently protecting their money?
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