Over Half of Global Pension Funds Exceed Private Equity Allocation Targets

As private markets continue to gain popularity, global pension funds were, on average, above their median target allocation to private equity in the first quarter of 2025.

S&P Global Market Intelligence data revealed that the median target allocation across 298 funds across the global was $306.8 million. Yet, the median actual allocation was $330.3 million, resulting in a $23.5 million overallocation.

Of the 298 pension funds analyzed, 174 were found to be overallocated to private equity. In particular, California State Teachers' Retirement System (CalSTRS) had the largest overallocation with a $7.49 billion overallocation, followed by the Montreal-based Public Sector Pension Investment Board at $6.02 billion.

The California Public Employees' Retirement System recorded the largest private equity allocation at $90.37 billion, with CalSTRS close behind at $53.88 billion.

At the other end of the spectrum, the Chattanooga General Pension Fund, Texas Abilene Firemen’s Relief & Retirement Fund, and Burlington Employees’ Retirement System each had the smallest allocations, at just $1 million.

Among US public pension plans with the largest dollar overallocations to private equity, allocations exceeded targets by 116% to 142%.

In contrast, US public pension plans with the largest dollar underallocations to private equity were investing between 59% and 97% of their targets. The New Jersey Division of Investment sat at the lower end, while the New York State Common Retirement Fund reached 97% of its target allocation.

S&P strategists warned that if public markets experience a prolonged downturn, allocations become more significant, as the denominator effect can lead to an overallocation to private markets. This imbalance may limit a pension fund’s capacity to make further private asset investments.