The case against equity investment by U.S. corporate pension funds has been well documented for a quarter century. The public sector has ignored or dismissed that case because of differences between taxation and accounting between the private and public sectors, the differing interests of...

Many companies believe that underfunding pension plans is an inexpensive way to borrow from employees and that mismatching equity investments to bondlike pension promises creates shareholder value. To the contrary, financial economics calls for fully funding and immunizing accrued pensions. For...