Researchers looked at the fee disclosure policies of the 73 largest funds, which collectively account for $2.9 trillion, or 95 percent of all public pension assets.
While all of those plans receive disclosure guidance from the Government Accounting Standards Boards, states are left to their own devices when it comes to interpreting and implementing that guidance.
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In 2013, state pensions allocated 25 percent of assets to alternative investments like private equity and hedge funds, or more than twice the 11 percent that was invested in alternatives in 2006.
The increased allocation to alternatives has driven up the total management fees, according to the report.
State pensions paid $10 billion in management fees for all asset classes in 2014. That's an increase of 30 percent over the past decade, which Pew's brief said is correlated with the greater use of alternatives like private equity.
Pew's brief did not break out specific performance and fee data on all of the 73 funds it reviewed, but a spokesperson said a more in depth report is forthcoming.
It did note the decision by CalPERS trustees, who administer the nation's largest public pension, to fully disclose what it pays to managers in its private equity portfolio.
Last November, the fund publicly disclosed carried interest, or performance-based fees paid to private equity managers, for the first time.
External private equity managers were paid $700 million in carried interest payments in 2015, according to Pew.
The move by CalPERS to fully disclose all costs in managing its alternative asset portfolio highlights the "widespread problem" of underreported manager fees in public pensions, the brief said
Some funds report investment performance gross of fees, meaning they don't account for investment management costs.
Other funds don't report performance of specific allocations within their overall funds.
A study last year of the New York City pension fund found it underperformed its investment goal by $2.5 billion over 10 years, largely the result of investment management fees, according to news reports cited by Pew.
South Carolina's Retirement System, which allocates 38 percent of assets to alternative investments, disclosed 1.58 percent in fees in 2013, a comparatively high number, but independent analysis showed costs were high because trustees included all costs, including carried interest payments to private equity managers, in assessing costs.
CEM Benchmarking Inc., a provider of analytics to pension funds, estimates the cost of undisclosed private equity fees can be 1.5 percent of assets each year.
The Pew brief calls for comprehensive reporting standards that would include all the costs of alternative investments, including carried interest earned by private equity managers.
It also recommends all pensions make investment policy statements available online, and disclose funds' returns both net and gross of fees. Of the funds it reviewed, 37 percent reported returns gross of fees, meaning they did not deduct management costs.
Pew's brief also recommends reporting performance by asset class, and expanding performance history to 20 years.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
