We document the net equity performance of US defined benefit and defined contribution schemes at plan level, using a unique and comprehensive database. Pension fund performance is measured taking into account fund-specific benchmarks and multiple cost components. Pension funds perform close to their benchmarks, whereas size-matched mutual funds strongly underperform. Cost, risk and style differences do not explain the performance gap between the two institutional arrangements. Our results are consistent with the notion that pension funds are less exposed to hidden agency costs than mutual funds. Efficient fund pooling provides pension boards with enough negotiating power and monitoring capacity to ensure that institutional asset managers serve the interests of participants.