Even if you paid more, the incentives are wrong. Managers are told (often by state legislatures) to go out and hit unrealistic return targets, because to lower the targets would mean the states have to fund the pension more. If they hit the target, they keep their job. If they miss their target, they get fired. What would you do?

This is also why state pensions like to jam money into alternative investments like hedge funds and venture. They're chasing yield.