Generally, limited partners like pension funds diversify their asset allocation. I found this interesting presentation that shows 57% of US pension funds is in the "equities" asset class, but I would expect most of that to be public blue-chip stocks, with a small fraction dedicated to higher-risk growth capital.

http://conferences.pionline.com/assets/2014_GPAS_Study_Final...

In another interesting note, this shows that pension funds in the US grew at over 6% annually between 2003-2013. The recent horror stories you're thinking of are less about pension funds, and more about grandma's savings being tied up in her own house.