This is all been tried before. It is the same as defined benefit pension funds with a board of trustees made up of union members. Anyway you cut it, if there is a board tasked with allocating a big pot of money, there will be corruption.

So far the least corrupt method is a low cost broad market index fund. There are fewer people in the chain of decision making, hence less agency risk. Passive index funds do the job better than human investors with lower probabilities of corruption.

We have surprisingly little corruption in Sweden. Not that it doesn’t exist, but it’s far from the norm.

Anyway, I’m not arguing for the solution. I just brought it up as I think it’s an interesting historical footnote. Even the finance minister of the ruling party that introduced them famously wrote a poem that goes something like (in fine translation by google)

  The wage earners' funds are fucking crap,  
  now we've dumped them all the way here.
  Then they should be filled with every union bigwig
  who supported us so strongly in our struggle.
  Now we do not have to go more rounds,
  until the whole of Sweden is full of funds.

I think this whole affair is hilarious, but I’m afraid it is somewhat lost in translation.

Sorry, I should not have written my post in a way that insinuates you were advocating for that. It is interesting history. It does seem something is lost in translation for the poem.