Governance Of Public Pension Funds

And key messages -- Key principles of governance and investment management -- Governance of public pension assets -- Governance structures and accountabilities -- Qualification, selection, and operation of governing bodies -- Operational policies and procedures -- Managing fiscal pressures in defined-benefit schemes -- Policy responses to turbulent financial markets -- Investment of public pension assets -- Defining the investment policy framework for public pension funds -- Managing risk for different cohorts in defined-contribution schemes -- An asset-liability approach to strategic asset allocation for pension funds -- In-house investment versus outsourcing to external investment managers -- International investments and managing the resulting currency risk -- Alternative asset classes and new investment themes.

An understanding of corporate governance theory can promote the adoption of appropriate governance tools to limit agency problems in public pension fund management. The absence of a market for corporate control hinders the translation of lessons from the private sector corporate world to public pension governance. The establishment of a fit, and proper governing body for public pension funds, thus may be even more important than the maintenance of a comparable body for private sector corporations. In particular, behavioral controls should be carefully designed.

The author surveys the empirical literature on the relationship between governance of public pension fund management and investment performance. He makes a preliminary attempt to identify good governance practices and distill governance guidelines aimed at reducing the political risk that is associated with central, public pension fund management. The author highlights the need for further work to support the development of a satisfactory set of governance guidelines.

An understanding of corporate governance theory can promote the adoption of appropriate governance tools to limit agency problems in public pension fund management. The absence of a market for corporate control hinders the translation of lessons from the private sector corporate world to public pension governance. The establishment of a fit and proper governing body for public pension funds thus may be even more important than the maintenance of a comparable body for private sector corporations. In particular, behavioral controls should be carefully designed.This paper - a product of the Financial Sector Operations and Policy Department - is part of a larger effort in the department to study the effects of contractual savings development on financial markets.

The academic literature on pension governance is sparse and this book will fill some important gaps by bringing together original contributions from around the world on subjects related to the area. The book initially lays out the main frameworks for pension fund governance and then goes on to examine global governance practice and experience and country studies on pension funds in the United States and Australia. The final section of this in-depth study discusses the role of government guarantees. The editors and contributors to this book have struck a balance between the various dimensions of the governance problem. Whilst ensuring that the theoretical frameworks are represented, at the same time, they have also recognized that it is vital to report on empirical work. Private pensions are examined closely, while also acknowledging that public pension funds are extremely important actors. Pension Fund Governance will appeal to academics and researchers of financial economics and financial management, as well as those in the fields of public finance and public sector economics. Furthermore the book will also find an audience among those in commercial and policy roles which involve pensions, including pension actuaries.

'This collection of essays on a rapidly developing topic is a valuable addition to the field and the editors must be congratulated on beginning to bring the area to the attention of thinkers and government (not necessarily the same thing), who are charged with dealing with the challenge of controlling private pension provision.' - Robin Ellison, Pensions

From the Pension Research Council of the Wharton School, this book explores the diversity of governmental pension plans and investigates how these financial institutions must change in years to come.

Abstract: Public pension funds have the potential to benefit from low operating costs because they enjoy economies of scale and avoid large marketing costs. But this important advantage has in most countries been dissipated by poor investment performance. The latter has been attributed to a weak governance structure, lack of independence from government interference, and a low level of transparency and public accountability. Recent years have witnessed the creation of new public pension funds in several countries, and the modernization of existing ones in others, with special emphasis placed on upgrading their investment policy framework and strengthening their governance structure. This paper focuses on the experience of four new public pension funds that have been created in Norway, Canada, Ireland and New Zealand. The paper discusses the safeguards that have been introduced to ensure their independence and their insulation from political pressures. It also reviews their performance and their evolving investment strategies. All four funds started with the romantic idea of operating as 'managers of managers' and focusing on external passive management but their strategies have progressively evolved to embrace internal active management and significant investments in alternative asset classes. The paper draws lessons for other countries that wish to modernize their public pension funds.

The first comprehensive guide to mastering the roles and responsibilities of a public pension fiduciary in the U.S. In an ever-changing financial and political landscape, your job as a public pension fiduciary continues to get more difficult. Now, you have the help you need. U.S. Public Pension Handbook is the only one-stop resource that covers the various areas of public pension governance, investment management, infrastructure, accounting, and law. This comprehensive guide presents critical data, information, and insights in topic-specific, easy-to-understand ways—providing the knowledge you need to elevate your expertise and overall contribution to your pension plan or system. U.S. Public Pension Handbook covers: •Today’s domestic and global public pension marketplace•The ins and outs of the defined benefit model, the defined contribution, and hybrid pension designs•Financial concepts central to the actuarial valuation of pension benefits•Public pension investment policies and philosophies•Asset allocations and how they have changed over time•State and local government pension contribution policies•The impact of governance structure and board composition on organizational results•Fiduciary responsibility and the general legal/regulatory framework governing trustees•How changes in trust law may affect public pension trustee fiduciary responsibility and liability•Best practices in pension governance and organizational design Public pension trustees are the unsung heroes of the world of finance, collectively managing over $6 trillion in retirement assets in this country alone. U.S. Public Pension Handbook provides the grounding you need to make sure you perform your all-important with the utmost expertise and professionalism.