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Pensions and Capital Stewardship Project
Labor and Worklife Program, Harvard Law School
The Pensions and Capital Stewardship Project was established to educate and inform workers, scholars, researchers, and practitioners on issues of retirement security, including employment-based retirement plans, and of pension fund governance, management, investment, and related matters.
The Future of Retirement
Controversies over the future of Social Security, challenges to public and private sector defined benefit plans, and the rise of defined contribution and other private-account based schemes are evidence of serious and pressing concerns about the ability of households to sustain them through the transition to retirement and beyond. These concerns about the adequacy of income are exacerbated by ones relating to the cost of health benefits and the expense of care and support, especially long term care during retirement. For these reasons, the Pensions and Capital Stewardship Project focuses its work not only on challenges to retirement security for those who already enjoy some measure of it through existing schemes, but also to ways in which it can be extended to and enhanced for all households in America.
Pension Plans: Institutions, Systems, and Practices for Investment
Pension stewardship and the choices made by those responsible for overseeing trillions of dollars in retirement plan assets are of tremendous significance for active and retired plan participants’ ability to enjoy sufficient retirement income. These choices also have profound implications for internal corporate stakeholders, including workers, shareowners, and management, as well as the larger community that is affected by employment trends, economic development and growth, the environment, worker and human rights, and social services. The Project’s work on pension plans focuses on institutions, systems, and practices of pension fund investment that encourage capital markets and corporate policies to work more effectively for workers and the health and well-being of the community at large.
The Pensions and Capital Stewardship Project is unique in that it has gained the interest of and financial support from diverse players in the pension community including unions, pension fund investment managers, and consultants. In all of its work, the Project will be able to draw upon international experience with similar issues. The Project has established relationships with scholars, union leaders, trustees, and others who are active in these matters across the world. Most recently, the Project collaborated with the European Trade Union Institute and Trade Union Advisory Committee to the OECD to convene the first Capital Matters in Europe conference, which took place in Brussels on December 9-10, 2009.On October 12-13, 2010 a conference and forum, modeled on the Project’s annual conference, on “Superannuation: The Past, Present and Future” and “Capital Stewardship – Managing Labour’s Capital” was held at the University of Sydney. The Project’s Director was the keynote speaker and panelist at the Second Annual Managing Labour’s Capital in Australia Conference “Superannuation and the Social Purpose: Nation Building, Governance & Politics,” on December 24, 2011.
On March 28-30, 2012, the Project held its tenth annual conference, attended by pension trustees from across the United States as well as from Canada and the United Kingdom. They were joined by scholars, researchers, and practitioners from the U.S., Canada, France, and Germany. The conference explored a range of issues concerned with the relationship between pension fund investment and economic growth and job creation; assessed the merits of financial markets reform in the United States, especially as it pertains to pension funds; considered the rationales for and the import for themselves and others of pension fund investment in commodities; discussed a range of activities - from research to engagement - concerned with the bearing of S-factors, particularly workplace related considerations, on investment decisions; described new and important ways of rethinking the meaning and practice of fiduciary duty; and described initiatives in the United States by which public sector pension plans can facilitate private sector worker participation in retirement plans.
Program for Advanced Trustee Studies
Starting in 2007, in collaboration with the National Conference on Public Employee Retirement Systems, the Project has offered a Program for Advanced Trustee Studies (PATS). The 2011 PATS program ran from July 26-28, 2011 and included nearly experienced public sector pension fund trustees from across the country, serving on boards which manage assets ranging from $50 million to $240 billion. One set of sessions focused on the nature and attributes of derivatives and hedge funds and hedge funds of funds, the role they might play in investment portfolios, The other set of sessions looked at how boards select external and internal asset managers and consultants, manages relationships with them set within the broader context of fund goals, policies, and fund resources and capabilities. The 2012 PATS program was held on July 30th to August 1st and spent one day on “Measuring and Accounting for Pension Funds” and the other on “Investment in Private Equity: Lessons From the Past and for Action Now in a Time of Turmoil and Uncertainty.”
Recent, Current, and Future Work
The Project convened working meetings in February and March 2007 that focused on private equity investment for market-based returns and labor friendly outcomes and collaboration among labor, pension, SRI, faith-based, foundation, and other shareholder activists, respectively. The Project co-sponsored with the Building and Construction Trades Department of the AFL-CIO “Investment in Infrastructure and the Pension Fund Role in It” on February 2009. As the first step in a major initiative on the subject, the Project convened a meeting on “Long-term Investment Decisions: Assessing the Sustainability Risks of Labor and Human Rights and other Workplace Factors” in March 2009.
In April 2008, the Project commenced publication of papers (“Capital Matters: Occasional Papers”) on a variety of issues ranging from incorporating workplace/labor and human rights factors in investment decisions to pension fund investment in infrastructure to efforts at pre- funding of health benefit costs. Other Project writings include papers and articles on labor and private equity, worker voice in the management of pension funds assets, financial markets reform, labor friendly pension fund investments, and the merits of automatic enrollment in retirement plans.
The Project is engaging in research – and related conferences and meetings – on a number of topics. Its initiative on work on incorporating workplace issues in investment decisions recently completed for the Australian Council of Superannuation Investors, a benchmarking study of labor and human rights supply chain practices of the ASX 200 and a comparison of the results with those for the largest 2500 global corporations. ACSI will be drawing on this study to engage ASX companies on those practices. A group on UPRI signatories is engaging a group of companies world-wide using the results of the Project’s previous benchmarking work. The Project also recently released its report on its collaboration with the Fair Labor Association (FLA), FLA member companies, and major institutional investors to develop and use key performance indicators for companies’ management labor and human rights risks in their supply chains. A paper entitled “Infrastructure: Defining Matters,” which considers what pension funds might understand infrastructure to be and how that relates to whether and how they might invest in infrastructure will be published shortly. Another paper which offers a critical evaluation of how fiduciary duty has been interpreted will appear later in 2012 in a collection of essays entitled “Handbook of Institutional Investment and Fiduciary Duty,” to be published by Cambridge University Press. Other research and writing in progress relate to a further analysis of fiduciary duty, other aspects of pension fund investment in infrastructure and an assessment of the relationship between pension fund governance and management and investment return and other outcomes.
Project Director: Larry W. Beeferman. E-mail: email@example.com Tel.: 617-495-9265
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