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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.
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-accounted based schemes are evidence of serious and pressing concerns about the ability of households to sustain themselves 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 is currently focusing its work on retirement security to include ways in which it can be extended and enhanced for more households in America.
Pension stewardship and the choices made by those responsible for overseeing trillions of dollars in retirement plan assets have a tremendous significance for active and retired plan participants’ ability to enjoy 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 active on these matters in Canada, the UK, the Netherlands, and Australia and has brought in speakers from the Netherlands, the UK, Canada, Sweden and South Africa.
In spring 2008, the Project held the sixth annual Capital Matters: Managing Labor's Capital conference. The success of previous conferences, organized by the LWP, and attendees’ enthusiasm for the creation of a long-term program to spur research, education, and engagement on the kinds of issues discussed were the reasons for the LWP establishing the Project. The 2008 conference brought together public and Taft-Hartley pension trustees, labor leaders, members of the pension investment community, legal experts, scholars, researchers, and others to discuss the reasons for and import of current turmoil in capital markets and related issues of financialization and how labor might understand and respond to it. They considered the import of efforts to reform corporate governance for workers followed by assessed property investments geared to achieving not only market-based returns but also labor friendly outcomes. They participated in a spirited international dialogue about capital stewardship within and across borders. Conferees also took up a review of pension fund engagement on corporate labor and human rights issues. In addition, they considered new ideas to address the need to ensure retirement security for all and the role of employment-based retirement plans in meeting that need, featuring both policy changes in the Netherlands and Germany and policy proposals in the United States. Finally they explored the rationales behind recent efforts to pre-fund retiree health benefits, analyzing the implementation of these measures, as well as their impact. The seventh annual conference will take place on April 29-May 1, 2009.
In October 2007, the Project published the first issue of its quarterly newsletter, Capital Matters, the aim of which is to share information and insights on issues of retirement security and capital stewardship drawn from the Project’s own work, as well as scholarly and other research and activities on those issues. The timing and format of the publication will be changed so that issues of “Capital Matters: Occasional Notes” will commence in March, 2009.
The Project convened working meetings in February and March 2007 which 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 will co-sponsor a meeting on “Investment in Infrastructure and the Pension Fund Role in It” on February 12-13, 2009. As the first step in a major initiative on the subject, the Project will convene a meeting on “Long-term Investment Decisions: Assessing the Sustainability Risks of Labor and Human Rights and other Workplace Factors” on March 26-27, 2009. In 2007, in partnership with the National Conference on Public Employee Retirement Systems, the Project offered the first seminar in its Program of Advanced Trustee Studies for a group composed primarily of experienced public sector trustees. The 2008 program included two full-day sets of sessions, one relating to corporate governance and the other to investment in infrastructure. This year’s program is scheduled for July 21-23, 2009. One set of sessions will look at financial markets, institutions, instruments, and regulation with an eye to events over the past two years. The other will look at investment strategies in relation to modern portfolio theory and its critics/limits, anticipating and taking account of investment risk, and informed and accountable investment decision-making more generally. In April 2008, the Project commenced publication of papers on a variety of issues, with the first relating to intensified interest in both the public and private sector in the United States in pre-funding of health benefits. A second paper focused on the inclusion of labor and human rights risk into investment decisions. The third was a resource paper on pension fund investment in infrastructure, focusing on both financial and labor issues. The Project is engaged in research for the Council of Institutional Investors concerning the relationship between pension board composition and investment-related outcomes. The Pensions and Capital Stewardship Project anticipates engaging in research – and related convenings – on a number of other topics. These include: legal issues regarding fiduciary responsibility for public as well as private pension fund trustees and other aspects of pension fund activity; the practice and impact of pension funds and others’ activism on the quality of corporate governance and behavior, especially as relates to workplace issues, including labor and human rights and human capital; trustee decision-making; and how, consistent with the rules for fiduciary duty, pension plans that establish individual accounts may spur activism analogous to that engaged in within the framework of defined benefit plans.