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 such security can be extended to and enhanced for more 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 on “Superannuation: The Past, Present and Future” and “Capital Stewardship – Managing Labour’s Capital” was held at the University of Sydney.

Annual Conference

On March 16-18, 2011, the Project will hold its ninth annual 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. This year’s event, entitled the 2011 PENSIONS, RETIREMENT SECURITY, AND STRATEGIES FOR INVESTMENTCONFERENCE, will feature speakers and panels on key topics, including a critical perspective on the operation of financial markets in which pension funds participate, the nature and implications for pension funds of the recently enacted financial markets reform legislation; the current and future landscape of those who provide financial services to funds, the relationship between pension fund boards and their staff, consultants, and asset managers,  the progress and impact of corporate governance reforms, efforts to sustain public sector pension plans both currently and with any eye to the future, and the ongoing challenge of retirement income security for all households.

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 2010 PATS program, which ran from July 26th to July 28th, included nearly fifty experienced public sector pension fund trustees from across the country, Canada, and the Virgin Islands serving on boards which manage assets ranging from $30 million to over $60 billion. One set of sessions focused on pension fund risk management included with segments relating to a framework for pension fund risk management, systems and processes to strengthen decision-making and implementation, and individual and collective board decision-making. The other set concerned fiduciary duty and included segments pertaining to current key issues facing trustees under the prevailing understanding of fiduciary duty, challenges to that prevailing understanding and possible courses of action in light of a different understanding, and a tour of the landscape claims made of breaches of fiduciary duty and lessons to be learned from that. The next program will be held on July 25 to 27, 2011.  Details on the program and registration materials will be available in March 2011.

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.  

In October 2007, the Project published the first issue of a quarterly newsletter, the aim of which was 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. A new version of the publication, “Capital Matters: Occasional Notes” will commence shortly.

The Project is engaging in research – and related convenings – on a number of topics. Its continued work on incorporating workplace/labor and human rights issues in investment decisions includes collaboration among the Fair Labor Association (FLA), FLA member companies, major institutional investors and the Project to develop key performance indicators for companies’ management labor and human rights risks in their supply chains. (The Project is convening a special meeting in that connection, called “Assessing Management of Labor and Human Rights Issues in the Supply Chain: A Dialogue on Meeting Company Needs and Addressing Investor Concerns.”) It also involves research in connection with a developing working group of the United Nations-backed Principles for Responsible Investment Initiative on social factors and investment decisions. Other efforts relate to a critical review of fiduciary responsibility for public as well as private pension fund trustees and other aspects of pension fund activity; assessment of pension fund decision-making with respect to infrastructure investment;  analysis of the relationship between pension fund governance and management and a variety of outcomes, including investment returns.  

Project Director: Larry W. Beeferman. E-mail: lwb@law.harvard.edu

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