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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.
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 May 16, 2013, the Project co-sponsored with the U.S. State Department Bureau of Democracy, Human Rights and Labor the second workshop on “Promoting Labor and Human Rights Through Investment” involving leading pension fund and other institutional investors.”
From May 7 to May 9, 2014, the Project held its thirteenth annual conference. Trustees from the United States and Canada were joined by senior pension fund staff, scholars, researchers, and others from across the United States as well as from Brazil, Canada, France, Morocco, and the United Kingdom. The conference explored a range of issues with a particular eye to the meaning, import, and practice of long-term investing in general and how it relates to investment in emerging market countries in particular. Keynote remarks set the stage for much of the discussion, focusing on the global economy with a long view historically and going forward of the relationships between and among developed and developing countries – and what it means for pension funds. Participants were then offered perspectives on the practical meaning of long-term investment in general and with respect to infrastructure in particular. Within this framework subsequent sessions explored in detail the potential for pension fund investment in Brazil, Indonesia, and Morocco. A related session explored the increasing relevance of labor and human rights standards to investment decision-making. The last group of sessions addressed diverse challenges at the pension fund level. Two were related to investment decision-making: one addressed how much better prepared pension funds were (and might be) to navigate challenging financial markets after the Great Financial Crisis and conversely in what ways pension funds may contribute to making those markets challenging; the other inquired into the critical roles that investment consultants do and should play in relation to trustees and staff, how useful their services are in fact, and concerns about compensation and conflicts of interest. Another two canvassed the effectiveness (and fate) of retirement plans in theory and practice: one sought lessons to be learned for others from the Detroit bankruptcy, its connection to and impact on Detroit pension funds, set within broader context of state and municipal finance and the local, state, and regional economy; the other considered the claimed strengths and asserted weaknesses of the small scale occupational defined contribution plan in France, PERCO, in comparison with the large scale 401(k) plans in the U.S. in relation to the overall retirement systems in each of the two countries.
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 2013 PATS program was held on August 19-21, 2013 and spent one day on “Assessing Challenges to the DB Plan Model: What is Lost. What, If Anything, is Gained from Changing It” and the other on “Investment in Private Equity: Lessons from the Past and for Action Now.” The dates for future PATS programs have not yet been set.
Recent, Current, and Future Work
The Project has convened meetings focusing 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.” 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 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 on a number of topics. Its initiative on work on incorporating workplace issues in investment decisions included a benchmarking study for the Australian Council of Superannuation Investors, on the labor and human rights supply chain practices of the ASX 200 companies and a comparison with those of the largest 2500 global corporations. ACSI drew on this study to engage ASX companies on those practices. A group on UN PRI signatories engaged a group of companies world-wide using the results of the Project’s previous benchmarking work. The Project prepared a report on its collaboration with the Fair Labor Association (FLA), FLA member companies, and major institutional investors to develop key performance indicators for companies’ management labor and human rights risks in their supply chains. The first two of a series of papers relating to whether and how pension funds might invest in infrastructure – “Infrastructure: Defining Matters” and “”Infrastructure: Deciding Matters” have been released. The next in the series – “Infrastructure: Doing What Matters” – will be published shortly. Another publication – “Paradigm Lost; Employment Based defined benefit plans and the current understanding of fiduciary duty” recently appeared in the Handbook of Institutional Investment and Fiduciary Duty, published by Cambridge University Press. Other work in progress relates to a further analysis of fiduciary duty, pension fund investment in infrastructure, the materiality of human capital behaviors and practices of companies to their financial performance, and a comparison of recent changes to the Brazilian pension system for federal employees to somewhat similar changes made in the United States made over 25 years ago.
Project Director: Larry W. Beeferman. E-mail: email@example.com Tel.: 617-495-9265
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