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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 1-3, 2013, the Project held its eleventh 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., the United Kingdom, Canada, and France. The conference explored a range of issues based on the theme of “Doing Well By and For Those With a Stake in Pension Fund Investment in Emerging Markets,” which included perspectives on the social, political, economic, etc., landscape for such investments; what pension funds know and need to know about them; the overlaps of development and pension fund investment agendas; and standards and practices for doing well….and good. In addition there were special related perspectives on India as an object of investment in general and infrastructure there in particular. Other sessions assessed critical challenges to public and private sector pension plans as well as for those who do not participate in any plans; issues in pension board decision-making, and a critical assessment of the role of modern portfolio theory in investment decision making.
On May 16, 2013, the Project co-sponsored with the U.S. State Department Bureau of Democracy, Human Rights and Labor a workshop on “Promoting Labor and Human Rights Through Investment” involving leading pension fund and other institutional investors.
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 2012 PATS program was held on August 19-21, 2013 and spent one day on “Investment in Private Equity: Lessons From the Past and for Action Now” and “Assessing Challenges to the DB Plan Model: What is Lost? What, If Anything, is Gained from Changing It?”
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 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 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 was recently published. A study relating to fund decision-making on such investments – “”Infrastructure: Deciding Matters,” will be published shortly. Another paper – “Paradigm Lost; Employment Based defined benefit plans and the current understanding of fiduciary duty” – which offers a critical evaluation of how fiduciary duty has been interpreted will appear 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 relates to a further analysis of fiduciary duty, other aspects of pension fund investment in infrastructure, labor and human rights and investment-related decisions in general and the relevance of key of key performance indicators to it in particular, 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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