The Future of Pension Management E-Book

Keith P. Ambachtsheer

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch

Seitenzahl: 353

Veröffentlichungsjahr: 2016

Beschreibung

A real-world look at the pension revolution underway The Future of Pension Management offers a progress report from the field, using actual case studies from around the world. In the mid-70s, Peter Drucker predicted that demographic dynamics would eventually turn pensions into a major societal issue; in 2007, author Keith Ambachsheer's book Pension Revolution laid out the ways in which Drucker's predictions had come to pass. This book provides a fresh look at the situation on the ground, and details the encouraging changes that have taken place in pension management concepts and practices. The challenges identified in 2007 are being addressed, and this report shows how design, management, and investment innovation have led to measurably better pension outcomes. Pensions have become an everyday news item, and people are rightly concerned about the security of their retirement in light of recent pension scandals and the global financial crisis. This book provides a note of encouragement, detailing the ways in which today's pensions are becoming more and more secure, and the new ideas and practices that are chipping away at the challenges. * Learn how pension management practices are improving * Examine the uptick in positive outcomes over recent years * Discover why pension investing is turning toward the long-term * Consider the challenges that remain and their possible solutions Drucker's vision of a needed pension revolution is unfolding in real time. Better pension designs, more effective pension governance, and more productive pension investing are mitigating many of the issues that threatened collapse. The Future of Pension Management provides a real-world update on the state of pensions today and a look forward to the changes we still need to make.

Leseprobe

Table of Contents

Series Page

Title Page

Copyright

Dedication

Preface

The Evolving Pension Revolution

Three “Unreasonable” Men

Part One: Touchstones

Chapter 1: Improved Pension Designs and Organizations: Gateways to a More Functional Capitalism

A “Gateways” Lecture in London

Setting the Stage

Addressing Capitalism's 21st-Century Challenges

Sustainable Pension Designs

Effective Pension Fund Organizations

Opening Up a Second Front

A Vision

Notes

Chapter 2: Pension Plans for the Masses: Good Idea or Pipe Dream?

The Looming Retirement Savings Challenge

The USA Retirement Funds Initiative

Canada's Pension Reform Journey

The UK Pension Journey

Lessons for the USA and Canada

Notes

Chapter 3: Does Institutional Investing Have a Future?

A Talk in Tokyo

The Cost of Active Investing

New Evidence from the Pension Fund Sector

How Should Institutions Invest?

From Theory to Practice: The Case of Ontario Teachers' Pension Plan

“Ideal” Investment Organizations and the Cost of Investing

Getting from Here to There

Notes

Chapter 4: Thomas Piketty's Capital in the 21st Century: Its Relevance to Pension Fund Management

The Piketty Phenomenon

The R > G Inequality

The Laws Governing Wealth Concentration

What Is the R Story?

How Important Are Pension Funds in the Global Scheme of Things?

Piketty's Contributions

Notes

Part Two: Pension Design

Chapter 5: Why We Need to Change the Conversation about Pension Reform

Debating Pensions in Washington D.C

A New Book on Pension Reform

Changing the Pension Reform Conversation

A Fit-for-Purpose Pension Formula

Intergenerational Fairness

Where to Go from Here?

Changing the Conversation

Notes

Chapter 6: On the Costing and Funding of Defined-Benefit Pensions: Separating Fact and Fiction

Unconventional Wisdom Needed

Complete Pension Contracts

Incomplete Pension Contracts

The Risk-Free Arbitrage Test

The Case of PERS

Further Reflections

Notes

Chapter 7: Defining Defined-Ambition Pension Plans: Conclusions from an International Conversation

An International Conversation in Rotterdam

Addressing the Adequacy-Affordability-Safety Conundrum

Designing 21st-Century DA Pension Plans

The QSuper Story

The PFZW-PGGM Story

Looking Ahead: Three 21st-Century Challenges

Notes

Chapter 8: What Are Target-Benefit Plans and Why Should You Care?

Why You Should Care

What “Benefit” Are We Talking About?

What Does “Target” Mean in a TB Plan?

Where Does That Leave Janet and John?

So What Are Target-Benefit Plans?

Notes

Chapter 9: Designing 21st-Century Pension Plans: We're Making Progress!

Pension Design in the 21st Century

The High Historical Returns Mirage

Rethinking Investment Risk Sharing

Rethinking Longevity Risk Sharing

Updating the Tinbergen Pension Model and its Applications

Note

Part Three: Pension Governance

Chapter 10: How Effective Is Pension Fund Governance Today?: Findings from a New Survey

A New Survey on Governance

Prior Pension Governance Research Findings

Description of the 2014 Survey and Respondents

2014 Survey Findings on Governance

Major Governance Concerns Remain

Notes

Chapter 11: The Evolving Meaning of Fiduciary Duty: Is Your Board of Trustees Keeping Up?

Pension Boards Lag Courts in Interpreting 21st-Century Fiduciary Duty

Why Now?

Responses at the Pension Organization Level

Collective Responses at the National and Global Levels

Doing the Right Thing

Notes

Chapter 12: Pension Organizations and Integrated Reporting: Improving Stakeholder Communications

The <IR> Initiative

South Africa's Sentinel Mining Industry Retirement Fund

Practice vs. Theory

Three Possible Next Steps in the Journey

Notes

Chapter 13: Measuring Value-for-Money in Pension Organizations: A New Look

Defining Success

Measuring Value-for-Money

Chapter 14: Measuring Value for Money in Private Markets Investing: Why Investors Need a Standard Protocol

A Wakeup Call for Pension Funds

Measuring Value for Money in Private Markets Investing: A Retrospective

Measuring Value for Money: from Retrospective to Prospective

The CEM Standardized Measurement Initiative

Where to Go from Here?

Notes

Chapter 15: How Pension Funds Pay Their Own Investment People

A Unique Study of Pension Investment Pay Practices

A Study in Four Parts

Four Insights from the Survey Findings

Searching for High-Compensation Drivers

Five Concluding Observations

Notes

Chapter 16: Investment Beliefs and Organization Design: Are They Aligned in Your Organization?

A Recent Board Conversation

Investment Beliefs

Two Goals…Two Instruments

Managing the Return-Seeking Portfolio

Managing the Payment-Safety Portfolio

Organizational Implications

A Board Dilemma

Notes

Chapter 17: Norway versus Yale—or versus Canada?: A Comparison of Investment Models

Canada Calling

Competing Investment Models

Competing Organizational Models

Which Fund Model “Wins”?

The Best Way Forward for the Norway Fund

Should Norway Go Canadian?

Notes

Chapter 18: Does Culture Matter in Pension Organizations?

Addressing the Culture Question

Bad Cultures, Bad Outcomes

Good Cultures, Good Outcomes

A Biology Framework

Culture Issues in Pension Organizations

Notes

Part Four: Pension Investing

Chapter 19: Are Investment Returns Predictable?

Reconciling Investment Theory and Practice

The Predictable Returns Thesis

Lo's Adaptive Markets Hypothesis

Keynes' “Beauty Contest” Investors

Akerlof's “Lemons” Thesis

Drucker's Fiduciary Investment Institutions

Ambachtsheer's Return Prediction Journey

Back to the Starting Questions

Notes

Chapter 20: Investment Returns in the 21st Century

Rethinking Investment Beliefs

Telling the Capital Markets Story

The S&P 500 Entrails: A Closer Look

Reasonable Pricing

Notes

Chapter 21: Long-Termism as the Dominant Investment Paradigm: Not There Yet

Movement toward Long-Termism?

The Case for Long-Termism

An Institutional Survey

Notes

Chapter 22: Investing for the Long Term I: From Saying to Doing

The FCLT Initiative

Reorienting Portfolio Strategies and Management in Five Core Areas

From Saying to Doing

Notes

Chapter 23: Investing for the Long Term II: How Should We Measure Performance?

Long-Term Investing: Measuring Results

Sensible Progress Markers

Assessing Investee Organization Health and Effectiveness

Investment Income Production as Performance

Total Fund Return Still Matters

Notes

Chapter 24: Investing for the Long Term III: Does It Produce Better Outcomes?

Better Outcomes?

The Design of the EIS Study

The Case of Unilever

Lessons for Pension Organizations

Notes

Chapter 25: Are Alphas and Betas Bunk?

Operationally Meaningful Theorems

Making Portfolio Theory Useful, and Moving On

Making Drucker's “Unseen Revolution” Visible

Key Characteristics of Return-Seeking and Payment-Safety Investment Programs

The Essence of the Scientific Investment Paradigm

Fits and Misfits

Are Alphas and Betas Bunk?

Notes

Chapter 26: Risk Management Revisited

Does MPT Need Editing…Or How We Apply It?

MPT's Insights

From Theory to Practice: How Helpful is MPT?

As Simple as Possible, but No Simpler

Who Is at Risk?

What Is Our Risk Exposure?

Salient Strategic Advice and Implementation

Notes

Chapter 27: From an Unknown to a Known: Managing Climate Change Risk

Categorizing Risks

Risk and Pension Management

The Mercer Climate Change Study

Risk Management Revisited

Notes

Conclusion

About the Author

Index

End User License Agreement

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Guide

Table of Contents

Begin Reading

List of Illustrations

Chapter 5: Why We Need to Change the Conversation about Pension Reform

Figure 5.1 Pension Risks to Be Considered

Figure 5.2 The Intergenerational Fairness Problem

Figure 5.3 A DA Plan Delivery Organization

Chapter 10: How Effective Is Pension Fund Governance Today?: Findings from a New Survey

Figure 10.1 Demographics of the People Completing the 2014 Survey

Figure 10.2 The Response Distributions in 1997, 2005, and 2014

Chapter 13: Measuring Value-for-Money in Pension Organizations: A New Look

Figure 13.1 10-Year Net Value Added versus Excess Investment Cost

Figure 13.2 10-Year {Net Return–Liability Return} versus Asset-Liability Mismatch Risk

Figure 13.3 Excess Service Score versus Excess Cost per Member

Chapter 15: How Pension Funds Pay Their Own Investment People

Figure 15.1 Size of Responding Funds by FTEs and AUM

Figure 15.2 Asset Allocations and Organizational Structures

Figure 15.3 Average Total Compensation – Total Fund (ex–Top Five) and Top Five

Figure 15.4 Ratio of Top Five Compensation to Total Fund Average Compensation (Excluding Top Five)

Figure 15.5 Top Five Employees' Actual Compensation as a Percentage of Target Compensation

Figure 15.6 Base/Variable Compensation Splits at Target Performance

Figure 15.7 Org + Pers/Investment Variable Compensation Splits at Target Performance

Figure 15.8 Average Compensation by FTE Size – Total Fund (ex–Top Five)

Figure 15.9 Average Compensation by FTE Size – Top Five

Figure 15.10 Average Compensation by Location – Total Fund (ex–Top Five)

Figure 15.11 Average Compensation by Location – Top Five

List of Tables

Chapter 4: Thomas Piketty's Capital in the 21st Century: Its Relevance to Pension Fund Management

Table 4.1 Global Asset Values for Major Institutional Investment Categories

Chapter 6: On the Costing and Funding of Defined-Benefit Pensions: Separating Fact and Fiction

Table 6.1 The Enhanced PERS Balance Sheet with Full Guarantees (20 percent contribution rate for the next 15 years)

Table 6.2 The Enhanced PERS Balance Sheet with Reduced Guarantees (20 percent contribution rate for the next 15 years)

Chapter 10: How Effective Is Pension Fund Governance Today?: Findings from a New Survey

Table 10.1 Pension Fund Oversight and Management: What Really Matters?

Table 10.2 Pension Fund Governance and Management: Specific Challenges

Table 10.3 The Six Lowest Scoring Statements in 1997 and 2005

Table 10.4 Demographics of the 1997, 2005, and 2014 Responding Groups

Table 10.5 Areas of Highest vs. Lowest CEO Satisfaction

Table 10.6 The Five Lowest-Scoring Statements in 1997, 2005, and 2014

Table 10.7 Regional Variations in Governance Quality

Chapter 14: Measuring Value for Money in Private Markets Investing: Why Investors Need a Standard Protocol

Table 14.1 Average Net Private Equity Returns in the CEM Database (1996–2012)

Table 14.2 Average Dutch Private Equity Cost Experience Applied to a $3B Portfolio (2012–2013)

Chapter 15: How Pension Funds Pay Their Own Investment People

Table 15.1 Characteristics of Responding Funds

Table 15.2 Ultimate Accountability for Design of Compensation Structure

Table 15.3 Variable Compensation Ceilings for Organizational and Personal Performance

Table 15.4 Variable Compensation Ceilings for Investment Performance

Table 15.5 Years to Calculate Variable Compensation

Table 15.6 Investment Performance Benchmark—Market-Based

Table 15.7 Investment Performance Benchmark—Absolute Target

Table 15.8 Investment Performance Benchmark—Peer Relative

Chapter 17: Norway versus Yale—or versus Canada?: A Comparison of Investment Models

Table 17.1 Investment Results—OTPP vs. Norway Fund

Chapter 20: Investment Returns in the 21st Century

Table 20.1 Entering the Eighth Capital Markets Era Since WWI

Table 20.2 S&P 500 Fundamentals in Transition from Double-Bubble Blues to Mature Capitalism

Chapter 21: Long-Termism as the Dominant Investment Paradigm: Not There Yet

Table 21.1 Six Common Threads to the Four Extraordinary Investor Stories

Table 21.2 The State of Long-Horizon Investing in the Global Pension Sector

Chapter 22: Investing for the Long Term I: From Saying to Doing

Table 22.1 Risk Identification Matrix

Table 22.2 Risk Appetite Matrix

Chapter 23: Investing for the Long Term II: How Should We Measure Performance?

Table 23.1 A Simple Investment Income Monitoring Protocol

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The Future of Pension Management

Integrating Design, Governance, and Investing

KEITH P. AMBACHTSHEER

Copyright © 2016 by Keith P. Ambachtsheer. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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