The Future of Pension Management

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.

Table of Contents

PART ONE Touchstones

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

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

CHAPTER 3 Does Institutional Investing Have a Future?

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

PART TWO Pension Design

CHAPTER 5 Why We Need to Change the Conversation about Pension Reform

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

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

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

CHAPTER 9 Designing 21st-Century Pension Plans: We’re Making Progress!

PART THREE Pension Governance

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

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

CHAPTER 12 Pension Organizations and Integrated Reporting: Improving Stakeholder Communications

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

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

CHAPTER 15 How Pension Funds Pay Their Own Investment People

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

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

CHAPTER 18 Does Culture Matter in Pension Organizations?

PART FOUR Pension Investing

CHAPTER 19 Are Investment Returns Predictable?

CHAPTER 20 Investment Returns in the 21st Century

CHAPTER 21 Long-Termism as the Dominant Investment Paradigm

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

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

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

CHAPTER 25 Are Alphas and Betas Bunk?

CHAPTER 26 Risk Management Revisited

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

About the Author

Keith P. Ambachtsheer is Director Emeritus of the International Centre for Pension Management at the Rotman School of Management, University of Toronto, and President of KPA Advisory Services, which provides strategic advice to a global clientele of pension and investment organizations. He is the author of three bestselling books and has been a regular contributor to industry journals since the 1970s.