Pensions and protests demands action

Sitting on the steps of St Paul’s Cathedral, London, looking over the sea of tents “occupying” the forecourt, I wondered what 2011 would be remembered for. Certainly this movement is highlighting that the people on the street see a disconnect between the financial and real economies. But what are pension funds doing to take action?

Some funds managers in “The City” were joking about how the tents were empty at night as the demonstrators went back to their homes in South Kensington – I’m interpreting this as the British sense of humour, although most humour does have some element of truth to it. Regardless, these people are taking action.

Jokes, and cynicism aside, if you take a step back it seems the world is in a bit of a mess. The leaders of the “free world” walk and talk in circles, in an attempt to bail their countries, regions and banks out of financial crises; while the leaders of war-driven territories are frozen like deer in headlights, caused to suffer and slaughtered in public humiliation. Neither scenario paints a picture of a world I want to live in, of people driven by humanity.

So what will 2011 be remembered for? Financial crisis. Countries – yes, countries – on the brink of bankruptcy! You don’t learn about that scenario, hypothetical or otherwise, in an economics degree. Governments unable to pay their pension promise. Leaders lacking courage and know-how to lead. Record youth unemployment. Record numbers of people in poverty. Record numbers of people starving.

I’m not sure how the world is going to get out of this mess. Refocusing policy on people, not money, is a start; and collaboration and coordination of policies could help. But I do know institutional investors can play a role in making the world one in which our children would want to live, or one in which we want to live. And perhaps it’s time for the industry to step up, and take some action of its own. Together.

Institutional investors must invest in climate change technology and innovation. They must invest for the long term. They must invest with sustainability as a driving force. And they must enforce their beliefs on their funds managers and other outsourced partners. If that is done, a realignment of the real and financial economies is possible.

Sponsored Content

Money is at the core of the pension fund business – pension funds are about providing an income for members in retirement. But it seems money has taken over as a driving force of every decision (this is true also of politics), creating a short-termism that may not be in the best interests of the beneficiaries – which, by the way, are not just numbers but real, living, breathing people: citizens of the world. Institutional investors can take action.

 

 

Leave a Comment

Sort content by

Why US funds can drive harder fee bargains

Many US fund sponsors believe they have not received fair value for the fees they paid to investment managers in recent years, a survey by Callan Associates found. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

CEM survey reveals private equity partnership details

CEM Benchmarking has completed a review of the private equity investments of 30 large pension funds globally, with an average of $935 million committed to private equity, revealing detail of their partnership structures, fees, and investment stages, timing and regions, and is now embarking on its first ever risk practices project. mrec4inarticleinline Sponsored Content scnative1

More private equity funds abandoned

Only $38 billion was raised in private equity worldwide in the third quarter of 2009, the lowest level since the fourth quarter of 2003, with the number of fund raisings abandoned more than tripling in a year, according to Preqin. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Mercer 2009 funding and credit balance report

Principal at Mercer, Craig Rosenthal, was among the witnesses who gave testimony to the US House of Representatives Committee On Ways and Means, under the hearing “Defined Benefit Pension Plan Funding Levels and Investment Advice Rules” on October 1. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

UAE and Malaysia strengthen investment ties

In another deal struck in the United Arab Emirates (UAE) financial sector, the $25 billion Khazanah Nasional Berhad of Malaysia has bought a 25 per cent stake in Dubai Islamic investment firm Fajr Capital for $150 million. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

HMC to increase in-house management

Harvard Management Company, with responsibility for managing the $26 billion Harvard endowment fund, has hired a number of senior investment staff and reorganised its internal structure as it positions itself to bring more asset management in-house. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Previous