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

Real credit the only opportunity in the new regime: Watson Wyatt

Investors must recognise that the economic world has changed and not expect normal asset price reversion in the future, says Carl Hess, Watson Wyatt’s global head of investment consulting. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Swedish AP funds exclude 10 companies due to ethical breaches

Sweden’s first four buffer funds, with combined assets of SEK 690.6 billion (US$83 billion) have demonstrated a lack of tolerance for companies that continue to breach ethical guidelines despite the funds’ governance efforts to bring about change, excluding 10 companies from their investment universe. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

…while ICGN urges IASC to prioritise investors’ views in accounting

The International Corporate Governance Network (ICGN), with members from 47 countries responsible for global assets of US$15 trillion, has urged the International Accounting Standards Committee (IASC) to prioritise investors, not auditors, as the key stakeholders in the setting of global financial reporting standards. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Modern Portfolio Theory still holds up Harry Markowitz says so.

In an exclusive interview, Amanda White, editor of top1000funds.com, talks to the modern portfolio theorist about markets, portfolio rebalancing, Madoff and more. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Economic recovery will bring inflation back from the dead: Partners Group

Government efforts to defend economies from the global downturn – primarily official interest rate cuts and spending packages – could make inflation a significant threat to investors’ portfolios once the crisis has run its course, according to Urs Wietlisbach, executive vice chairman of Partners Group, a CHF24 billion (US$21 billion) alternatives manager. mrec4inarticleinline Sponsored Content

SWFs eye private real estate funds

New research reveals many sovereign wealth funds (SWFs) have entered the private fund arena and more are planning to invest through private equity funds in the future. According to analysis from the 2009 Preqin Sovereign Wealth Fund Review, which contains investment plans for all SWFs active in the real estate sector, 13 per cent invest

Previous