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

Maverick Series video: Gonski part I

In the first of a new series of video interviews featuring thought leaders in global institutional investment, chair of the $80 billion Australian Future Fund, David Gonski, outlines his views on governance. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

ATP reunites alpha and beta after 6 years

Alpha and beta rely to a large extent on exposures to systematic risk factors, so goes the “2013 thinking” of ATP in reversing the decision to separate alpha and beta in its investment portfolio six years ago. ATP has separate hedging and investment portfolios, with the hedging portfolio significantly larger at around DKK 670 billion

State Street’s Probyn into 2013

The current equity rally is not predicated on a shift in economic performance, according to chief economist at State Street, Chris Probyn, who says it would be reasonable to say the market may “pause for thought”. Probyn says the move from fixed income to equities has been fostered by some of the “economic areas for

CalPERS’ sustainability initiative drives investment beliefs

Launched this week, CalPERS’ Sustainable Investment Research Initiative (SIRI) will drive the development the $250-billion fund’s first set of investment beliefs. While difficult to believe a fund of its size, reach and history could invest without a set of investment beliefs, it is encouraging to see that sustainability will be a core part of that

Finnish pension reform a lesson for all

The findings from the first review of the Finnish pension system, commissioned by the Finnish Centre for Pensions, were handed down by Nicholas Barr from the London School of Economics and Keith Ambachtsheer from the Rotman International Centre for Pension Management last month. Although Helsinki in January is far from a party Ambachtsheer and Barr

European investors stay on the offensive

2012 was a year of battles for European pension funds. An ongoing war was waged against a severe regulatory challenge from the European Commission in the shape of Solvency II-style legislation. Aside from the uncertain struggle of that campaign, major European investors gained plenty of credit from standing up to corporate boards in the “shareholder

Previous