With The Future of Pension Management, Integrating Design, Governance, and Investing Keith Ambachtsheer gives a current view on pensions. His new book is a must-read for trustees because it alongside the theory of pension fund governance and -beleggen gives many examples from practice.
Principles well defined
Ambachtsheer alerts as no subject and focuses on dilemmas that are discussed at the board table. Like no other Ambachtsheer makes the dilemma of sustainable pensions and income security for retirees negotiable. He referred to Nobel laureate Jan Tinbergen who wants to reach him early on convinced that if you have multiple goals, you need to use multiple instruments. An extremely dedicated book, which he economic theory (Keynes to Piketty) involves the pension domain. His plea for long-term investments (and his criticism of short-term thinking), investment beliefs, the approach to the investment process and the need for scale and efficiency are relevant to drivers.
After it appeared Pension Revolution and wrote with Don Ezra in 1998 Pension Fund Excellence is Ambachtsheer in 2007 on positive developments in governance, pension design, investment and risk management at pension funds. He thereby striking examples from Canada, USA, UK and Europe and shares his lessons learned from interviews with local experts and from international research. He describes the shifts in pension design of defined benefit and defined contribution to defined ambition, the impact of lower expected returns on policies and developments in risk sharing. Ambachtsheer emphasizes the importance of fair risk sharing and the demands it imposes on management and supervision. Most attention in the book is given to investment and pension governance. Little attention is given to developments on the participants side. Changes in society, labor and technology that lead to new questions about freedom of choice and financial planning (retirement planners and robo opinion).
Measuring is knowing
Ambachtsheer works the basic principles of good governance systematically. Thereby are sustainable pension design, good communication with stakeholders, organization design and implementation, effectiveness of governance, risk management, fiduciary responsibility, remuneration policy and principles of the investment at issue. He advocated cooperation between funds which their expertise and influence is enhanced and joint efforts to promote good regulation which fair risk sharing is secured over generations. He advocates the systematic measurement and transparency of results and share the results of research in this field. Knowledge is running as a thread through the book. Theory is underpinned frequent result of quantitative research. Specific attention he pays to the costs of external management. This increase if more layers formed in the investment process. Internal management of large exporters advantageous according to him. In the chapter on culture in organizations Ambachtsheer discusses good and bad examples and lessons to draw from his.
Much attention (four chapters) is given to long-term investing. Ambachtsheer see here positive movements in the pension sector. Investment beliefs, attitude to risk, benchmarking, evaluation and mandate are explained in detail. The industry is working on sustainable solutions and encourages companies to focus on a long-term orientation with emphasis on effects on the environment and other stakeholders. This will contribute to restore confidence. His most important lesson is that it is useful for pension funds to follow a comprehensive and sustainable stakeholder approach in which long-term value creation is central. A separate chapter is devoted to the risks of climate change and its impact on sustainable value creation.
This third book Ambachtsheer offers a compact handbook for good pension. The set-up with short chapters with reference to numerous studies and experts makes it is a readable book that vintage luggage for new and experienced trustees.
Source: Pension Administration & Management, No. 2, 2016