Rotman International Centre for Pension Management Spring 2012 Journal
Taking a look at how the tradition-bound pension industry can innovate to better service the retirement needs of its clients is the focus of the Spring 2012 issue of the Rotman International Journal of Pension Management. "The pension industry has not been known for its innovation. But as we continue to live and work longer, the industry has started to develop new thinking about retirement and investing to ensure a healthy financial future for both the pension organizations and their clients," says Journal editor, Keith Ambachtsheer who is also Director of Rotman ICPM and an adjunct professor of finance at the Rotman School. "This issue has an update on four research proposals that have just received ICPM funding. The Centre and our thirty-four research partners recognize that research and innovation go hand in hand. Our research today is the fuel that will propel pension-sector innovation tomorrow." The next issue of the Journal is scheduled for release in Fall 2012.
Can the Pension Industry Innovate? (Vol 5, Iss 1 Spring 2012)
ISSUE DETAILS: The Table of Contents/Abstracts/Hyperlinks to individual articles in this issue of the Journal are available below. The Journal is also available in FlipBook format. See: http://digital.utpjournals.com/i/66288
TABLE OF CONTENTS AND EDITORIAL: (See: http://utpjournals.metapress.com/content/m1v444w25718w567/fulltext.pdf )
Can the Pensions Sector Innovate? (See: http://utpjournals.metapress.com/content/m1v444w25718w567/fulltext.pdf )
By the standards of such sectors as information technology, the pensions sector has been a global innovation laggard. This issue of the Journal provides evidence this may finally be changing.
Benchmarking Retirement Income Systems around the World: Which Countries Rank Highest and Why? (See: http://utpjournals.metapress.com/content/e913p96r049jv400/fulltext.pdf )
The Melbourne Mercer Global Pension Index considers more than 40 indicators in calculating an Index value for the systems in 16 countries covering more than half the world's population. Index values indicate considerable global variance in pension system adequacy, sustainability, and integrity.
Pension Liability Measurement and Intergenerational Fairness: Two Case Studies (See: http://utpjournals.metapress.com/content/e28827h368124144/fulltext.pdf )
The liability valuation techniques of state and local pension plans in the United States and those recently proposed in the Netherlands are two examples of how current practices underestimate pension liabilities. This leads to intergenerational wealth-distribution effects that can be deeply damaging.
Incorporating Uncertainty into Accounting Estimates of Pension Liabilities (See: http://utpjournals.metapress.com/content/e6mx73065217x238/fulltext.pdf )
A model for obtaining estimates of pension shortfalls when rates of return are uncertain shows that the risks of underfunding are much greater than indicated in current financial reporting. Current practices must be changed to address this problem.
ULRICH MENZEFRICKE and WALLY SMIELIAUSKAS
How Large Pension Funds Organize Themselves: Findings from a Unique 19-Fund Survey (See: http://utpjournals.metapress.com/content/m7hq481308561jt3/fulltext.pdf )
A key finding was that more internal management is associated with greater fund size, lower operating costs, and higher net returns. Also, investment staff compensation varies widely, and Board selection processes continue to limit Board diversity.
JODY MACINTOSH and TOM SCHEIBELHUT
The Road Ahead: Rethinking the Investment Policy Roadmap (See: http://utpjournals.metapress.com/content/e836251831761230/fulltext.pdf )
Taxpayers, pensioners and political and union leadership should regard innovation in the investment and governance practices as important as changes in liability measurement and disclosure. This article describes New York City's efforts to ameliorate investment and governance shortcomings.
Really Investing for the Long-Term: A Case Study (See: http://utpjournals.metapress.com/content/e20w445p177uh325/fulltext.pdf )
PGGM Investment Management has created a dedicated equity portfolio with a long-horizon investment mandate. Its management integrates financial, environmental, social and governance factors with active ownership on an ongoing basis.
ALEX VAN DER VELDEN and OTTO VAN BUUL
Thinking Strategically about Climate Change: Risks and Opportunities See: http://utpjournals.metapress.com/content/0117127482083650/fulltext.pdf )
This article describes a large-scale research project analyzing the potential impact of climate change on investors' portfolios. Using four climate change scenarios to measure sources of investment risk leads to the conclusion that risks and uncertainty around climate policy can account for 10% of total fund risk.
DANYELLE GUYATT, JANE AMBACHTSHEER and ELISABETH BOURQUI
The BP Crisis as a "Preventable Surprise": Lessons for Institutional Investors (See: http://utpjournals.metapress.com/content/g6500722k0l9731w/fulltext.pdf )
The authors argue that BP's Gulf of Mexico spill was an instructive example of a "preventable surprise". They further argue for the adoption of fundamentally different mindsets by pension fund fiduciaries that focus on acquiring and nurturing sustainable cash-flows rather than short-term capital gains.
RAJ THAMOTHERAM and MAXIME LE FLOCH
ICPM RESEARCH PROJECT UPDATE: ICPM Invests in Innovation (See: http://utpjournals.metapress.com/content/9025143232468371)
ICPM believes there is a strong link between research and innovation. The Research Committee has just finished selecting four research projects for funding from 34 original proposals. The projects are in the areas of pension design, risk tolerance and liability valuation.