IDEAS home Printed from https://ideas.repec.org/p/oec/dafaab/18-en.html
   My bibliography  Save this paper

Pension Fund Governance: Challenges and Potential Solutions

Author

Listed:
  • Fiona Stewart

    (OECD)

  • Juan Yermo

    (OECD)

Abstract

Good governance is increasingly recognized as an important aspect of an efficient private pension system, enhancing investment performance and benefit security. Yet, despite regulatory and industry initiatives, governance weaknesses persist across OECD and non-OECD countries. This paper highlights the main governance challenges faced by policymakers (particularly with trust-based pension systems), and draws on recent policy initiatives to propose possible solutions to strengthen governance arrangements. The paper suggests that some of the more serious cases of governance failures could be solved through a more balanced representation of stakeholders in the governing body, higher levels of expertise (which may be achieved via training or the use of independent trustees) and the implementation of codes of conduct addressing conflicts of interest. The absence of governance arrangements for defined contribution style pension plans also needs to be addressed, potentially via management committees, increased fiduciary responsibility for relevant parties or via a strengthened role for pension supervisory authorities. Consolidation of the pension industry in some countries may also be required to achieve economies of scale and reduce costs, which in turn would allow pension funds to dedicate more resources to strengthening their internal governance. La gouvernance des fonds de pension : défis à relever et solutions envisageables La bonne gouvernance est de plus en plus considérée comme un aspect important de l‘efficience des régimes de retraite privés, car elle accroît les performances des investissements et la sécurité des prestations. Malgré les initiatives adoptées sur le plan réglementaire et par les professionnels, la gouvernance reste néanmoins défaillante dans les pays membres et non membres de l‘OCDE. Ce document met en relief les principaux défis qui se présentent aux responsables politiques dans ce domaine (notamment en cas de gestion sous mandat) et il s‘appuie sur des mesures récentes pour proposer des solutions de nature à renforcer les dispositions relatives à la gouvernance. Il semblerait que l‘on puisse remédier à certaines des failles les plus préoccupantes des dispositifs en place en introduisant une représentation plus équilibrée des parties prenantes au sein de l‘organe de direction, en relevant le niveau de compétence (par la formation ou en faisant appel à des administrateurs indépendants) et en adoptant des codes de conduite qui abordent la question des conflits d‘intérêts. Il convient également de pallier l‘absence de dispositions ayant trait à la gouvernance pour les plans de retraite à cotisations définies, par exemple en instaurant des comités de gestion ou en accroissant la responsabilité fiduciaire des parties concernées ou le rôle des autorités de contrôle du secteur des retraites. Dans certains pays, la concentration des intervenants sur ce marché peut aussi s‘avérer nécessaire pour réaliser des économies d‘échelle et réduire les coûts, ce qui permettrait aux fonds de pension de consacrer davantage de ressources à la consolidation de leur gouvernance interne.

Suggested Citation

  • Fiona Stewart & Juan Yermo, 2008. "Pension Fund Governance: Challenges and Potential Solutions," OECD Working Papers on Insurance and Private Pensions 18, OECD Publishing.
  • Handle: RePEc:oec:dafaab:18-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/241402256531
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:bla:acctfi:v:57:y:2017:i:1:p:47-85 is not listed on IDEAS

    More about this item

    Keywords

    administrateur; conflicts of interest; conflits d’intérêts; fiduciary responsibility; fonds de pension; gouvernance; governance; pension fund; responsabilité fiduciaire; trustee;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:dafaab:18-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/caoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.