Upgrading the investment policy framework of public pension funds
Public pension funds have the potential to benefit from low operating costs because they enjoy economies of scale and avoid large marketing costs. But this important advantage has in most countries been dissipated by poor investment performance. The latter has been attributed to a weak governance structure, lack of independence from government interference, and a low level of transparency and public accountability. Recent years have witnessed the creation of new public pension funds in several countries, and the modernization of existing ones in others, with special emphasis placed on upgrading their investment policy framework and strengthening their governance structure. This paper focuses on the experience of four new public pension funds that have been created in Norway, Canada, Ireland and New Zealand. The paper discusses the safeguards that have been introduced to ensure their independence and their insulation from political pressures. It also reviews their performance and their evolving investment strategies. All four funds started with the romantic idea of operating as'managers of managers'and focusing on external passive management but their strategies have progressively evolved to embrace internal active management and significant investments in alternative asset classes. The paper draws lessons for other countries that wish to modernize their public pension funds.
|Date of creation:||01 Jan 2008|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivia S. Mitchell & Ping Lung Hsin, 1994. "Public Sector Pension Governance and Performance," NBER Working Papers 4632, National Bureau of Economic Research, Inc.
- David Robalino, 2005.
"Pensions in the Middle East and North Africa: Time for Change,"
World Bank Publications,
The World Bank, number 7427, August.
- Robalino, David & Whitehouse, Edward & Mataoanu, Anca & Musalem, Alberto & Sherwood, Elisabeth & Sluchynsky, Oleksiy, 2005. "Pensions in the Middle East and North Africa: time for change," MPRA Paper 10448, University Library of Munich, Germany.
- Palacios, Robert, 2002. "Managing public pension reserves Part II : lessons from five recent OECD initiatives," Social Protection and Labor Policy and Technical Notes 33407, The World Bank.
- Iglesias, Augusto & Palacios, Robert J., 2000. "Managing public pension reserves - Part I : evidence from the international experience," Social Protection and Labor Policy and Technical Notes 21311, The World Bank.
- Impavido, Gregorio, 2002. "On the governance of public pension fund management," Policy Research Working Paper Series 2878, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4499. 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: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.