Pension Fund Management

Pension fund management requires the investment of assets to achieve the long-term provision of funding for retirement. The management of pension funds can be differentiated from mainstream asset management in that pension fund management typically adopts a much more conservative approach to risk to meet the needs of all pension stakeholders. These stakeholders include all existing and future recipients of income from the pension plan as well as those parties contributing to the plan, including employees and the business, government, or union offering employees the benefit of future retirement provision. As an incentive to decrease their reliance on the state for retirement provision, pension fund contributions generally receive advantageous tax incentives.

Given the enormous importance pension funds hold over the long-term financial wellbeing of their beneficiaries, pension fund trustees play a key role in the effective governance of a fund, with responsibilities including ensuring that it sticks rigidly to its mandate and regularly reviewing the performance and abilities of the entity actually making the investment decisions. The challenges facing of those overseeing pension funds are continually evolving, driven by factors such as national legislation and developments in investment products. For example, while many pension funds traditionally favored a mix of equities and bonds to help them achieve their long-term investments, debate continues about the role of guaranteed return products and hedge funds to augment fund performance.

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Pension Fund Management