Pension Fund Governance Research Articles

A landscape analysis of investors in the global breast milk substitute industry to target for advocacy.

The International Code of Marketing of Breast-milk Substitutes and subsequent resolutions (the Code) was adopted to address increases in mortality and morbidity resulting from the practices of the breast-milk substitute (BMS) industry. The lack of success in ensuring company compliance with the Code has prompted advocates to consider engaging with investors to shape the governance of BMS companies. To support these efforts, this paper aimed to identify prominent investors in the global BMS industry and explore their Code-related policies and practices. Using multiple methods and data sources, we developed a novel approach to identify and rank investors in the world's leading publicly listed BMS companies. We also examined the policies and voting behaviour of a sample of investors using publicly accessible materials from 2020 to 2022. We found that a small number of large investors, led by BlackRock and Vanguard, hold a substantial share in the global BMS industry. Of the top-10 ranked investors, only Norway's Government Pension Fund (NBIM) reported policy information relating specifically to BMS marketing. Most of these large investors also opposed the sample of public health-related shareholder proposals analysed. In addition, we identified several investors that have reported engaging with BMS companies on Code-related issues, including NBIM, Pictet, and UBS, along with several potential investor targets for future advocacy efforts, including some North American public pension funds. The inclusion of Code-related issues as part of broader policies, disclosures and regulations related to environmental, social and governance oriented investment warrants increased attention.

The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner

Abstract We examine expectation documents’ effectiveness as an activism tool. We use the Norwegian sovereign wealth fund’s release of a corporate governance expectation document as a natural experiment. We introduce a novel, three-way analytical decomposition of the firms, the fund, and their joint response to this document. Firms’ governance practices adapt to the fund’s new portfolio-wide governance preferences, with heterogeneous responses across ownership and firm characteristics. The fund’s investment policies also change, even at the expense of financial returns. Overall, our research demonstrates the potential effectiveness of expectation documents as an emerging, low-cost activism tool for universal investors. (JEL F30, G32, G34)

Retirement savings behaviours and COVID-19: Evidence from Thailand

This paper utilises administrative data from members of the Thai Government Pension Fund to examine voluntary contributions and investment plan change. We find low overall incidence of both behaviours which increased only modestly during the onset of COVID-19. While the major finding is that members are in the minority if they engage in the behaviour regardless of gender, salary, balance, or experience in the fund, the relative probability varies systematically by member characteristics. Policy implications are discussed including the difficulty large plans face when attempting to encourage the savings behaviours in identifiable member groups who may benefit but the costs of doing so are borne by the full membership.

FINANCIAL PLANNING BEHAVIOR FOR RETIREMENT OF THE PERSONNAL IN RAJAMANGALA UNIVERSITY OF TECHNOLOGY TAWAN-OK, CHANTHABURI CAMPUS

The purposes of this research were to study the following: (1) Behavior (2) Factors affecting behavior and (3) Financial planning model for retirement of the personel at Rajamangala University of Technology Tawan-ok, Chanthaburi Campus. The total of 97 samples were collected. Using a purposive sampling. An important instrument used to collect data was the questionnaires. The researchers employed descriptive and inferential statistics, such as frequency, percentage, average, and standard deviation. and multiple regression analysis. The findings of the study revealed that the in retirement planning behavior, there is a preparation after retirement (83.33%), savings and investments in style of bank deposits (79.38%), no fixed proportion of savings (32.99%). The factors of preparing for retirement had the greatest impact on financial planning (3.51). The factors of current income size had the moderate impact on financial planning (3.22), The factors of Current cost size had the moderate impact on financial planning (3.15). The factors of debt burden had the low impact on financial planning (2.33). The factors of return from savings had the moderate impact on financial planning (3.12). The factors of the certainty of the expected income level after retirement had the moderate impact on financial planning (3.31). A found appropriate investment and savings model is associated with 1) Provident Fund 2) Government Pension Fund 3) cooperative stock and 4) set/ securities.

Optimisation of the investment strategy of the Norwegian Sovereign Wealth Fund by adjusting the real estate quota

Purpose This paper compares the benefits of direct international real estate investments in a mixed asset portfolio from the perspective of a passive investor with high and low bond allocation.Design/methodology/approach Due to high data availability and its professionalism, the Norwegian sovereign wealth fund was used as a representative example. Real estate indices from 8 countries were used for the portfolio analysis. The data were desmoothed according to Geltners’s 1993 approach.Findings The optimal real estate ratio in the present case is around 20–55%. However, this is strongly dependent on the bond ratio of the multi-asset portfolio. Portfolios with a high equity ratio benefit more from the additional direct real estate investments than portfolios with high bond ratios.Research limitations/implications A rebalancing of individual stocks and bonds was not analysed. Only indexes from MSCI (Morgan Stanley Capital International) were available.Practical implications Concludes that the weighting of stocks and bonds has a strong influence on the optimal real estate ratio and therefore structural changes that affect this weighting.Originality/value The originality of the paper lies in the analysis with different weights of stocks and bonds, the consideration of 8 real estate markets and the observation period. The results of the work highlight areas of interest for further research.

Plausible futures for the Norwegian offshore energy sector: Business as usual, harvest or rebuild?

The global energy transition from fossil to low-carbon energy challenges the future of the Norwegian petroleum sector, a major factor in the country's economy, now facing financial climate risk and long-term declining demand, particularly for gas to the EU. What energy policies can assist transition into a low-carbon society? We explore three investment scenarios for the Norwegian offshore energy sector from 2020 to 2070: 1) Business as usual, 2) Increasing cash-flow by harvesting existing petroleum fields and cutting investments (Harvest-and-Exit), or 3) Rebuilding with green offshore energy investments. In a new economic model, we compare impacts on key macro- and sector-economic variables. We find that rebuilding by investing moderately in green offshore energy production could reverse the extra job decline that a quicker phase-out of petroleum investments would incur. The impacts on the Norwegian sovereign wealth fund - Government Pension Fund Global - and on gross domestic product (GDP) per capita are insignificant to 2050 and positive by 2070. The simulated investments and economic results can be compared with observations to constitute forward-looking indicators for energy transitioning in producer countries.

Savings natural resource funds: effectiveness of the Norwegian Government Pension Fund Global

Motivation: Many countries that are rich in natural resources struggle with the resource curse — the phenomenon of achieving worse economic development results by economies specializing in the extraction and export of natural resources. To address this problem, an explicit fiscal tool was proposed — natural resource funds. However, empirical studies on the effectiveness of resource funds conducted so far have delivered mixed and inconclusive results. Specifically, the effectiveness of savings funds, otherwise known as funds for future generations, which are a specific type of natural resource funds, is still being questioned.Aim: This study aims to assess the effectiveness of savings natural resource funds in countries which are rich in natural resources on the example of the Norwegian Government Pension Fund Global (GPFG).Results: The main contribution of this study is to demonstrate the effectiveness of GPFG as a savings fund for future generations. In order to achieve the research objective, a classification of funds was presented and the existing natural resource funds were categorized. Funds were divided into stabilization, investment and savings. The specificity of each type of fund was explained in detail. It was found that all savings funds are also investment funds, but the reverse relationship does not apply. The effectiveness of GPFG was studied considering the functions and tasks of individual fund types. The quantitative study confirmed the effectiveness of GPFG in increasing long-term investments in Norway. At the same time, the fulfillment of the stabilization function by the fund was also validated. The study confirms that the savings fund is an important economic policy measure to counteract the resource curse.

Regulation from the inside? Internal supervision in Dutch pension funds

Political economists have long acknowledged the importance of funded pensions acting as catalysts for processes of financialization. The transformation from rule- to risk-based pension fund governance is particularly important for pension financialization. Risk-based governance involves monitoring of internal decision-making procedures by new professionals rather than compliance with highly detailed legal restrictions. Scholars of financial regulation have termed this kind of supervision ‘regulation from the inside’. Being part of the organization they monitor, internal regulators hold fundamentally ambivalent positions. Existing studies emphasize the duality of internal regulators’ role perceptions as well as their attempts to span the boundaries between themselves and other organizational actors. In this paper, we extend scholarly insights on risk-based supervision of private (non-)financial institutions to pension institutions by focusing on a peculiar form of ‘regulation from the inside’: so-called internal supervisors in Dutch occupational pension funds. Internal supervisors are pension fund functionaries, responsible for evaluating the governing board's performance and holding the board accountable. We report findings from an original survey and interview study among internal supervisors. Contrary to the formal requirement of independence between governing board and internal supervision (a ‘checks and balances’ perspective), we find that internal supervisors often adopt a ‘fusion of powers’ approach that emphasizes collaboration with the governing board. We attribute this finding not only to internal supervision’s institutional design but also to the highly networked character of Dutch pension governance.

Dynamic spending and portfolio decisions with a soft social norm

We explore the implications of a preference ordering for an investor-consumer with a strong preference for keeping consumption above an exogenous social norm, but who is willing to tolerate occasional dips below it. We do this by splicing two CRRA preference orderings, one with high curvature below the norm and the other with low curvature at or above it. We find this formulation appealing for many endowment funds and sovereign wealth funds, including the Norwegian Government Pension Fund Global, which inspired our research. We derive an analytical solution, which we use to describe key properties of the policy functions for consumption and portfolio allocation. We find that annual spending should not only be significantly lower than the expected financial return, but mostly also procyclical. In particular, financial losses should, as a rule, be followed by larger than proportional spending cuts, except when some smoothing is needed to keep spending from falling too far below the social norm. Yet, at very low wealth levels, spending should be kept particularly low in order to build sufficient wealth to raise consumption above the social norm. Financial risk taking should also be modest and procyclical, so that the investor sometimes may want to “buy at the top” and “sell at the bottom.” Many of these features are shared by habit-formation models and other models with some lower bound for consumption. However, our specification is more flexible and thus more easily adaptable to actual fund management. The nonlinearity of the policy functions may present challenges regarding delegation to professional managers. However, simpler rules of thumb with constant or slowly moving equity share and consumption-wealth ratio can reach almost the same expected discounted utility. Nevertheless, the constant levels will then look very different from the implications of expected CRRA utility or Epstein–Zin preferences in that consumption is much lower.

"Business Ethics in Norway: History of Business Ethics in Norway and Guidelines of Council on Ethics for the Government Pension Fund Global "

The aim of this paper is to present business ethics as practiced in Norway. Based on an article published in 1959, a vision of business ethics history in Norway under the rise of industrialism is described. Subsequently, the role of the Council on Ethics for the Norwegian Government Pension Fund Global (GPFG) is explained and its guidelines are presented. Aiming to obtain an overview of business ethics in Norway during both industrial and modern era and understand how views have changed during the time, a comparison is conducted.

An Analysis of High Teacher Turnover and Attrition in the North-West Province of South Africa

In the past few years, there has been a shocking rise in the rate at which teachers are abandoning the teaching profession. What is more disturbing is the scenario that the numbers appeared to be increasing daily. This research used a mixed-method approach. The study provided information on the teacher profile, the capacity of staff in relation to workload and expertise, factors that influenced teachers to leave the teaching profession in the province, perception of the teaching profession and employment opportunities after resignation from 590 teachers in the province. The study found that there were several factors which have contributed to high teacher resignations in the North-West Province over the years. The study found that one of the main causes of attrition was the Government pension fund saga. On policy implication, the Department of Basic Education has been pushing for an increase in qualified teachers’ deployment to different schools due to the high demand from the increased number of students. However, due to high attrition, it has been difficult to fill the void created by teachers who have left as they take with them high-value experience leaving a high rift of inexperienced, less effective teachers in classrooms which leads to increased recruiting and training budgets. Participants indicated the existence of peers from colleagues who have resigned and are undertaking industrious projects with the Government pension money. Their desire to make money pushes them to want to do the same and this makes efforts to change their mindset quite challenging. The study concluded that the Department of Basic Education needs to focus on teacher welfare to reduce the high attrition rate and ensure student success in the long run. Keywords: Attrition, Resignation, Teacher Turnover, Teaching Profession, Pension Fund

Макроэкономические шоки 2022 г. и суверенные фонды

In 2022, instead of getting back to pre-pandemic “new normal” the world entered into another period of severe economic and geopolitical turbulences. In terms of macroeconomics, the most evident and painful was the hike of hydrocarbons’ and food prices. This drove inflation rates to the levels not seen in recent 40 years. In attempts to cool down underlying inflationary pressures the monetary authorities of many countries had to stop the policies of quantitative easing (QE) and started to raise basic interest rates. In this environment the governments, businesses and families are facing massive debt problems. The main stock market indices crushed deeply and simultaneously in 2002 which meant substantial depreciation of assets. All these macroeconomic shocks seriously affected the performance of sovereign wealth funds which currently present a solid and increasingly influential group of global assets’ holders and managers. The steady growth of the value of their assets under management (AUM) was interrupted last year. According to preliminary analysis, the total losses of AUM can reach circa 1 Trillion US$. Just one fund – Norway’s Government Pension Fund Global (GPFG) – reported a depreciation of its assets by as much as 165 Billion US$ as of end‑2022. This is an amount comparable to the GDP of a mid-size country, for instance Ukraine before current military conflict. However, for Norway’s GPFG and similar state-owned investors (SOIs) of other countries such losses were not critical. SWFs are, basically, “tolerant investors” with very long view on value creation and operational planning, so they easily absorb paper losses. Simultaneously, the huge SWFs of oil and gas exporting Gulf countries enjoyed the hike of hydrocarbons’ international prices and hurried up to invest massive influx of unexpected revenues into depreciated assets in troubled economies of the USA and Europe. More countries tended to expand the mandates of their sovereign funds beyond traditional stabilization and saving functions. Strategic development funds became increasingly demanded by the governments and may appear even at the supranational level (the projected European Sovereignty Fund). So far, it may be concluded that in general macroeconomic shocks of 2002 did not undermine the positions of SWFs as strong and resource-rich global investors. On the contrary, it looks like that their role as an efficient tool of governmental policies of offsetting and preventing multiple market failures is getting to be further strengthened in upcoming harsh times.

Capital Preservation and Current Spending with Sovereign Wealth Funds and Endowment Funds: A simulation Study

We simulate the future performance of the Norwegian Government Pension Fund Global as a leading example of sovereign wealth funds intended both to preserve wealth and provide regular budget contributions. Withdrawals are limited to the fund’s expected real returns; however, deviations are allowed to fund automatic stabilizers as well as discretionary fiscal policy. It also allows smoothing to avoid abrupt changes. Except for the fiscal policy part, many endowment funds are subject to similar rules. The main findings are: (i) Even if withdrawals matching expected returns maintain the fund’s value in expectation, the fund will be depleted eventually. (ii) Because the fund is invested in foreign currency, long-run purchasing power parity introduces an element of mean reversion and hence a negative serial correlation in the rates of return, so that the fund’s value is not even preserved in expectation. (iii) The use of the fund for fiscal policy introduces a substantial risk of depletion in finite time. (iv) Smoothing raises the risk of depletion after large negative financial returns, though only modestly so. Risk reduction and withdrawal rates below expected returns are explored as remedies. Risk reduction postpones the eventual depletion but does not eliminate it. Lower withdrawal rates help sustainability more fundamentally, but bounds on fiscal policy are needed for depletion risk to be eliminated.

Attitudes towards priority setting in the Norwegian health care system: a general population survey

BackgroundIn an ideal world, everyone would receive medical resources in accordance with their needs. In reality, resources are often scarce and have an alternative use. Thus, we are forced to prioritize. Although Norway is one of the leading countries in normative priority setting work, few descriptive studies have been conducted in the country. To increase legitimacy in priority setting, knowledge about laypeople’s attitudes is central. The aim of the study is therefore to assess the general population’s attitudes towards a broad spectrum of issues pertinent to priority setting in the Norwegian publicly financed health care system.MethodsWe developed an electronic questionnaire that was distributed to a representative sample of 2 540 Norwegians regarding their attitudes towards priority setting in Norway. A total of 1 035 responded (response rate 40.7%). Data were analyzed with descriptive statistics and binary logistic regression.ResultsA majority (73.0%) of respondents preferred increased funding of publicly financed health services at the expense of other sectors in society. Moreover, a larger share of the respondents suggested either increased taxes (37.0%) or drawing from the Government Pension Fund Global (31.0%) as sources of funding. However, the respondents were divided on whether it was acceptable to say “no” to new cancer drugs when the effect is low and the price is high: 38.6% somewhat or fully disagreed that this was acceptable, while 46.5% somewhat or fully agreed. Lastly, 84.0% of the respondents did not find it acceptable that the Norwegian municipalities have different standards for providing care services.ConclusionAlthough the survey suggests support for priority setting among Norwegian laypeople, it has also revealed that a significant minority are reluctant to accept it.

Shifting Patterns from Defined Benefit to Defined Contributions: An Empirical Analysis of Selected OECD Countries

The goal of the study is to find out how the growth of pension funds and their accumulation factors are related. Step-wise regression approach was utilized on a dynamic panel data model to verify the individual significance of included variables in the model systematically in order to bring out the core accumulation elements which are driving the pension fund's development, and R2-change was observed for this purpose. The study explores that OECD economies behave differently on the bases of their growth perspective i.e., Defined Benefits, and Employers' Contributions are positively contributing to pension funds in HGO economies and negative in LGO ones, showing that DB is hardly practised in the latter ones and is replaced by DC plan. The approach utilized in this article could be of practical value to policymakers and data analysts in OECD pension funds departments when making decisions on pension fund governance and the underlying fundamental drivers.

Experts versus representatives? Financialised valuation and institutional change in financial governance

ABSTRACT Valuation devices and institutional change are key aspects of financialisation, but have been largely separated in the literature. This article explores the causal link between both concepts. We draw on the linked ecologies framework to argue that financialised valuation, such as market valuation of assets and liabilities, creates opportunities for financial experts to influence policy processes. Making use of their institutional position, experts frame policy problems to advance further financialisation as a solution. So doing, they perform essential boundary work to tie authority over financial knowledge to their social position as financial market actors. The result is a process of endogenous institutional change, whereby financial experts increasingly displace other actors in governance arrangements. We illustrate this argument providing a case study of pension fund governance in the Netherlands. There, financialised valuation requirements led to a crisis of pension funding, to which policymakers responded by strengthening experts’ positions on pension fund boards, thereby eroding century-old corporatist institutions. We show how the infrastructural entanglements between financial markets and the state in the Dutch pension system not only benefited financial actors’ institutional positions, but also point to limits of financial agency as the state increased its own capacity over a formerly corporatist domain.

A Review of the Active Management of Norway's Government Pension Fund Global

A Review of the Active Management of Norway's Government Pension Fund Global

Sustainable investing and the environmental awareness through the time: evidence from the Norwegian Government Pension Fund Global companies

Sustainable investing and the environmental awareness through the time: evidence from the Norwegian Government Pension Fund Global companies

Alertness-Grundmessung als stärkster Prädiktor für den Erwerbsstatus bei Patienten mit MS sechs Monate nach der Rehabilitation

Baseline alertness as the strongest predictor of employment status in patients with MS 6 months after rehabilitationS. Marchione, C. Dettmers, A. Weimer-Jaekel, B. Godde, M. JoebgesAbstractIntroduction: Fatigue is a dominant impairment in multiple sclerosis, which often also limits the professional performance of patients with MS (PwMS). In clini-cal practice fatigue is often difficult to assess. The question of our study was whether the objective cognitive fatigability – measured as reaction time or tonic alertness – or the subjective self-assessment of the patient – recorded by the Fatigue Scale for Motor and Cognitive Functions (FSMC) – predicts employment status 6 months after discharge from rehabilitation.Methods: PwMS whose rehabilitation measures were paid for by the government pension fund, and who had doubts about maintaining their professional per-formance in terms of their workload, underwent further testing. Tonic alertness from the test battery TAP-M was used as an indicator of cognitive fatigability. Participants were tested in the morning at 8:00 a.m., after standardized exer-cise at 11:00 a.m., and in the afternoon at 2:00 p.m. In addition, fatigue was determined using a self-assessment questionnaire (FSMC). Six months after discharge from neurological rehabilitation, their employment status was classi-fied through a telephone interview and also compared with our socio-medical performance assessment. Results: A complete data set was collected from 64 patients (43 female; age 48.9 ± 8.7 years; duration of illness 14.7 ± 9.5 years; EDSS 3.8 ± 1.3; 67 % relapsing remitting, 16 % secondary progressive, 17 % primary progressive). According to the International Standard Classification of Occupations (ISCO) code, 86 % were “white collar” workers, for example, in service, office and non-manual jobs. Six months after discharge from the rehabilitation clinic, 15 (23 %) out of 64 PwMS reported working less than 3 hours per day, 35 (55 %) PwMS reported 3 to 6 hours, and the remaining 14 (22 %) PwMS were full-time employees. The mean total value of the FSMC questionnaire for cognition was 38.9 ± 7.4, which was equivalent to severe cognitive fatigue. Eleven of the 14 full-time employees had severe fatigue. The morning alert-ness measurement (alertness1) (β = -.985; p= .003) and, the decline in alert-ness from morning to noon (alertness difference21; β = -.590; p= .033) and from noon to afternoon (alertness difference32; β =-.709; p= .020) were sig-nificant predictors for employment status. A reduction in alertness (increase in reaction time) by 1 SD on the alertness scale increases the probability of not working full-time by a factor of 2.67. Likewise, the probability of not working full-time increases by a factor of 1.80 if fatigability is increased by 1 SD from morning to noon. If fatigability increases by 1 SD from noon to eve-ning, the probability of not working full-time increases by a factor of 2.03. Discussion: The FSMC has no prognostic value for employment status 6 months after discharge from rehabilitation. The morning alertness measurement has the highest predictive value. However, an above average decline in alertness over the course of the day also reduces the probability of working full-time. Keywords: fatigue, fatigability, MS, alertness, employment status, prognostic factor

Sustainable Income at Retirement and UK Pension Fund Investment Oversight: a Practice Perspective

Using practice theorizing, this paper sheds more fresh light into pension fund investment oversight and how trustees make strategic investment decisions in the complex institutional context. Using the insights from 22 in-depth interviews of pension fund trustees and pensions experts, we reveal that pension fund governance has been ‘ritualised’ in embedded and self-perpetuating practices. Specifically, the process of pension fund investment is dominated by a variety of contextual and internal constraints that often lead to a loss of value within pension fund investments, which is not in the long-term best interests of pension fund savers. Theoretically, our study raises important questions about the appearance rather than substance of governance and the principal role of pension fund trustees as non-executives in this process. We highlight the conflicting intersections around trustees as socially legitimate, trustworthy, independent social actors, as well as the challenges of working across social processes and structures in the effort to achieve fairer and more sustainable financial institutions. This has significant implications for policy and practice.