Organizational structure of pension funds, Financial Management

Organizational Structure of pension funds

In an investment organization such as pension funds, endowments, life and casualty insurance companies, the central bank's investment professionals are responsible for implementing asset portfolios as these organizations face several challenges. As the pension funds comprise the highest net worth of managing fund, they should be more cautious about the investment. Investment management companies should have the expertise to deal with different types of investors as well as the ability to resolve various investment issues the sponsors encounter. These issues include - strategic asset allocation, risk management, portfolio construction, and performance measurement and attribution. Investment management companies at times have to face increasing demands from institutional investors, and may be forced into an activity in which they have no comparative advantage in an attempt to satisfy large investors.

Governance and Organization Structure

A pension fund is operated and advised by a mix of internal and external experts (i.e., agents); it must be governed and monitored by a body of people who have accepted the responsibility to keep the stakeholder "value creation" as their business goal clearly in mind. In a pension fund, members of the board of trustees are the governors of the fund. They are responsible for the governance and ultimately for the investment result. A board or an oversight committee have the overall responsibility for developing the long-term asset mix, providing guidelines for investment strategy, and reviewing performance of the fund. Trustees must sort out who the stakeholders in the pension plan are (i.e., retirees, active plan members, shareholders or taxpayers), and what loyalties they owe and to whom.

 

Posted Date: 9/11/2012 1:38:53 AM | Location : United States







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