Pensions and Capital Stewardship Project

The Pensions and Capital Stewardship Project was established to educate and inform workers, scholars and researchers, and practitioners on issues of retirement security, including employment-based retirement plans, and of pension fund governance, management, investment, and related matters.

The Future of Retirement

Controversies over the future of Social Security, challenges to public and private sector defined benefit plans and the rise of defined contribution and other private-accounted based schemes are evidence of serious and pressing concerns about the ability of households to sustain themselves through the transition to retirement and beyond. These concerns about the adequacy of income are exacerbated by ones relating to the cost of health benefits and the expense of care and support, especially long term care during retirement.

For these reasons, the Pensions and Capital Stewardship Project is currently focusing its work on retirement security to include ways in which it can be extended and enhanced for more households in America.

Pension Plans: Institutions, Systems, and Practices for Investment

Pension stewardship and the choices made by those responsible for overseeing trillions of dollars in retirement plan assets have a tremendous significance for active and retired plan participants’ ability to enjoy retirement income.

These choices also have profound implications for internal corporate stakeholders including workers, shareowners, and management as well as the larger community that is affected by employment trends, economic development and growth, the environment, worker and human rights, and social services.

The Project’s work on pension plans focuses on institutions, systems, and practices of pension fund investment that encourage capital markets and corporate policies to work more effectively for workers and the health and well-being of the community at large.

A Unique Partnership

The Pensions and Capital Stewardship Project is unique in that it has gained the interest of and financial support from diverse players in the pension community including unions, pension fund investment managers and consultants. In all of its work, the Project will be able to draw upon international experience with similar issues. The Project has established relationships with scholars, union leaders, trustees, and others active on these matters in Canada, the UK, the Netherlands, and Australia and has brought in speakers from the Netherlands, the UK, Canada, Sweden and South Africa.

Capital Matters: Managing Labor’s Capital

In spring 2008, the Project convened the sixth annual Capital Matters: Managing Labor's Capital conference. The success of previous conferences, organized by the LWP, and attendees’ enthusiasm for the creation of a long-term program to spur research, education, and engagement on the kinds of issues discussed were the reasons for the LWP establishing the Project.

The 2008 conference brought together public and Taft-Hartley pension trustees, labor leaders, members of the pension investment community, legal and other scholars and researchers, and others to discuss the reasons for and import of current turmoil in capital markets and related issues of financialization and how labor might understand and respond to it. They considered the import of efforts to reform corporate governance for workers followed by assessed property investments geared to achieving not only market-based returns but also labor friendly outcomes. They participated in a spirited international dialogue about capital stewardship within and across borders. Conferees also took up a review of pension fund engagement on corporate labor and human rights issues. In addition, they considered new ideas to address the need to ensure retirement security for all and the role of employment-based retirement plans in meeting that need, featuring both policy changes in the Netherlands and Germany and policy proposals in the United States. Finally they explored rationales for, the implementation, and impact of recent efforts to pre-fund retiree health benefits. The seventh annual conference will take place on April 22-24, 2009.

Capital Matters Newsletter

In October 2007, the Project published the first issue of its new (initially quarterly) newsletter, Capital Matters, which aims share information and insights on issues of retirement security and capital stewardship drawn from the Project’s own work and scholarly and other research and activities on those issues.

An International Collaboration

The Pension Funds and Urban Revitalization Initiative (PFURI), led by researchers associated with Oxford University’s School of Geography at the Center for the Environment, is affiliated with the Project. This effort seeks to advance U.S. public sector pension funds’ engagement in urban revitalization through research and promotion of best practice. The Initiative has co-convened with state officials and regional Federal Reserve Banks meetings with pension fund trustees and officials, investment firms, and other stakeholders in Boston, Baltimore, Hartford, and Pittsburgh to discuss research findings and their application to pension fund investment. The Initiative’s capstone event will be a conference on “Pension Funds: Investing to Build Strong and Sustainable Communities” to be held on June 10, 2008.

Recent, Current, and Future Work

The Project work convened working meetings in February and March 2007 which focused on private equity investment for market-based returns and labor friendly outcomes and collaboration among labor, pension, SRI, faith-based, foundation, and other shareholder activists, respectively. On July 26-27 2007, in partnership with the National Conference on Public Employee Retirement Systems, the Project offered the first seminar in its Program of Advanced Trustee Studies for a group composed of primarily experienced public sector trustees. This year’s program is scheduled for July 22-24, 2008 and will include two full day sessions, on set relating to corporate governace and the other investment in infrastructure.

The Project is engaged in research for the Council of Institutional Investors relating to various impacts of defined benefit and defined contribution plans is in process. Research has been done in connection with the March 2007 meeting and related efforts to assess labor-friendly private equity investments.

In April 2008, the Project commenced publication of papers on a variety of issues with the first relating to intensified interest in both the public and private sector in the United States in pre-funding of health benefits. A second focusing on including labor and human rights risk into investment decisions and another on the financial risks and rewards and impact on labor of infrastructure investments will follow.

The Pensions and Capital Stewardship Project anticipates engaging in research – and related convenings – on a number of other topics. These include: legal issues regarding fiduciary responsibility for public as well as private pension fund trustees and other aspects of pension fund activity; the practice and impact of pension funds and others’ activism on the quality of corporate governance and behavior, especially as relates to workplace issues, including labor and human rights and human capital; trustee decision-making; and how, consistent with the rules for fiduciary duty, pension plans that establish individual accounts may spur activism analogous to that engaged in within the framework of defined benefit plans.

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