Executive Offices (Bestuursbureau’s)of Pension Funds

Alfred Slager

Tilburg University, TiasNimbas Business School

April 26 2012, Noordwijk

Remember 1628?

2012• Pension funds’ organizations evolve:

– Coordination: Internal organization grows more complex

– Counterweight: Outside world more complex and challenging

• Executive Offices increase in importance, to

– Own policy and monitoring capabilities after spin off investment

organisation.

– Separate policy and practice, focus on the “core” responsibilities

of Trustees

– Organize countervailing power: pension fund’s goals ≠ asset

manager’s.

– Be better equipped to manage pensions in increasingly complex

markets.

– Coordination mechanism to cope with new (internal) units,

organisations, etc.

Different structures emerge

Board of Trustees

Executive Office

Committees

Custodian

Investment Manager

1 23 4 5

Tasks Executive Office

• Support the Board of Trustees: organization and servicing meetings of

the Board and its committees

• Centralization to promote controlled, efficient and effective

management. Sets priorities and manages internal decision-making

• Ensure that key decisions and management responses to challenges

are consistent with the Fund’s mission, values and strategy.

• First point of contact with regulators, participants, journalists, etc.

• Carry out reviews and analyses of policy issues relating to the plan

design.

Different approaches to Executive OfficeApproach Description Executive Office

Resourcing Buying-in investment services "as a commodity”.

“Building blocks”; market practice

Coordination/outsourcing

Transfer to outside suppliers of in-house activities.

SLA Management

Co-creation Pooling of facilities to profit from complementary expertise.

Product DevelopmentR&D Agenda

Resourcing

Outsourcing/Coordination Co-creation

Issues in a few years’ time

• Different shapes and sizes of “in control”

• Organizational growth of Executive Office

• Shift in agenda: your or mine beliefs

• Best/Worst of both worlds in decision making.

• Mandate fuzzyness

• Effectiveness

Different shapes and sizes of “in control”

Board of Trustees

Executive Office

Committees

Custodian

Investment Manager

Issues in a few years’ time

• Different shapes and sizes of “in control”

• Organizational growth of Executive Office

• Shift in agenda: your or mine beliefs

• Best/Worst of both worlds in decision making.

• Mandate fuzzyness

• Effectiveness

Shift in agenda: your or mine beliefs.What about the Executive Office?

Pension fund Asset manager

Risk diversification

Risk premiums

Responsible Investments

Goals

Inefficiencies

Active management

Teams and staff

Focus

Impact

Risk man.

Issues in a few years’ time

• Different shapes and sizes of “in control”

• Organizational growth of Executive Office

• Shift in agenda: your or mine beliefs

• Best/Worst of both worlds in decision making.

• Mandate fuzzyness

• Effectiveness

• Don’t temper with a slim

and elegant design

• Top heavy is inherently

unstable

• Respect the craftsman

• Clarity of roles

• Early warning signals

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