U.S. Pension Fund Investments: Trends, Regulations and Corporate Governance

1
U.S. Pension Fund Investments Trends,
Regulations and Corporate Governance

• International Pension Conference
• FIAP and the Chilean Pension Funds
  Administrations Association
• March 15, 2001

2
Pension Fund Investments Current and Future
Trends
3
Pension Fund Investments Current and Future
Trends ( Billions)
4
Pension Fund Investments Current Trends

• For private sector plans, equities as a share of
  total assets have grown slightly to 46 of the
  total portfolio.
• Bonds have decreased from 25 of total assets in
  1985 to 12.8 in 2000.
• Equities in public sector plans comprise 67 of
  assets, bonds equal 22, and 8 of assets are in
  cash and other assets.

5
Pension Fund Investments Future Trends

• Effect of the US Stock Market
• Company Stock in Pension Plans
• Social Investing
• Investment Responsibility Employer v. Employee
• Changes to Fiduciary Regulations

6
Corporate Governance

• Structure of U.S. Pension Laws
• Review of ERISAs Rules for Fiduciary Duties and
  Conduct
• Who Controls Plan Assets
• Plan Trustee
• Named Fiduciary
• Investment Manager

7
Corporate Governance

• The Directed Trustee Exception
• Plan may permit participants to be named
  fiduciaries who may direct plan trustee
• Conditions for participants to direct plan
  trustee
• Tendering of unallocated or non-voted stock

8
Corporate Governance

• Investment Manager Exception
• The fiduciary act of managing plan assets
  includes responsibility for voting of proxies
• Investment manager cannot delegate duties so as
  to relieve itself of fiduciary responsibilities
• Appointment and monitoring of investment manager

9
Corporate Governance

• Issues Related to Corporate Governance in the
  U.S.
• Inactivity of Plan Fiduciaries
• Effect of Class Action Lawsuits

10
U.S. Pension Fund Investments Trends,
Regulations and Corporate Governance

• International Pension Conference
• FIAP and the Chilean Pension Funds
  Administrations Association
• March 15, 2001