Public Pensions and the Uniform Management of Public Employee Retirement Systems Act

Willborn, Steven L.

doi:10.2139/ssrn.140787

SSRN Journal

1999

DOI: 10.2139/ssrn.140787

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Public Pensions and the Uniform Management of Public Employee Retirement Systems Act

Steven L. Willborn

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2014

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“…This model code focuses upon the holding of assets in trust, prudent investment rules, and disclosure consistent with ERISA and more recent federal court decisions regarding the nature and scope of fiduciary duty(WILLBORN, 1998). To date, only two states have adopted this regime.…”

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confidence: 99%

State and Local Pension Fund Governance and the Process of Contracting for Investment Services: The Scope of Diversity and the Problem of Embeddedness

Clark

Monk

2014

Territory, Politics, Governance

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US state and local public employee retirement systems (PERS) utilise various models of contract with distinctive features in their form and substantive content in relation to industry norms. These models differ between states, within states, and even between PERS within major metropolitan areas. Diversity goes against expectations to the effect that the sector relies upon commonly accepted investment management agreements (IMAs), given the similarities between state and local PERS as to the nature of pension benefits. One goal of this paper is to account for apparent commonalities and differences. Another goal of the paper is to explain the nature and significance of the pre-contract screening of potential suppliers to the sector, suggesting that requests for proposals tend to 'sterilise' contracts for investment management services. We provide a comparison of the categories and items evident in model IMAs with reference to selected states, in particular Illinois and the Chicago-area PERS. We also briefly note relevant provisions of pending legislation establishing the Oregon Investment Corporation, emphasising provisions which would enable the fund to make contracts like its private sector peers. The paper concludes that it is important to focus on the process of contracting in the US state and local PERS as well as the form of contract.EXTRACTO Los sistemas de jubilación para empleados públicos (PERS) locales y estatales de los Estados Unidos utilizan diferentes modelos de contrato que incluyen rasgos distintivos en su forma y contenido sustancial con relación a las normas de la industria. Estos modelos son diferentes entre los Estados, dentro de los mismos Estados, e incluso entre los sistemas PERS en las principales áreas metropolitanas. La diversidad va contra las expectativas al efecto que el sector confía en los acuerdos de gestión de inversiones ampliamente aceptados, dadas las similitudes entre los sistemas PERS locales y estatales en cuanto a la naturaleza de las prestaciones de jubilación. Una de las finalidades de este artículo es analizar las aparentes similitudes y diferencias. Otro objetivo de este trabajo es explicar la naturaleza y el significado de la selección precontractual de posibles proveedores para el sector, lo que indica que las solicitudes de propuestas tienden a 'esterilizar' los contratos para los servicios de gestión de inversiones. Presentamos una comparación de las categorías y elementos evidentes en los modelos de los acuerdos de gestión de inversiones con referencia a Estados seleccionados, en particular los sistemas PERS de la zona de Illinois y Chicago. También señalamos brevemente las disposiciones pertinentes de la legislación pendiente para establecer la Corporación de Inversiones de Oregón, haciendo hincapié en las disposiciones que permitirían que el fondo concerte contratos como sus coetáneos del sector privado. Llegamos a la conclusión de que es importante centrarse en el proceso de contratación de los sistemas PERS estatales y locales de los Estados Unidos así como en l...

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mentioning

confidence: 99%

State and Local Pension Fund Governance and the Process of Contracting for Investment Services: The Scope of Diversity and the Problem of Embeddedness

Clark

Monk

2014

Territory, Politics, Governance

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Participation in Corporate Governance

McGaughey

2014

SSRN Journal

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Over the last thirty years there has been a remarkable functional convergence in the way companies are run. Behind directors, asset managers and banks usually participate the most in setting the ultimate direction of corporations, as they have assumed the role of stewardship over shareholder voting rights. At the same time, an increasing number of people's livelihoods and old age now depend on the stock market, but these ultimate contributors to equity have barely any voice. Why has there been such a separation of contribution and participation?Two positive theses explain this convergence in corporate governance, one political, one economic. The first positive thesis is that laws which guarantee participation rights in investment chains (either for shareholders against directors, or for the ultimate contributors against institutional shareholders) were driven by a progressive democratic movement, but very incompletely compared to its social ideals. The second positive thesis is that when there have been no specific rights in law, the relative bargaining power of different groups determined the patterns of participation, whether the outcomes were reasonable or entirely arbitrary. In practice, the separation has grown between those who contribute to equity capital and those who participate in governance. These theses are preferable to existing narratives in political literature, and law and economics, which entail predictions of different forms of rational interest-driven institutional evolution. On the contrary, participation in corporate governance is largely unprincipled. The evidence is found in the historical development of participation rights in the UK, Germany and the US.Does the separation of contribution and participation matter? One normative thesis is derived from the historical evidence. It proposes that the separation of contribution and participation is a pressing concern, precisely because participation in corporate governance, as it stands, manifests no coherent principles. Asset managers and banks have gathered shareholder voting rights through no better reason than their peculiar market position as investment intermediaries. They have significant conflicts of interest when they exercise voting rights with other people's money. They are able to use votes like any other selfperpetuating interest group would, because they are not effectively accountable to their natural beneficiaries: the ultimate investors. To ensure that the successes of modern corporate law are not unravelled, corporate governance should protect the principle of a symmetry between contribution and participation. This will mean that in the future, corporate governance becomes more economically efficient, sustainable, and just.

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Public Pensions and the Uniform Management of Public Employee Retirement Systems Act

Cited by 2 publications

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State and Local Pension Fund Governance and the Process of Contracting for Investment Services: The Scope of Diversity and the Problem of Embeddedness

State and Local Pension Fund Governance and the Process of Contracting for Investment Services: The Scope of Diversity and the Problem of Embeddedness

Participation in Corporate Governance

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