Global Investment Review

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A Multinational Perspective

In an effort to identify leading-edge thinking and practices in the management of global pension investments, Watson Wyatt interviewed pension officers from a select group of recognised multinational organisations whose foreign pension fund assets exceeded US$50 billion.

These qualitative interviews examined the following issues:

• pension fund governance
• investment and funding policies
• information management and performance monitoring
• asset manager relationships

Although participants reported a variety of different practices, careful analysis of responses enabled Watson Wyatt to formulate a list of best practices for pension fund asset governance.

In summary, participating organisations recognised the need for corporate staff to actively participate in driving the global pension investment governance process. Highly skilled investment professionals were on staff to exercise corporate oversight. In each case, individuals with corporate oversight responsibility have developed a network of relationships with local pension fund and service providers around the world. While individual networking between corporate staff, subsidiary management and fund trustees is considered very important to accomplishing investment tasks globally, the relationships are more successful when the governance process has been institutionalised.

Most interviewees reported that corporate pension staff's credibility and influence within their subsidiary network have evolved over time, overcoming initial attitudes of distrust and protection of control. In many cases, these relationships are still evolving and currently appear based as much on local acceptance gained through the value added by corporate involvement as through a mutual sharing of interests. Regardless of the status of the existing relationships, all participants had a governance process in place through which they maintained effective corporate oversight of at least their larger funds.

The results of this analysis have now been published in a report which is available from Brian Hersey in our Atlanta office on +1 770 290 8500.