If the Government Employee Pension Fund (GEPF) aims to seek outside guidance, perhaps the model adopted by the Government Pension Fund of Norway is a more suitable template than advice from the asset managers. (Time for public servants to stand up against the looters, September 27). The Norway model invests solely in public securities, stresses cost efficiency, diversification and transparency, and has a long-term investment horizon.
Unfortunately, the asset management industry thinks in quarterly periods and in line with its bonus policy, which is to the detriment of pension funds with liabilities payable many years into the future. Publicly listed asset managers exacerbate this situation where they are accountable to their shareholders and their promise to pay dividends.
The GEPF’s trustees should remain vigilant in taking advice and falling victim to the innovations of asset managers — be it trendy alternative investments, passive products or social and governance considerations. Instead they should ensure that their members’ savings are prudently managed.