At the Benelux Pension Fund Roundtable, I discussed the role of executive offices at pension funds. Trustees steadily expand the staff and resources for these executive offices. However, we find that these offices (the Dutch term is “pensioenbureau”) come in different shapes and sizes. For example, do trustees need them to handle the increased complexity of coordination? This requires different knowledge than setting it up with the intention to provide counterweight to asset managers. Finally, some of the larger pension funds tend to concentrate all policy making activities within the executive office.
In the presentation, I do not favor one model, but raise concerns that when trustees are not quite clear about the model that they prefer, executive offices might grow without any restrictions, possibly even becoming counterproductive at some point. For example, how do you make sure that the incentives (or investment beliefs for that matter) of a large executive office is aligned with the trustees, instead of nudging towards the investment manager?