Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
September 01, 1997 01:00 AM

INSIGHTS INTO PENSION START, MANAGEMENT

Mike Clowes Editorial Director
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Two books caught my attention just before and during my August vacation that anyone in the pension industry ought to read. One is descriptive, the other prescriptive.

    One you can read immediately. It is "The Promise of Private Pensions: The First Hundred Years," by Steven A. Sass, published by Harvard University Press, Cambridge, Mass. The other - "The Excellent Pension Fund: Creating Value for Stakeholders," by Keith P. Ambachtsheer and D. Don Ezra - I read in manuscript form and will be published sometime next year by John Wiley & Sons Inc., New York.

    "The Promise of Private Pensions" is a history - probably the first - of the development of pension plans in the United States, showing the various forces, social, economic and political, that led to the introduction of pension plans just more than 100 years ago and that have shaped them since.

    Mr. Sass, editor of the Regional Review of the Federal Reserve Bank of Boston, answers the question: What prompted corporations, for-profit enterprises, to voluntarily offer pensions to aged employees who no longer were able to work before federal or state governments offered them (except to Civil War veterans)?

    Welfare capitalism, not self interest, was the motive for American Express Co. to start the first U.S. corporate pension program, and that motivated a number of other railroad companies in the remainder of the 19th century.

    Mr. Sass traces the evolution of the motives as more companies started plans. Some companies wanted to tie valued employees to them. Others wanted to facilitate the hiring of a young, energetic work force by encouraging older employees to leave.

    He also outlines the struggle with the funding issue as costs ballooned just before the Great Depression hit. He describes the awakening of government and union interest in pension plans, bringing the discussion through ERISA and almost up to the present.

    Mr. Sass has provided a valuable record of the development of the private pension system.

    The forthcoming book by Messrs. Ambachtsheer and Ezra, two pension consultants, looks at how pension funds, particularly defined benefit pension funds, can be effectively and efficiently managed. The authors argue that pension fund managers should aim to produce value for their stakeholders net of operating costs and adequate compensation for risk bearing, noting: "The bad news of this book is that many pension funds today do not produce enough of this kind of value."

    This is not just another book of theory about how pension funds should be managed, or about how one expert thinks an appropriate asset allocation should be determined.

    It is a book based in part on cost-effectiveness studies of pension funds Mr. Ambachtsheer's firm, K.P.A. Advisory Services Ltd., has been conducting over the past four years. The firm has received detailed information from more than 100 large funds for each of those years and has been able to calculate which funds were producing risk-adjusted net value added. It has also been able to determine what practices led to that positive value added.

    The observations based on the cost effectiveness study are backed up by qualitative research to understand organizational design and its impact on the investment results of funds. There is keen analysis by Messrs. Ambachtsheer and Ezra, both of whom are veteran pension consultants noted for thinking outside the box; Mr. Ezra recently was appointed head of European consulting for Frank Russell Co.

    The book leads the reader step-by-step through the process of structuring the investment process of a pension fund to achieve net value added. Despite the subject matter, it is an easy read - easier than Mr. Sass's history.

    If you want to know where pension plans have come from, and where they ought to go, read both of these important books, Mr. Sass's now and the other book next year when it is published.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    An Active Approach to US Mid-Cap Equities for DC Plans
    Sponsored Content: An Active Approach to US Mid-Cap Equities for DC Plans

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit