Democratic presidential nominee Sen. Barack Obama, D-Ill., believes participants in corporate pension plans should receive annual disclosures about the funds investments, including the performance of those investments and appropriate details about probable future investment strategies.
Mr. Obama called for full disclosure, saying when companies fail to disclose their investments, the resulting lack of transparency can make it easier for fund managers to make imprudent or even fraudulent investment decisions.
The statement was part of his response to a list of questions submitted to him and his opponent, Sen. John McCain, R-Ariz., by Pensions & Investments and 13 employee benefits groups. Mr. McCain, meanwhile, said Congress should not impose restrictions on investment activities for pension funds. He said it is the role of the government to create a financial regulatory system that protects investors and markets so that we end up with a transparent and highly efficient market.
Mr. McCain said these two goals need not be at odds with one another.
Response to the two candidates positions was mixed.
Some pundits said Mr. Obamas idea could be self-defeating and burdensome.
I hope that any reference to disclosing future strategies is intended to be incredibly generic, said Richard Susko, partner in the New York law firm of Cleary, Gottlieb, Steen & Hamilton. Otherwise, if you telegraph what you are going to do and you do it in size, others will beat you to it.
Calls to Mr. Obamas campaign for clarification were not returned by deadline.
William F. Quinn, chairman of American Beacon Advisors, Fort Worth, Texas, and the Committee on Investment of Employee Benefit Assets, Bethesda, Md., said requiring details about funds future investment strategies would be hard to disclose because pension funds respond differently as market conditions change.
Its not something that you would be able to disclose, since its an unknown, he said.
More troubling, Mr. Quinn said, is the amount of disclosure Mr. Obamas plan would require to be provided to pension plan participants. That volume of information would more likely overwhelm participants, instead of being useful.
We want transparency, but it needs to be relevant and meaningful transparency, Mr. Quinn said. American Beacon had $57 billion under management as of Aug. 31. American Beacon provides investment advisory services for American Airlines $9.1 billion pension fund, $7.3 billion 401(k) plan and other employee benefit funds, as well as cash management for AMR Corp.
Diann Howland, vice president, legislative affairs at the American Benefits Council, Washington, said the disclosure Mr. Obama wants could be a huge undertaking for some plans with several investment managers. She also wondered how often information should be made available, given that funds are regularly moving investments around.