Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Like Media Super, delegation takes a hit at UN fund
Comment by Greg Bright
Apparently, Media Super is not the only fiduciary fund in the world for which a better-resourced in-house investment management capability is being questioned on governance grounds. Here’s what’s happening at the US$50 billion United Nations pension fund.
According to the US publication aiCIO: “A proposal by the CEO of the United Nations’ (UN) pension fund to bring staff and manager hiring and firing decisions under his office’s control has met with strong opposition from the UN’s employee union.Â
“According to a draft of the rule changes, due to take effect June 1, authority over a swath of financial and management practices would shift from the UN’s secretary general to the pension fund’s CEO. These include internal staffing, service procurement, entering into contracts covering future budget periods, preparing and revising the organization’s budget, and authorizing special remittances and cash advances.Â
“Changes in authority over human resources have generated most of the staff-led opposition. The organization’s union has posted an online petition calling on Secretary General Ban Ki-Moon to block the reforms, or “protect our pension fund from the wolves of Wall Street.” Since May 15, nearly 10,000 people have signed,” an edition of aiCIO said last week.
The analogy with Australia’s A$3.7 billion Media Super is that that fund made the position of CIO – formerly occupied by Dr Jon Glass – redundant in April, citing costs or better deployment of resources elsewhere as the reason.
Media Super’s CEO, Graeme Russell, now also adopts the CIO role.
Investor Strategy News criticized that move and recommended the Media Super chair, Gerard Noonan, and union representative, Chris Warren, both of whom have been on the board for more than 20 years, should be replaced and the fund’s management reinvigorated. Investor Strategy News and its predecessor media companies have all been a contributing employers to Media Super and its predecessor funds since around the time of the introduction of Award Super in 1986.
aiCIO said: “The union has posted a confidential draft of the new rules to its website with the following introduction: ‘Some UN staff members might ask himself why does the CEO want delegation of authority to pick his staff?…When he picks the staff to be in the fund they will be the ones that do everything he says for them to do. He is trying now to change the rules about how he can spend all the money. Away from the UN, when he makes UNJSPF [the UN’s pension fund] the ‘financial institution,’ he will make all the rules to be his rules that his staff members (the cronies) that he picked to hire will follow… All his say. All power to him.’
“However, the UN’s own auditors have criticized the $52 billion pension fund’s byzantine governance and called for its streamlining. In a 2011 audit of its investment management and oversight, six of the seven recommendations related to governance.
“The pension’s strategic plan for 2014/2015 listed “strengthening the fund’s operating model” as its foremost long-term objective, ahead of improved risk management, better IT systems, and promotion of social and environmental issues.”
The full aiCIO report is accessible at: www.ai-cio.com
