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OECD Working Papers on Finance, Insurance and Private Pensions No. 6 - page 16 / 33

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or is disqualified or restricted from being a director of any company.

effective performance by the Commission of its functions.

Japan

The Chairman and investment committee members must have experience in economic or financial matters. The national assembly is the main governing body.

Korea

New Zealand

All board members must have experience, training and expertise in investment management.

The Chairman is appointed by the Ministry of Health, Labour, and Welfare. Not applicable

Norway

Sweden

The governing body is parliament and the ministry of finance. Al board members are appointed on the basis of their expertise in asset management.

Board members are appointed by the Ministry of Finance via a nominating committee. Not applicable

Directors are appointed by the government. Two are nominated by employee organisations and two by employer organisations. The Chairman and Deputy Chairman are appointed by the government from amongst the members who have not been nominated by the organisations.

Not applicable

Not applicable

Board members are appointed for up to 5 years.

Board members can be dismissed for reasons that in the Minister‘s opinion justifies the removal. Not applicable

Not applicable

Directors have 3 years terms.

There are no rules concerning the removal of board members. The government may remove a Director prior to the expiry of his term in office.

2. CIO + Investment Committee

Reserve funds, like pension funds, require a governance structure that ensures an appropriate division of operational and oversight responsibilities. This basic principle of governance is enshrined in both the OECD’s Guidelines on Pension Fund Governance and ISSA’s Guidelines for the Investment of Social Security Funds. Both set of guidelines contain similar criteria to implement this objective.

Yet even when reserve funds have achieved a clear oversight-executive separation on paper, in practice some boards are still excessively involved in investment micromanagement. This is often the case where they lack the necessary executive and operational support.

Good governance requires a clear assignment of responsibilities between the governing body and the fund‘s executive. The composition and organisational structure of the executive matters greatly for the successful deployment of a fund‘s resources. In particular, the separation of the role of chief executive and board chairman is essential in reserve funds because of the lack of a market mechanism or external supervisor that can ensure effective, ongoing monitoring of the reserve fund‘s executive. In investment

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