Pension Revolution: A Solution to the Pensions Crisis

Praise for Pension Revolution
"When Keith Ambachtsheer puts his keen mind to work on a problem, watch out! Here he exposes today′s fragile arrangements for the most serious social dilemma of our times—financing retirement. Then he provides a compelling and powerful set of solutions. His writings are essential reading for all who care about the future of American living standards."
—Peter Bernstein, founder and President, Peter L. Bernstein, Inc., and author of Capital Ideas and Against the Gods
"This book describes one of the most ingenious inventions in the history of mankind: pension funds offering credible promises about old–age income. It reads like a thriller: how can well–governed pension funds be created in an imperfect world in which mortals wrestle with foibles and moral shortcomings? One of the world′s leading experts on pensions searches for the answer—and finds it."
—Lans Bovenberg, Scientific Director, Network for Studies on Pensions, Aging, and Retirement, Tilburg University, The Netherlands
"Pension Revolution exposes the inadequacies of current pension systems and persuasively makes the case for the fundamental changes that are needed. It is essential reading for both the pension industry and policymakers."
—Elizabeth Bryan, Chair, Investment Committee, Unisuper Management PM Ltd, Australia
"Most analyses of complicated issues deal with complexity by simplifying or only looking at one piece–part, and, in doing so, provide limited value. In stark contrast, Keith Ambachtsheer boldly wades into the complexity in Pension Revolution to come up with a valuable integrative solution. He is a most welcome revolutionary!"
—Roger Martin, Dean, Joseph L. Rotman School of Management, University of Toronto, Canada
"We have known Keith for over ten years, and consistently over that time, he has constructively and comprehensively challenge d conventional wisdom. He has done this so effectively that many of his initial thoughts have now become universally accepted norms. Such is his energy however that he continues to push the boundaries of pension and investment thinking."
—Peter Moon, Chief Investment Officer, Universities Superannuation Scheme Ltd, UK
"Pension Revolution not only explains the shortcomings of the existing pension system and the underlying design features that have resulted in the current pension upheaval. It also offers thoughtful and creative suggestions for prospective pension design. A must–read for anyone interested in the future of retirement finance."
—James Poterba, Professor of Economics, Massachusetts Institute of Technology and a member of the TIAA–CREF Board of Trustees

Spis treści:
Preface: Peter Drucker’s Pension Revolution: Here at Last.
Introduction: Why a Pension Revolution Now?
The Trouble with DB Plans.
DC Plans Are Not the Answer Either.
Expert Pension Co–ops.
TOPS Tipping Points.
PART ONE: The Pension Revolution: Touchstones.
CHAPTER 1: Are Pension Funds "Irrelevant"?
An "Unreasonable" Actuary?
Exley’s Four Irrelevance Propositions.
So What Is Relevant?
Responding to Exley.
Relevant Pension Funds: Building the Case.
Managing Retirement Income Risks.
Leveling the Informational Playing Field.
Getting the Execution of the Idea Right.
CHAPTER 2: The Pension Revolution—Are You a Believer Yet?
A Revolutionary Reordering of the Pensions Firmament.
From Fuzzy Pension Deals to "Risk–Sharing Co–ops."
Toward Pension "Business Models" That Work: The Risk Issue.
Toward Pension "Business Models" That Work: The Scale Issue.
The Pension Governance Issue.
Two Role Models.
PGGM.
SunSuper.
Great Treasures?
CHAPTER 3: After the Perfect Pension Storm: What Now?
From Vegas t o Oxford: In Search of Answers.
Do Nothing or Something?
The Corporate Context: Two Basic Choices.
New DC Plan ‘‘Business Model’’ Also Needed.
The Industry/Public–Sector Pension Context.
The "Fair Value" Question.
Better Public Pensions Policy.
CHAPTER 4: Beyond Portfolio Theory: The Next Frontier.
Investment Theory’s Next Frontier: The Academic View.
Investment Theory’s Next Frontier: Two Further Considerations.
The Next Frontier: "Integrative Investment Theory."
CHAPTER 5: The United Airlines Case: Tipping Point for U.S. Pension System?
The United Airlines Case.
A Good Question and Two Very Different Answers.
ERISA’s "Sole Interest" Rule.
Lessons from Abroad.
Searching for "Supreme" Answers.
The UAL Case in Context.
CHAPTER 6: Peter Drucker’s Pension Revolution After 30 Years: Not Over Yet.
Two Unfashionable Themes.
Politico–Agency Issues.
Pension Contract and Risk Issues.
Investment Beliefs.
Pension Fund Governance.
Still Much Work to Do.
CHAPTER 7: Winning the Pension Revolution: Why the Dutch Are Leading the Way.
The Globe’s Number One Pensions Country.
Culture, Compactness, and Leadership.
Regulatory Leadership.
Research Leadership.
A Remaining Challenge: Solving the Organization Design Puzzle.
What About the Other Pensions Countries?
CHAPTER 8: Pension Reform: Evolution or Revolution?
A Pension "Tipping Point" Indeed.
What Should Happen?
Pension Reform in the United States.
Pension Reform Elsewhere.
Pension Reform: Evolution or Revolution?
PART TWO: Building Better Pension Plans.
CHAPTER 9: Can Game Theory Help Build Better Pension Plans?
Pension Games.
Why do Pension Game Switches Occur?
Who Are the Stakeholders and What do They Want?
Sources of Risk in Pension Schemes.
Mitigating Micro Risks.
Can We Mitigate Ma cro Risks?
Is Investment Risk Worth Taking in DB Plans?
Can Game Theory Build Better Pension Plans?
CHAPTER 10: If DB and DC Plans Are Not the Answers, What Are the Questions?
From Answers to Questions.
Ultimate Pension Questions and Their Consequences.
Underwriting Pension Mismatch Risk: Any Volunteers?
Should Pension Mismatch Risk Be Minimized?
Pension–Delivery Institutions.
Benchmarking Traditional DB and DC Plans.
The Way Ahead.
CHAPTER 11: Human Foibles and Agency Dysfunction: Building Pension Plans for the Real World.
Some Fundamental Questions First.
Back to First Principles.
Human Foibles.
Agency Issues.
Counteracting Human Foibles.
Minimizing Agency Costs.
TOPS, Employers, and Public Policy.
TOPS and DB Plans.
CHAPTER 12: DB Plans and Bad Science.
Science and the Design of Pension Contracts.
The TOPS Contract.
Taking on Investment Risk: Implications.
Is Investment Regime Risk Insurable?
Intergenerational Bargaining.
Robust Course–Correction Mechanisms Required.
The Flawed DB Model.
Bad Science.
CHAPTER 13: Peter Drucker’s Pension Legacy: A Vision of What Could Be.
Two Handshakes to Remember.
The Melbourne Message.
TOPS: Neither DC nor DB.
TOPS and Investing.
TOPS and Governance.
TOPS and the Real World.
The Drucker Visit.
PART THREE: Pension Fund Governance.
CHAPTER 14: Reinventing Pension Fund Management: Easier Said than Done.
A Paradigm Shift?
Novelties of Fact.
Novelties of Theory.
Pension Industry Responses.
Crossing the "Innovation Chasm."
CHAPTER 15: Should (Could) You Manage Your Fund Like Harvard or Ontario Teachers’?
Four Things in Common.
Legal Foundations: Solid or Not?.
Governance and Management: Understanding the Difference.
Investment Beliefs: Theirs or Yours?
Investment Processes: Like Wall Street?
Should You Manage Like