“their ability to align their [financing choices] with the flow of time”
With my proposed shift from “investment behavior” to “financing choices” this gives us the definition of prudent stewardship of The Pension Promise.
Warren Buffett does it by owning companies outright.
But owners acquire a duty to what they own.
Pensions already owe a duty of undivided loyalty to The Pension Promise. Becoming an owner will divide their loyalties and inhibit their ability to align their choices with the flow of time.
They need an innovative new financing architecture that aligns choices with time but does not divide their loyalties.
Hi Tim, I completely agree with you on the problem of governance in public pension plans. In fact, it is one of the most enduring problems in U.S. financial history, and it involves much more than public pension plans. It began with the U.S. Navy Pension Plan in 1800. The structural challenge is simple at the core: permanent pools of capital are managed by temporary volunteers who often lack the time and experience to know whether those advising them have their best interests in mind. As you mention, often they do not. This is a theme that I address in the book and in many papers that are in the works.
The U.S. Navy Pension Plan is described in the paper in the link below if you are interested.
“their ability to align their [financing choices] with the flow of time”
With my proposed shift from “investment behavior” to “financing choices” this gives us the definition of prudent stewardship of The Pension Promise.
Warren Buffett does it by owning companies outright.
But owners acquire a duty to what they own.
Pensions already owe a duty of undivided loyalty to The Pension Promise. Becoming an owner will divide their loyalties and inhibit their ability to align their choices with the flow of time.
They need an innovative new financing architecture that aligns choices with time but does not divide their loyalties.
Hi Tim, I completely agree with you on the problem of governance in public pension plans. In fact, it is one of the most enduring problems in U.S. financial history, and it involves much more than public pension plans. It began with the U.S. Navy Pension Plan in 1800. The structural challenge is simple at the core: permanent pools of capital are managed by temporary volunteers who often lack the time and experience to know whether those advising them have their best interests in mind. As you mention, often they do not. This is a theme that I address in the book and in many papers that are in the works.
The U.S. Navy Pension Plan is described in the paper in the link below if you are interested.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3986573