23 March 2006

OECD Guidelines on Pension Fund Asset Management

The OECD calls for new approach to managing pension fund assets. Its Guidelines on Pension Fund Asset Management, endorsed by all 30 member governments, offer a roadmap for how pension funds should manage their assets, proposing that funds follow the so-called ‘prudent person’ principle. Among others, these principle requests the governing body to act in the “best interest” of beneficiaries when investing pension plan assets. Funds should also establish internal controls and procedures to effectively implement and monitor the way investments are managed

The guidelines also call for strict limits or even prohibition on pension funds’ use of derivatives with the possibility for unlimited commitments. “Legal provisions should address the use of derivatives and other similar commitments, taking into account both their utility and the risks of their inappropriate use.

Press release
Guidelines

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