Peer Intelligence | Spring 2023

Client transparency best practices for institutional investors

By Edsart Heuberger

Transparency and effective communication are two critically important success factors for pension funds. Together they build trust, improve strategic focus and stakeholder relationships, increase engagement with plan members and employees, and drive better member outcomes. 

In 2021, CEM introduced the Global Pension Transparency Benchmark (GPTB), an annual collaboration with top1000funds.com. The GPTB rates the public disclosures of the five largest pension fund organizations in fifteen countries. 

Figure 1: The most transparent countries in the world

As part of this effort, CEMers spend 2,500 hours every year assessing the quality of public disclosures. The review focuses on four factors: responsible investing, performance, cost, and governance. Our team also identifies best practices. This quarter, we feature a governance best practice from Old Mutual Superfund in South Africa (Old Mutual).

Governance Best Practice: Board Effectiveness 

Board effectiveness is key in ensuring good stewardship of large pools of assets. Old Mutual does a great job of clearly defining the key competencies it needs from its Board collectively and how it contrasts its Board members’ actual competencies with desired skills. Aside from competencies and experience, Old Mutual does an excellent job of showing Board diversity, an area more pensioners are interested in, by gender, ethnicity and age, in a concise graphic.  

Figure 2: Old Mutual Board Member Composition and Competencies

In general, we find a graphical representation of the facts to be easy to understand and digest and we recommend funds adopt this method of communication in their disclosures at least some of the time.

CEM’s Transparency Benchmarking Subscription features many more performance, cost, responsible investing, and governance reporting best practices. To learn more click here.