How Should Pension Funds Pay Their Own People?
9 Pages Posted: 2 May 2011 Last revised: 3 Jun 2011
Date Written: April 1, 2011
Much attention in compensation strategy is focused on the corporate sector, and on how pension funds should exercise their say on pay responsibilities as investors in that sector. In contrast, little is been written on how pension funds should pay their own people. This article draws a number of parallels between the corporate say on pay debate and the internal compensation question for pension funds. However, there are differences too. The most difficult part is the design of an effective pay-for-performance scheme in the investment function. This article describes how the Canada Pension Plan Investment Board has tackled this challenge, and comments on a number of issues requiring further study and resolution.
Keywords: Canada Pension Plan Investment Board (CPPIB), Pay-for-Performance, Pension Fund, Say on Pay
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