Governance of Public Pension Funds: Lessons from Corporate Governance and International Evidence

Abstract

An understanding of corporate governance theory can promote the adoption of appropriate governance tools to limit agency problems in public pension fund management. The absence of a market for corporate control hinders the translation of lessons from the private sector corporate world to public pension governance. The establishment of a fit and proper governing body for public pension funds thus may be even more important than the maintenance of a comparable body for private sector corporations. In particular, behavioral controls should be carefully designed.

This paper - a product of the Financial Sector Operations and Policy Department - is part of a larger effort in the department to study the effects of contractual savings development on financial markets.