- You must be logged in to access full answers.
- Free 90-day trial
- Subscribe to our eNewsletter
- Sponsor an Educational Event
- Sign Up for a FREE Service Provider Directory Listing
- Find out what FiduciaryX can do for you.
- Pension Risk Matters
Knowledgebase
Welcome to the FiduciaryXSM Knowledgebase. Search on a variety of topics for answers to critical questions relating to investment best practices, governance and risk management.
- Submit your query via the Virtual Reference Desk. It only takes a minute or two to complete a short form. Let our librarians and subject matter experts do the research.
- Share your expertise. If you want to comment about a particular investment best practices, governance or risk management topic, the FiduciaryX editorial team welcomes your input. Let us know if you want to be identified or prefer to submit your comments anonymously. We will review before posting and edit or augment accordingly.
- Learn something new. The FiduciaryX Knowlegebase is continuously updated. Come back often for interesting tidbits or information about pressing issues.
Some Recently Asked Questions and Answers
- How Do You Define "Economic Funding Base" and How Is That Different From Actuarial Numbers?
- What is the Relationship Between Procedural Prudence and the Prudent Expert Standard of Care?
- Where Can I Get More Information About the 2009 Form Schedule C?
- How Much Information Are Limited Partners Entitled to Receive From a Venture Capital Fund?
- What is the Relationship Between Plan Size and Performance?
- How Do I Get Information About Fees For European Asset Managers?
- How Large is the Global Over the Counter Derivatives Market?
- Who is Referred to as Mr. ERISA?
- What Patent Allows Participants to Borrow from a Plan?
- Why is Standard Deviation Limited as a Risk Measure?
- What Limitations Apply to the Sharpe Ratio as a Performance Metric?
- How Many Excuses Do People Have for Not Saving?
- Who Invented the 401(k) Plan?
How Do You Define "Economic Funding Base" and How Is That Different From Actuarial Numbers?
Jun 20, 2010
During a May 21, 2010 educational webinar about liability-driven investing ("LDI"), produced by Investment Governance, Inc. and sponsored by P-Solve, there were many questions from the audience about economic versus actuarial funding as a basis for making asset-liability management decisions. Mr. Ryan McGlothlin, head of P-Solve's U.S. business, provides his insight on this important topic.
Click here to see the full article.
Return to top
What is the Relationship Between Procedural Prudence and the Prudent Expert Standard of Care?
Jun 19, 2010
In response to a request via the FiduciaryX Virtual Reference Desk, Attorney Andrew Oringer explains which comes first - meeting the prudent expert standard or setting up action steps to ensure procedural prudence.
Andrew L. Oringer, a partner in the Tax & Benefits Department of Ropes & Gray LLP, leads the firm's ERISA and executive compensation practice in New York. He counsels clients on their employee benefit plans and programs, benefits-related tax matters and fiduciary issues arising in connection with the investment of employee benefit plan assets. He is Chair of the Fiduciary Responsibility/Plan Investments Sub-Committee of the Employee Benefits Committee of the American Bar Association's Section of Taxation, and co-Chair of the Employee Benefits Committee of the Tax Section of the New York State Bar Association and a member of that Tax Section's Executive Committee. He is also a member of the Advisory Boards of the BNA Pension & Benefits Reporter and of the Tax Management Compensation Planning Journal, and an Adjunct Professor at Hofstra University School of Law. Mr. Oringer is a frequent author and speaker, and is often quoted in and interviewed by the press regarding a wide range of benefits-related matters.
Click here to see the full article.
Return to top
Where Can I Get More Information About the 2009 Form Schedule C?
Mar 25, 2010
Click here to access "FAQs About The 2009 Form 5500 Schedule C" (United States Department of Labor, Employee Benefits Security Administration).
Click here to see the full article.
Return to top
How Much Information Are Limited Partners Entitled to Receive From a Venture Capital Fund?
Mar 08, 2010
Limited partners cannot make a meaningful assessment about the risks in their venture capital holdings without adequate access to information. Read what Investment Governance, Inc. Advisory Board member, Mr. Pascal Levensohn, has to say. Click here to read Mr. Levensohn's impressive bio.
Click here to see the full article.
Return to top
What is the Relationship Between Plan Size and Performance?
Mar 07, 2010
A senior investment executive asks for the names of empirical studies that demonstrate whether there is a relationship between plan size (in terms of assets under management) and performance (in terms of reported returns). Initial response results in the following items:
- Antolin, P. (2008), "Pension Fund Performance," OECD Working Papers on Insurance and Private Pensions, No. 20, OECD Publishing.
- "Does Pension Size Matter?" by Susan Mangiero, September 12, 2006
- "Defined Benefit Plans Outperformed 401(k) Plans During Bull and Bear Markets: Large retirement plans had higher returns than small plans" by Stephen Miller, SHRM Online, February 9, 2010
- "State and Local Pension Plans' Equity Holdings and Returns" by Mark A. Sarney, Social Security Bulletin, Vol. 63, No. 2, 2000.
One of the ways to tackle the question is to conduct a statistical analysis of asset allocation mix for an identified group of pension plans, the assets under management for each pension plan in the study and their respective reported returns for a specified time period. Regulatory regime and other factors would have to be held constant or could be part of a multivariate approach.
Click here to see the full article.
Return to top
How Do I Get Information About Fees For European Asset Managers?
Mar 05, 2010
Onesuggested sourceis Table 11 ("Management Fee by Fund Type and Country") of "Current Trends in the European Asset Management Industry Lot 1." If you are able to pay for the data, you may want to check out the Mercer 2008 Asset Manager Fee Survey, "a biennial report analyzing fee data on 19,000 asset management products from 3,400 investment management firms."
Click here to see the full article.
Return to top
How Large is the Global Over the Counter Derivatives Market?
Nov 29, 2009
According to the Bank for International Settlements, over-the-counter derivative instruments totaled $604.622 trillion (U.S. dollars) at the end of June 2009. Interest rate contracts accounted for the largest share of this number at $437.198 trillion (U.S. dollars). Click to access the BIS summary statistics table by risk category and instrument.
Click here to see the full article.
Return to top
Who is Referred to as Mr. ERISA?
Nov 29, 2009
The late Illinois Congressman, John Erlenborn, became known as "Mr. ERISA" for his many years of guiding this federal pension law through its passage in 1974.
Click here to see the full article.
Return to top
What Patent Allows Participants to Borrow from a Plan?
Nov 29, 2009
United States Patent 5,206,803 is for a system that allows "pension plan participants to establish a line of credit (LOC), based on their vested interest in a sponsored pension plan?"
Click here to learn more about this invention by Francis M. Vitagliano and Franco Modigliani. (Dr. Modigliani won the Nobel Prize in Economics in 1985.) Click here to read "A Card to Borrow Your Future: Can Access to Credit Encourage Savings?" by David A. Vise (Washington Post, October 24, 2004).
Click here to see the full article.
Return to top
Why is Standard Deviation Limited as a Risk Measure?
Nov 29, 2009
The use of standard deviation (STD) as a risk measure assumes normal distribution of returns. Moreover,comparing two or more asset classes on the basis of STD requires identical average returns which almost never occurs. Click to access the Electronic Statistics Textbook.
Click here to see the full article.
Return to top
What Limitations Apply to the Sharpe Ratio as a Performance Metric?
Nov 29, 2009
The Sharpe Ratio is a measure of excess return per unit of risk with "risk" being defined as the standard deviation. There are limitations to its use.
Click here for a formal definition. Email Editors@InvestmentGovernance.com if you want to know more.
Click here to see the full article.
Return to top
How Many Excuses Do People Have for Not Saving?
Nov 29, 2009
Click here to see if your excuse shows up on the list prepared by the Alabama State Treasurer and the Bond Market Association.
Click here to see the full article.
Return to top
Who Invented the 401(k) Plan?
Nov 20, 2009
Mr. Ted Benna, currently President of the 401(k) Association and Chief Operating Officer of Malvern Benefits Corporation, is oft-credited as the architect of the 401(k) plan.
For an interesting chronicle of the development and approval of this popular retirement vehicle, Click here to read "401(k) Plans: From Inception to the Present Day."
Click here to see the full article.
Return to top