The impact of trustees’ age and representation on strategic asset allocations

A board of trustees has the fiduciary duty to invest a pension fund’s assets in the best interest of its beneficiaries. Trustees’ characteristics should not affect their investment decisions. We find two counterfactual artefacts for corporate pension funds. First, a higher average board age lowers the strategic allocation to equity by 7 percentage points after controlling for the pension fund’s characteristics. This way the strategic asset allocation does not fully reflect the beneficiaries’  characteristics. Second, pension funds with a greater representation of employers on the board allocate more to equities. This fosters a principal-agent problem between employer trustees and beneficiaries.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

MORE ABOUT NETSPAR


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2023-2027           •           Researchagenda

ABOUT NETSPAR

Our partners

B20160708_university of groningen
B20160615_pggmgroengrijs_grijswaarden_small
B20211201_Cardano_Logo 2021_website
AFM logo 2023 zwart wit
View all partners