GOSI Bahrain and Investcorp workshop discusses improving asset performance of social security and pension funds

Dr Michal Rutkowski, Director for Human Development in the Middle East and North Africa region at the World Bank told the senior officials attending from some 20 social security and pension funds organisations in the GCC, the Levant and Southeast Asia, that improving asset performance could be a much more politically viable alternative to other measures such as increasing contributions or reducing benefits. Professionalizing investment functions was what would achieve such improvements. Key to this was that fund administrators should ensure that the oversight function was separate from the investment and implementation function.

Bruno Roy, of McKinsey & Co in Canada, described how best-in-class institutions had definite organisational and governance characteristics in common. They had balanced corporate governance frameworks, explicit investment philosophies and were aligned behind their investment philosophies and strategies. In addition, despite having distinctive talent pools, cultures, structures, systems and processes, they had designed them using common principles.

The panel discussion focused on some of the hurdles that funds faced in adopting best practices in investment management, corporate governance and organisational structure. Panellists included Sh Mohammed Bin Isa Al Khalifa, Acting Director General of GOSI Bahrain, Mr Saleh bin Nasser Al-Araimi, General Manager of Public Authority For Social Insurance Oman and Mr Ibrahim Muhanna, Chairman of the Muhanna Foundation.

Gary Long, Investcorp's Chief Operating Officer, explained that social security and pension funds around the world were increasing their allocations to alternative investments. The growing popularity of alternative investments, he said, followed the market collapse of the 1990s that caused them to question the rationale of concentrating their investment portfolios solely in 'traditional' asset classes such as equities and bonds. They saw the benefit of diversifying by investing in 'alternative' asset classes such as private equity, real estate, venture capital and hedge funds.

The GOSI Investcorp Social Security and Pension Fund Workshop is the latest in Investcorp's program of institutional investor events, designed to provide opportunities to debate topical strategic issues. It follows last year's alternative investment workshop organised by Investcorp and the Kuwait Investment Authority.