The words “pension” and “crisis” are inseparable these days. Pension fund managers fret about widening deficits as retirees live longer and investment returns prove disappointing. Attempts to address pension problems in the public and the private sectors have proved mostly fruitless -- witness President Bush’s efforts to revamp Social Security.
All of which makes it heartening, and instructive, to look at well-run pension plans that meet today’s challenges. Senior Editor Steven Brull finds one in, of all places, San Francisco. A city defined by its free spirit in a state rife with budget woes turns out to run a model pension plan.
What’s the secret? A combination of innovative investing and conservative benefit policies. As Brull relates in “Push and Pull” (page 24), the fund’s longtime executive director, Clare Murphy, has been quick to adopt new strategies, moving early into real estate, venture capital and emerging-markets debt and sticking to them, despite some setbacks. The result: well-above-average returns.
Murphy and her colleagues have also been careful not to promise more than they can deliver. Retirement benefits have been kept somewhat below the California public plan average because of an unusual proviso: Voters must approve any increase. Politicians elsewhere might consider this.
Producing strong results in a difficult environment is a challenge Russian executives know only too well. A Communist legacy of overstaffing and outdated facilities hobbles many companies, which also face unwanted attention from an authoritarian state. Nevertheless, a growing number of executives are more than coping, as Contributor Craig Mellow shows in “Russia’s Top Business Leaders” (page 52). Selected by investors polled by Institutional Investor, they range from young, Western-trained managers like Alexander Izosimov of Vimpel Communications to politicians-turned-businessmen like Unified Energy System’s Anatoly Chubais. They set a great example for other Russian executives at a time when more and more are trying to tap the international capital markets.
