Reserve funds are important for social security systems. While aims vary, they often provide a financial buffer against future demographic changes, allowing the smoothing of cash flows and supporting the sustainability of systems. Many such funds are large and are attracting increasing scrutiny regarding how they are managed, the assets in which they invest, and the investment returns achieved. Best practice in governance is thus essential. The ISSA Reserve Fund Monitor project highlights the importance of these funds and aims to encourage the exchange of experiences to assist ISSA member organizations in the management of their funds.
The ISSA Reserve Fund Monitor provides essential information to member organizations to assist in the running of their reserve funds. It assesses and analyses different aspects of reserve fund management including asset allocation, performance, use of external managers and regulatory regime.
What is the Reserve Fund Monitor?
The ISSA Reserve Fund Monitor is a biannual survey and report which summarizes and analyses different aspects of the management of reserve funds of ISSA member institutions.
Why is the Reserve Fund Monitor being produced?
The aim of the Monitor is to better assist our members in the management of their social security funds through the exchange of information and experiences.
Why is the project important?
There is increasing attention on the management of reserve funds with a demand for good performance of underlying assets coupled with transparent governance and appropriate risk management. With the ageing of the population in most countries, the importance of reserve funds is growing. At the same time, investment returns over the last decade have been volatile and interest rates are at historic lows. The sharing of information regarding good practices, management of risk, asset allocation and use of external managers, amongst others, is therefore more important than ever to ISSA members.
What are the outputs of the project?
Reports analysing key findings are produced every two years and include a summary of rates of return, information regarding asset allocation, investment income, the use of external managers and the existence of a regulatory framework.
Each participating institution will also receive a tailored report showing their situation compared to the median of survey responses on a range of criteria including investment returns, asset allocation and use of external investment managers.
The initial Reserve Fund Monitor report covered the years 2009 to 2011 with the second report covering 2012 and 2013. The third reserve fund monitor report analysing 2014 and 2015 will be published in 2016.
How does this tie in with other ISSA work?
The Reserve Fund Monitor reports complement the ISSA Guidelines on Investment of Social Security Funds, and provide a resource for the ISSA Academy investment workshops and diploma training courses.