For social security institutions that have a mandate to manage the investment reserve funds of the administered programmes, whether through internal and/or external fund managers, the board and the management are duty bound to ensure that the funds are invested in accordance with basic prudential rules such as profitability, safety, liquidity and diversification.

There are many areas to be addressed in enforcing the prudent person principle in the investment of social security funds. The nine guidelines on this topic offer guidance to a) institutions with internal investment units; b) institutions with external fund managers; and c) institutions that have representation on the boards of companies where they have significant asset holdings.

The ISSA Guidelines on Investment of Social Security Funds provides detailed guidance on a progressive process of investment governance that starts with establishing the various structures involved in the investment process and defining their roles and how they interact, through to the processes and safeguards to be established to the implementation and monitoring of the institution’s investment policy.