The productivity of the firms that pension funds invest in increased by, on average, 3-5 per cent, according to a report by the International Centre for Pensions Management (ICPM).

The report cites recent research based on Danish data by the University of Amsterdam’s Roel Beetsma, Svend E. Hougaard Jensen, Dario Pozzoli and David Pinkus.

The ICPM’s whitepaper, The Four Ways Through Which Pension Funds Increase the Productivity
of Firms They Invest In, is comprised of academic researchers and senior officials of large pension funds from around the world.

“When pension funds collaborate on research, they can effectively drill down to the concrete
takeaways that will make the most difference to the industry,” ICPM research committee co-chair and chair of the working group, Jaap van Dam, said.

“We see enormous benefits to the pension fund community when our network gathers insights that can be shared more broadly.”

The paper found that the productivity effect is larger when the equity stake is larger and is held for a
longer period. It is also more concentrated among the non-listed and smaller firms. In addition, the four primary channels promoting this productivity effect are the supply of funds channel, the long-term commitment channel, the engagement channel, and the signalling channel.

The paper features several case studies that illustrate these channels in action, including PensionDanmark/Stiesdal, PSP Investments/Mahi Pono, PGGM/Amvest, and
APG/ANET.

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