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Stagflation Concerns Pension Plans

The potential for stagflation over the next two years is one of the biggest concerns for global public pension plans and sovereign wealth funds, says a report from the?Official Monetary and Financial Institutions Forum . They expect a period of stagflation and will face huge challenges positioning their portfolios to cope with it. And they don’t expect inflation to disappear quickly. It says persistently high inflation is the top long-term concern of almost 50 per cent of global public funds surveyed. To prepare their portfolios for potential stagflation, pensions and sovereign wealth funds have created a ‘barbell approach’ that combines a ‘flight to safety’ with an allocation to alternative assets to provide an inflation hedge. Although fixed income and equities still accounted for more than three quarters of portfolios in 2021, these concerns have prompted more than 40 per cent of the funds surveyed look at increasing their allocations to real estate and infrastructure assets over the next two years.

Pay-For-Performance Needs Makeover

Employers in North America need to reshape their performance management efforts and pay-for-performance programs to give them a much-needed boost, says a survey by WTW. Its survey found just 26 per cent of North America employers reported being effective at both managing and paying for performance. Additionally, the gap between the priorities for performance management and delivering on those objectives is wide. For example, 93 per cent of respondents cited driving organization performance as a key objective for performance management, yet 44 per cent said their performance management program is meeting that objective. Similarly, 72 per cent said supporting the career development of their employees is a primary objective, but only 31 per cent said their performance management program was meeting that objective. “Employers have their work cut out to raise the bar on their performance management programs. Many recognize that their programs have not kept up with the changes due to the pandemic and tight labour market, yet they have not taken action. Ideally, employers will reshape their programs to correspond with new work styles and employee career aspirations and provide a better employee experience,” says Amy Sung, work and rewards global growth leader at WTW.

For details on these stories, visit www.bpmmagazine.com

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