Governance and responsibility: who takes the investment decisions in a collective foundation?

As the highest governing body, the foundation board has overall responsibility for the collective foundation. First and foremost, the board determines the investment strategy, which means it decides how the assets of the affiliated employee benefits schemes are invested – in line with legal requirements and the foundation’s objectives.

The foundation board usually puts together an investment committee to ensure that it can draw on the necessary expertise. Made up of external experts, and occasionally members of the foundation board, the committee prepares investment decisions and oversees the implementation of the strategy. Thanks to the two-tiered structure comprising the foundation board and the investment committee, decision-making is guided by general governance principles as well as specialist investment expertise.

Support from external consultants and specialists

Many collective foundations work closely with external asset managers and expert consultants. The outside specialists contribute their in-depth market knowledge and assist, for instance, in the selection of investment funds and real estate projects or in conducting asset-liability studies.

External specialists help manage complex asset classes and control risks to a high professional standard. Acting for and supervised by the foundation board, they always work within the defined investment guidelines. Ultimately, all responsibility rests with the collective foundation – external partners act as advisors and implementers, but not as decision-makers.

Transparency, control and security

Diligent control and transparent reporting are key elements of effective governance. Compliance with legal requirements, such as the BVV 2 guidelines and investment restrictions, is monitored on an ongoing basis.

In addition, the affiliated employee benefits schemes are provided with regular information on investment performance, returns and the coverage ratio. Internal control systems, target/actual comparisons against benchmarks and annual external audits ensure the correct implementation of the investment strategy and objective performance assessment.

Transparency builds trust: Thanks to clearly defined structures and continuous monitoring, members can rest assured that their pension assets are managed on a responsible and professional basis.

Summary

The governance structures in collective foundations are designed to fully protect the interests of the members. Supported by expert committees and external specialists, the foundation board assumes ultimate responsibility. Transparency and control ensure that investments comply with legal requirements and are sustainably managed in the interest of the members.