Skip to main content

Table 3 Savers-principals and their agents

From: Pension and state funds dominating biomedical R&D investment: fiduciary duty and public health

Distance from principals Agents Financial flows order of magnitudea Authority by Incentive Compensation Geography
Principals Savers Thousands Asset ownership Welfare May be based on financial performanceb. Linear scaling Dispersed
1 Pension fund board Billions Election or political appointment Political Fixed retainer fee Concentrated: regional or national
2 Pension fund executives Appointment by pension fund board Financial return Based on financial performance. Superlinear scaling
3 Investment managers Trillions Appointment by pension fund executives Financial return Based on financial performance. Superlinear scaling Concentrated: global financial centres
4 Corporate directors Millions Appointment by investment managers’ vote on shares Financial return Based on financial performance. Superlinear scaling Concentrated: global economic hubs
  1. aAnnual pension contributions in high-income countries amount to several thousands to tens of thousands of USD. Pension funds can range from several billion to several hundred billion USD, while the largest investment managers have several trillion USD under management. They invest in stock-exchange-listed corporations and vote their shares to elect corporate executives. Corporate executives then have authority over smaller operational budgets that can amount to hundreds of million USD (for instance, Alexion Pharmaceuticals annual R&D budget in 2018 was $730 million [22]).
  2. b Savers can benefit from their pension fund’s strong financial performance in other ways, for instance, through a reduction of monthly contributions