The Voice of the Funds

The following article is a condensation of an address delivered by the author on May 12, 1988 to a symposium of the Pension Research Council at the Wharton School of the University of Pennsylvania. There are thousands of words in ERISA (the Employee Retirement Income Security Act), but "voting" is not one of them. In 1974, when the Act was adopted, Congress gave no thought to the voting of the enormous number of shares that would be accumulated by the funds that the Act protected. Twelve years later, when the Federal Employees Retirement System Act was adopted, the authors mentioned voting, but only to say that the votes should not be cast by the executives, the boards, or the employees of the fund. In 1988, voting came out of the closet. Today, everybody in the pension world is talking about who should cast the votes that go with fund shares, and on whose side they should vote.