Session 12 – Leading Practices in Pension Committee Management
Lessons learned from The University of Western Ontario’s experiences.
By Louise Koza, Director, HR (Total Compensation), The University of Western Ontario
The University of Western Ontario has been managing DC pension programs for more than 40 years. It is the largest, oldest DC program in Ontario in which members make investment decisions. The nearly $1 billion master trust supports retirement programs for more than 7,000 current and former University faculty and staff. Retired employees may also establish a retirement income fund supported by the master trust.
Board Structure
While the University’s Board of Governors retains the key decisions regarding the establishment of the plans and their funding, the University has delegated most of the administrative accountabilities to two pension boards: one for the academic plan and one for the administrative staff plan. These boards have chosen to work together as a Joint Pension Board to fulfill their accountabilities. The Joint Pension Board includes eight members of the retirement plans who have been nominated and elected by their colleagues. It also includes three members appointed by the University, with the requirement that at least one of these appointees holds an investment professional designation (e.g., Chartered Financial Analyst).
The Joint Pension Board is the managing fiduciary (the administrator, as referenced in the pension statute) and is accountable for approving policies and plan amendments to ensure compliance with the CAP Guidelines, the Income Tax Act regulations and the pension statute. Operating fiduciaries—including internal professional staff, trustees, investment managers, legal counsel, consultants, auditors and recordkeepers—are accountable for the daily operating decisions and regular reporting to the board.
Education and Tools
The University supports the members of the Joint Pension Board with a number of tools, including a role description, terms of reference for their work, a risk management framework and annually updated metrics on member performance, decisions and service levels. For each recommendation, agent review or policy review that the board considers, reference is made to the board’s Principles and Statement of Investment Beliefs to ensure consistency.
For ongoing support and education, board members participate in an annual strategic planning retreat and receive comprehensive agenda material throughout the year at their monthly meetings. Consistent recommendation formats are used that address rationale, legal considerations, implementation considerations and consistency with the board’s principles and beliefs. Consultant and manager literature and reports are filtered for applicability and posted on a dedicated portal for board members. Members are also encouraged to attend topical industry conferences and to pursue professional accreditation and memberships in the areas of investments and pensions.
We have modified our structure and supports over time to improve our decision-making and outcomes. If we were to amend our pension committee structure, we would revisit the membership and question whether the majority should be members or if a shared governance structure is appropriate, including a representative from the retired group investing in the trust. Although we have properly set up the delegation to operating fiduciaries, many of our board members have wanted to make operational decisions, and we have had a difficult time attracting new members or keeping them engaged when they expected that their role would include that element. At times, providing too much information on a recommendation has had the effect of inhibiting the board in making an effective decision. BC
Board resources are available at: www.uwo.ca/humanresources/facultystaff/comp/pension/gov_plan_idx.htm.
> click here for a PDF version of this article
© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the April 2010 edition of BENEFITS CANADA magazine.
