Since its creation by the provincial government in 2006, the Nova Scotia Pension Agency (NSPA) (No. 21 in the 2012 Top 100 Pension Funds Report) has been guided by one key principle.
“Our driving mantra has been to view our trustees as customers,” says Steven Wolff, CEO of the NSPA.
“We’ve really tried to understand what their priorities and expectations are, and then to use that input to drive strategic improvements.”
Wolff explains that a vital piece of legislation passed by the province in April 2012 aligns with that mantra, enabling the NSPA to strengthen its relationship with trustees, who will assume more responsibility and authority in shaping its future. The Pension Services Corporation Act shifts oversight of the NSPA from the minister of finance to a joint ownership structure involving the trustees of the plans that the agency serves—the Teachers’ Pension Plan and the Public Service Superannuation Plan.
“The investment decisions are really driven by the trustees themselves,” he says. “What this does is provide independence from the provincial government and allow for more strategic decisions. On the other hand, there will be a very high level of transparency in terms of reporting and a very robust [number] of controls and oversight by the trustees.”
Of course, with more responsibility comes the need for more education to make sound plan design decisions. Trustees of the Teachers’ Plan—which moved from government oversight to an employee-employer joint governance structure in 2006—have been gaining knowledge over the past few years via courses through the International Foundation of Employee Benefit Plans and face-to-face meetings with consultants. The Superannuation Plan is currently making the shift from government as sole trustee to a joint governance model similar to that of Teachers’, and Wolff says that its trustees will focus on similar learning opportunities over the coming year.
“The issues become more and more complex. The trustees are moving into more complex asset classes, and they’re not making these decisions until they fully understand the profiles of these classes, the risks that come with them and best practices [for investing in them].”
And the trustees of both plans aren’t just passively sitting in seminars. They’ve had to learn as they go, as the NSPA implements new asset mixes that were approved in 2010. Both plans are moving away from equity market risk by lowering their existing 50% allocation to the asset class. For the Teachers’ Plan, that means shifting to a target of 46%, while the fully funded Superannuation Plan is targeting 30% equities. In both cases, trustees have had to learn about the opportunities and risks involved in hedge funds, fixed income, commodities, infrastructure and global real estate.
Wolff is confident that the plan is on the right path. He says the work will continue as it always has: slowly but surely, with trustees’ needs at the forefront. “We’ve tried to execute very incrementally and to do a lot of homework before we pull the trigger.”
Neil Faba is associate editor of Benefits Canada. neil.faba@rci.rogers.com
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