Pension Plan Governance during the Financial CrisisLinkedIn
There, in black and white
NB Bulletin Vol. 12, N. 8, July 2009
The financial crisis severely impacted pension plans in 2008, and the uncertainty remains. Pension committee members must manage this situation and several challenges will need to be addressed in the years ahead. What are the responsibilities of the pension committee in the current economic climate?
To fulfil its responsibilities, the pension committee will typically retain the services of different experts. When the pension committee assigns duties it should carefully choose the expert, clearly establish the responsibilities of each party, give the expert straightforward instructions and conduct periodic follow-up of the work completed.
The financial crisis had a drastic impact on pension funds. Careful monitoring of the investment policy has thus become critical. In cases where the pension committee chooses the investment funds offered to members (defined contribution plans), it may be appropriate to review the options offered. The pension committee should ensure that members have access to resources that can answer their questions and guide them in their decisions.
Payment of contributions
The Supplemental Pension Plans Act requires that contributions be paid to the pension fund within 30 days following the date on which they are due.
The pension committee is required to plan meetings according to the schedule set out in the internal by-laws. The pension committee must meet as often as necessary to ensure the effective completion of its tasks. During a financial crisis, increasing the frequency of meetings to monitor pension plan administration more closely could be appropriate.
Communication with members
The information communicated through the media is inciting members to question even more the financial health of their pension plan. To silence the rumours and maintain members' trust in the pension committee, it is important to take the time to discuss the situation with members. To be effective, your communication should be simple (despite the complexity of the situation), plain (despite the abundance of technical jargon) and reassuring (despite the troubling situation).
Please feel free to contact us for additional information.
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