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Global Future of Retirement Conference

Speakers extol benefits of good pension fund governance

Good governance is about alignment of goals, leadership, independence from political pressure and showing stakeholders the value of contributing to pension funds, said Derek Dobson, CEO and plan manager of the College of Applied Arts & Technology Pension Plan, Ontario, at Pensions & Investments' Global Future of Retirement conference in New York on Tuesday.

Sticking to those core values enabled the multiemployer plan to increase contribution rates by 1.65% during the financial crisis because it made the system more sustainable, he said. "Never waste a good crisis," he advised attendees.

Other best practices include direction setting, delegating, oversight and correction, said Rick Funston, managing partner at Funston Advisory Services, and it makes good financial sense. "Good governance is something that improves the investment performance of an organization," he said. In the U.S., "we face very strong headwinds because of the evolution — the devolution — of the funded status of (public) pensions plans," said Mr. Funston, who predicts that public pension boards might even see an effort to claw back some of authority delegated to them.

On governance reform in Japan, Sadayuki Horie, senior researcher with Nomura Research Institute, said a 2016 governance law that goes into effect Oct. 1 is good timing that adds a governance board for the 144 trillion ($1.3 trillion) Government Pension Investment Fund, among other reforms.