Trust, but verify. That Cold War slogan now should be applied by pension executives to their service providers' assurances that they are prepared for Jan. 1, 2000, that the so-called millennium bug won't bite.
And it also would be appropriate for the service providers to apply it to those who service them --brokers, subcustodians, etc.
Executives at most large pension funds, according to surveys, are confident their systems are Y2K compliant. But they can't be complacent. No one knows where a flaw might be hidden in a buried line of code in a portfolio management system. All they can do is continue to test their own systems as realistically as possible.
Likewise, money managers are confident their systems are ready for Jan. 1, but even they can't be 100% sure. They too may encounter a glitch that no one spotted in tests of the systems.
No one is confident about the vendors supplying their firm or plan. Pension executives are not 100% sure all of their money managers, custodians and consultants will be problem free.
And money managers are not 100% sure those they deal with -- brokers, master trustees, master custodians, global custodians, etc. -- are ready.
The master trustees and custodians have spent hundreds of millions of dollars on their own systems, and have worked with their subcustodians in an effort to make sure they, too, are ready for the turn of the century.
But somewhere in the chain from broker to subcustodian to master trustee to money manager to pension fund it is virtually certain there will be a weak link.
So no one in the chain can rest. All must continue to test their own systems in different ways, and must continue to urge suppliers to do the same, and to demand evidence they have done so.
Murphy's Laws state that if anything can go wrong it will go wrong, and that nature sides with the hidden flaw.
Despite the best efforts of pension executives and their suppliers, Murphy's Law almost certainly will be proven again in January.
But with sufficient care and testing, pension industry executives will be able to ensure that whatever does go wrong will be of minimal importance, and that no fund, no employee participant, will suffer significant harm.