Crafting a code Ensuring that a public pension fund has the resources to meet its commitments to beneficiaries should be job No. 1 for members of a fund's board of directors.
It's not an easy thing to do. Pressures are high, given the need for returns and growing unfunded liabilities. Board members, too, must ensure that sound governance practices are in place and followed.
But as a story in the Jan. 13 issue of Pensions & Investments noted, some public pension funds now are facing additional challenges that arise from conflicts among and between board members. Such conflicts seem to pop up during times of financial stress, like now, industry experts told P&I.
To build a culture of collegiality, some boards are looking to create and adopt codes of conduct for their members. No one would argue that board members have to personally like each other. But if a boardroom culture undermines an effective working environment, there's a big problem to fix. Codes of conduct, self assessments and evaluations are considered best practices when it comes to creating an efficient board. And investment expertise or education should be required or provided.
Public pension funds shouldn't have to put policing bad board behavior among their list of to-dos. There's too much other work at hand.