Pension boards have an important duty to oversee the investment apparatus that ensure that retirees will be paid their promised benefits — but what happens if a board member goes too far, becoming more attack dog than watch dog?
That was an accusation recently leveled at a public meeting of the Los Angeles City Employees’ Retirement System (LACERS), when the $17bn fund’s recently-retired general manager spoke up to protest what he saw as “breakdowns in board decorum” that were interfering with the plan’s ability to recruit and retain the staff and consultants needed to meet the city’s investment goals.
Pension trustees face a difficult task in striking the right oversight balance — often working part-time to oversee investment staff that are making day-today decisions in a complicated industry where trustees often have little direct expertise. Education, training, and relationship management are all important tools in such a context, allowing board members to ask productive questions without being either needlessly antagonistic nor a rubber stamp for investment staff, according to Matrice Ellis-Kirk, a managing director at RSR Partners. Ellis-Kirk has offered governance consulting and recruiting services to the boards of pension plans, investment managers, and public and private companies.
“You’re not looking to have a monolith,” Ellis-Kirk told MMR. “The most important part of a board is having diversity of thought. What you’re trying to do is create an environment where you can get honest information, get transparency, and hold people accountable without making them want to run or hide. Hostile environments do not create that.”
Read the full story: Turmoil in LACERS_ board
Published by Money Management Report/Pageant Media.