You’ve just been appointed a new trustee to a pension committee—now what?
Whether elected or appointed, a pension trustee faces many demands soon after assuming the role. But while the load of a trustee is heavy, there are ways to lighten the burden. Here’s how.
1. Understand the challenges A trustee’s mandate involves pension and benefits legislation, regulation, general fiduciary duties and, when they arise, issues of equity, privacy, work legislation, family law or tax law. There are also plan provisions, trust agreements, contracts and various other plan-specific documents. And the governance of these areas requires working with partners—some voluntary, but not all (think of the Canada Revenue Agency and the superintendents)—that stretch from accountants and administrators, to investment managers and insurance companies, custodians and lawyers.
2. Consider your need for deep understanding in any area of involvement in a trust Depending on the makeup of the committee, new trustees may be assigned an area of focus or may be permitted to choose. Regardless, they have much to learn. For example, in accounting, trustees are immediately presented with the intricacies of income and balance sheets within a set of financial statements. For investments, they must become familiar with asset allocation, liabilities and performance measurement. Then there’s the truly fundamental priority of the trustee’s fiduciary duties: care, prudence, diligence, loyalty, delegation, even-handedness and no conflict. Any trustee who doesn’t understand the meaning of these expectations may be taking great risk unnecessarily.
3. Be aware of your individual responsibility While a trustee is joining a collective that is usually judged as a whole, group protection does not eliminate that individual’s responsibility or possible liability. At the earliest opportunity, a novice trustee should receive an extensive orientation that includes clear guidance on the role, duty and expectations. Understanding the organization, and his or her place in it, is the logical starting point for a needs assessment.
4. Ramp up your skills A plan sponsor should develop tailored, individual learning paths for each trustee. Learning can be monumental in the early stages of a trusteeship but should become incremental over time. However, remaining current means never being done with education. There should be no excuses (from the sponsor or the trustee) for allowing gaps in a trustee’s knowledge to persist since there are numerous programs, courses and conferences aimed specifically at such needs. Professional staff and advisors are available for educative purposes. And networking with peers and mentors and leveraging technology for learning should be encouraged and supported by plan policy.
5. Focus on governance A trustee who is taught to focus on governing has the best chance of delivering on commitments. Adherence to governance should minimize exposure to legal liability and reduce the odds of costly failures. The trustee’s work should be at the strategic level—leave operations to the plan management.
Trustees are made, not born. A successful trusteeship is most likely achieved through a process, not an event. Time and the determination of an individual working in collaboration with a plan sponsor present the best recipe for a positive outcome. Personal initiative in a supportive environment is key. If you are involved with a trusteeship, determine your needs and those of others surrounding you—then, act on them.
Blair Richards is CEO of Halifax Port ILA/HEA. b.richard@ns.sympatico.ca
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