Industry News

On November 20, 2019, the National Association of State Retirement Administrators (NASRA) released its publication, Overview of Public Pension Plan Governance.  The paper is intended to summarize the laws and rules that govern public pension plans as well as the various entities typically responsible for those plans.  It discusses: 1) the role of legislative bodies and chief executives; 2) retirement system board and staff responsibilities; 3) external investment entities; and 4) other oversight entities.

Key findings include:

• All public retirement systems are unique and should be measured in the context of their individual governance framework.
• Typically, the governance of public retirement systems is the responsibility of various entities, primarily a legislative body, chief executive, board of trustees and key staff members.  Other entities may also have a role such as an oversight committee or agency.
• Generally, the elected legislative bodies and chief executive are responsible for key areas of retirement system governance including setting benefit levels, benefit design and plan funding.
• Commonly, retirement system boards and staff have restrictions in assigned governance responsibilities, such as asset management, personnel policies and use of service providers.   

The paper concludes, “Authority to make the most consequential decisions regarding the long-term health of a public pension plan typically lies not with the retirement system board, but with policymakers, who enact the laws that establish the plan, its design and financing; and who authorize the public entities responsible for key areas of governance.  Understanding a retirement system’s governance framework is a vital first step toward properly evaluating a public pension plan, its condition, and the entities responsible for various policy outcomes.”

In addition, the paper provides a listing of the oversight agencies for statewide retirement systems.

The paper is available here.