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Ongoing Education is Key for Strong Pension Governance, Says Aon’s Ed Bardowski

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  • On: 10/11/2023 20:48:56
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NCPERS spoke with Ed Bardowski, Partner, Registered Principal & Public Sector Solution Leader at Aon, about the state of private equity markets today and the role of ongoing education in a strong governance model.


By: Lizzy Lees, NCPERS

Later this month, NCPERS Program for Advanced Trustee Studies (PATS) will return after a COVID-related hiatus. PATS is a two-day, intensive program designed for advanced trustees and staff who crave an in-depth exploration of pension plan governance. This year's program will cover two key topics: Actuarial Deep Dive for Pension Funds and Investment in Private Equity.

To preview the event, we spoke with Ed Bardowski, Partner, Registered Principal & Public Sector Solution Leader at Aon, about the state of private equity markets today and the role of ongoing education in a strong governance model.

Aon staff have been tapped as expert presenters for the private equity portion of NCPERS Program for Advanced Trustee Studies (PATS). Can you provide a brief overview of the state of private equity markets today?
Private equity market velocity has slowed in terms of deal execution, capital calls and distributions. Fundraising has also been impacted by market conditions and the denominator effect as many LPs are over allocated to PE. Fundraising timelines are being elongated and some GPs may not be able to raise to target levels but there is still a great deal of interest in the asset class as public markets may remain volatile due to many internal and external capital market factors. With the impact of higher interest rates on capital structures and debt availability at times in question, GPs will be earning their management fees to navigate these times and generate top quartile returns.

Are there any key considerations that public pensions should keep in mind as they evaluate their private equity allocations?
Portfolio managers and obviously plan sponsors shouldn't overreact to increased exposure to PE due to the denominator effect. Vintage years that follow points of market turmoil have the potential to be very strong, so this is not the time to pull out of the market. Clients will need to consider their plan design, demographics and most importantly their respective funding policy when making a decision to invest through these times, albeit at potentially reduced commitment levels to take into account overexposure to PE.

PATS is just one of the many programs NCPERS hosts to help educate pension trustees, staff, and stakeholders. How does ongoing education fit into a strong governance model?  
Ongoing education is one of the most important aspects. We are seeing unprecedented levels of turnover at the Board, Key Executive, Committee and staff levels across plans of all sizes. Aon realizes the importance of providing Fiduciary Governance training and hosting other non-investment discussions as these changes are taking place. Education on investment matters is important but equally important are education and historical reviews of how decisions are made and memorialized at many organizations. Operational Due Diligence (ODD) on private equity and other managers is also a frequent topic at conferences and educational sessions. While investment risk discussions dominated these sessions in the past we hear more about other areas like ODD and all meetings have some form of discussion on CyberSecurity. Aon's CyberSecurity and Fiduciary Governance units have been extremely busy fielding these calls for the last 24 months and we expect that trend to continue as firm's face these credible and significant risks to assets. Communication with participants and beneficiaries is also key.

Aon has been an NCPERS member for over a decade. As a service provider, what value does your team see in attending these educational events?
Very simply, NCPERS events have been a wonderful resource to stay close to our clients and prospects and help them make better decisions in all areas that impact their pension or other asset pools. Many plan sponsors and asset managers utilize NCPERS events to also understand potential regulatory changes that also impact their governance, asset management and staffing decisions. The access to decision makers and new trustees is critical for educational purposes and allows us to engage national issues but also very specific regional and state details that allow us to offer customized strategies and support to plan sponsors. Further, the more intimate nature of events like PATS and other Trustee Education endeavors allows us to engage more intimately to understand the full needs of their staff, participants and beneficiaries. As a large and diversified firm, Aon can offer investment specialists but also our CyberSecurity and Fiduciary Governance teams the opportunity to meet with individuals that begin as prospects but ultimately end up as valued clients. In this economic environment, more entities will rely on NCPERS and similar associations and organizations and Aon is stepping up to support them as they are integral in helping our clients make better decisions.



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