National Conference on Public Employee Retirement Systems

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Pension Plan Governance

Download NCPERS Guide to Pension Governance & Oversight Best PracticesGood governance is important to public retirement systems because it enables improved performance and management of risk across a system's administrative, investment, operational and member service functions.

NCPERS Best Governance Practices for Public Retirement Systems, developed in collaboration with Segal Marco Advisors, provides an overview of governance and risk management practices for pension funds to consider. The guide also features a model risk management framework. Download the Guide.

About NCPERS Guide to Pension Governance & Oversight Best Practices

This guide, last updated February 2024, is comprised of recommendations in seven areas including governance manuals, board practices, board policies, risk oversight, strategic planning, key performance and risk measures, and stakeholder communications.
  • Governance manual: Whether it is in electronic or paper form, a fund should adopt a governance manual that serves as a central repository for the fund's primary governance documents. A well-designed governance manual facilitates effective management and provides a tool to educate trustees and stakeholders on fund operations.
  • Board practices: A retirement system should establish, document, and adhere to a set of practices that have a proven impact on performance and risk oversight. Some of these practices are mandatory (e.g. actuarial valuations), while others may be optional. Key practices include development of a strategic (multi-year) plan, board evaluations, adoption of a fiduciary education program, actuarial valuations, asset-liability modeling (ALM) studies, establishment of a program of audits and assessments, and adoption of a corporate governance and proxy voting approach.
  • Board policies: A fund should adopt and adhere to a set of policies designed to guide system operations toward the achievement of stated goals within established risk tolerances. While their form may vary, a board's key policies and procedures should include: standards of conduct for fiduciaries, a communications policy, an investment policy, procurement guidelines, a privacy policy, whistleblower policy, and a risk management policy or equivalent.             
  • Risk oversight: A fund should adopt a risk management framework and document it in a risk policy or within other policy documents (e.g. investment policy, privacy policy). The board should delegate accountability for management of market, credit, operational, asset / liability, liquidity and other risks through job descriptions, contracts, and charters.
  • Strategic planning: A fund should adopt a strategic planning approach either in the form of a multi-year plan or within other documents. Strategic planning is a hallmark of successful organizations. It provides the board with a mechanism to map out long-term goals along with the implementation steps necessary to achieve them.  
  • Key performance and risk measures: Reports to the board should include a set of key performance and risk measures to help the board assess the fund's progress toward goals across actuarial, administrative, audit, compliance, and investment functions. Given their expansive duties, boards rely on efficient reporting to enable effective oversight.
  • Stakeholder communications: A fund should communicate regularly with members and other stakeholders through multiple media including website notifications, publications, letters, and required reports. Communications provide transparency into fund operations and may increase member satisfaction, while strengthening the fund's reputation.