Pension Plan Governance and Risk Management – Why Good Governance is Good Business

Governance is a hot topic in the pension arena as well as in corporate boardrooms. Increased litigation, institutional shareholder activism, the impact of pension plans in capital markets and greater awareness of plan members and beneficiaries all point to the need to document and implement good governance practices. Pension plan governance can be viewed as the process by which a plan administrator or sponsor discharges its legal obligations. Sources of those obligations include statute and common law concepts, such as fiduciary duties, tort law (especially, negligence) and contractual obligations. From a legal perspective, good governance reduces the risk of a plan administrator or sponsor being subject to legal liability in maintaining a pension plan.