How are pension fund directors faring through coronavirus upheaval?

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Closeup of notepad kept on table in empty conference room © mariakraynova /123RF Stock PhotosDespite drastic changes stemming from the coronavirus crisis, the majority (58 per cent) of pension fund directors said their fund’s transition to a remote boardroom has had no perceived impact on board effectiveness, according to a global pulse survey by Mosaic Governance Advisors.

However, 19 per cent of respondents noted their board’s effectiveness was being impeded by the crisis, while 23 per cent believed it’s too soon to say how effectiveness has been impacted, said the survey, which was was conducted in April and May 2020.

“Directors may have never had a more challenging set of circumstances within which to operate than those presented by the COVID-19 pandemic,” the report noted. “The pace and magnitude of the crisis have significantly impacted their internal and external operating environments. Yet, directors have confidence in their boards’ and managements’ responses to date.”

As social distancing measures were enacted around the world, all directors of pension funds outside of the U.S., and 92 per cent of U.S. trustees, reported their funds were able to conduct meetings remotely. Many funds transitioned to remote meetings without changing the schedule of their meetings, while 15 per cent of U.S. respondents noted their board or committee meetings were less frequent, postponed or were shortened or changed.

Only two per cent of U.S. respondents cited an increase in board and committee meetings. This is in contrast to non-U.S. respondents — none postponed meetings and 67 per cent reported an increase in meeting frequency. “Some commented that they did so in order to support their leadership teams and put their boards in a position to be able to act and react to risks and opportunities as they emerged,” said the report. “Indeed, they believed that more frequent meetings were contributing to their ability to fulfill their oversight role. The flexibility to adjust the timing of board meetings is imperative at all times, but particularly in a crisis situation as the world is in now.”

Of note, the majority of non-U.S. respondents were Canadian.

As for meeting content, 67 per cent of non-U.S. directors said board committee agendas were now focused on immediate significant risks, including matters related to business continuity, employee welfare and investment markets. This compares to only 38 per cent of U.S. trustees who said the same.

And when asked whether their boards were prepared to address a crisis like the one at hand, 59 per cent either strongly agreed or agreed, whereas 22 per cent were undecided and 19 per cent felt their board was unprepared. “Some directors commented that it is impossible to be fully prepared for a crisis of this scope and magnitude,” said the report. “Others held a divergent view. They cited a belief that their board’s focused attention and commitment to overseeing and implementing governance processes, such as emergency preparedness and business continuity planning, was now paying off.”

Perceived governance effectiveness is a lagging indicator, the report noted, so boards should be proactively thinking about and discussing how to preserve effectiveness in a prolonged crisis. As such, the report offered conversation starters for directors, boards and management teams to help them navigate the future challenges.

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