Public Retirement System Governance

  Public Pension Governance Stakeholder Roles

  Introduction

Public retirement system governance pertains to the systems and processes that comprise oversight of retirement benefits for employees of state and local government. The governing structure in the U.S., manifest chiefly in the U.S. Constitution, 50 state constitutions, and state laws, is designed to disperse power among different groups and individuals so as to prevent one group from accumulating excessive authority in one area. The principle of dispersed power holds true with public pensions: generally, no one group or person has complete authority over public retirement systems. Rather, as described below, different groups and individuals have different levels and types of responsibility to govern the retirement system and its chief components: the plan, i.e., the benefit structure and how it’s paid for, and the fund—the assets and how they’re managed and invested.

This paper follows and builds on the NASRA publication, Overview of Public Pension Plan Governance, first published in November 2019, by focusing on the respective role certain groups and individuals—the legislature, the governor, retirement system boards, and retirement system staff—play in public pension plan governance.

Date published

May 2020

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager

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  Overview of Public Pension Plan Governance  

   Introduction

Although often overlooked or misunderstood, governance–defined as the systems and processes that comprise the oversight and control of an organization–plays an important role in the performance of a state or local government retirement system. Public retirement systems are established under state statutes, local ordinances, or both, and subject to fiduciary, investment, and administrative laws, which both grant authority to, and place restrictions on, entities responsible for one or more key areas of plan governance. This overview is intended to summarize the laws and rules that govern public plans, and the range of entities typically responsible for them. Common law trust laws, as well as the prudence and fiduciary standards required by them, also govern public pensions. Because every public retirement system and pension plan, including its governance structure, is unique, the description provided in this introduction is intended to illustrate typical arrangements and will not apply to every state, system, and plan. Subsequent publications will address some of these unique or atypical governance arrangements. 

Date published

November 2019

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager

Download Paper