Our Trust has created a subcommittee concerned with governance (GC), and disclosed the job description of the Trustee Chairman.  (That is the chairman of the overall trust board, not the chairman of the governance committee.)

Governance is the process by which a trust attempts to achieve its objectives.  Attention to governance has increased over recent years,  with the Pensions Regulator's survey and opinion emphasising "trustee knowledge and understanding, management of conflicts of interest, and monitoring the employer covenant".  There is no legal requirement to have a governance committee, but it is good news to have one.

Here are some pointers to help understand the terms of reference of the governance committee.

SLA stands for Service Level Agreement.  Many trusts have a documented agreement with the  administrators (the people who actually take the actions which ensure your correct pension appears in your bank account) about what service the administrators provide.  Not all SLA's are the same, but they will have details of timescales, quality and accuracy of service.   73% of all schemes have an SLA.  Our trust used not to have an SLA.  It is an implication of the terms of reference that it now does.

SRI stands for Socially Responsible Investment.  SRI is based on looking at possible investments in terms of their social aspects as well as their short term financial prospects.  Some pension funds might decide not to invest with the manufacturers of cluster bombs.   Some have taken Wal-Mart out of their investment portfolios because of its business practices.

PwC is Price Waterhouse Coopers, the firm currently chosen for auditing.

Pensions Trust effectiveness.  There is no way of knowing what this phrase means.  Since it refers to the Pensions Trust it is not a review of the Trust Board's effectiveness.  Apparently there is intended to be an annual assessment of the Board (presumably to see if the Board is demonstrating suitable foresight, making the interests of scheme members paramount, giving itself access to appropriate information,  keeping good records of its deliberations, and the like) but no standards are established so there is little prospect of the Board recognising its shortcomings. 

Pensions Trust resource and expense budgets.  Again note that this is a reference to Pensions Trust (the administration) and not to the Trust Board itself.  The payments to trustees are a matter that the IBM company decides.

Power to delegate.  The GC has wide powers to delegate.  It would not be good governance if the monitoring and reviewing responsibilities were delegated to those being monitored and reviewed!
 

Disclosure of the Chairman's objectives gives scheme member's some perspective on how good the governance is.  Of course, we know from general business experience that a process alone does not ensure good outcomes, but a good process is a good start.

The role disclosed is a fair description of what a chairman should do, but it lacks quality standards for judging how well things are done.  One aspect is particularly crucial "Represent the views of the Trustee in meetings and correspondence with IBM".  If this means the views of the Trustee are well recorded and the chairman acts as spokesman, that is fine.  If it means the chairman gets closeted alone with IBM acting on what he thinks is the "Trustee view" then it is not good governance. 

No connection with the views of the Trustee is specified for communications with scheme members.  This is presumably intended as a green light for the current chairman's practice of putting his own views in such letters.