Public Pension Plan Clients Share How They’re Meeting Their Fiduciary Duty During the COVID-19 Crisis

Shareholder Advocate Spring 2020

April 22, 2020

The spread of COVID-19 across the globe has created unprecedented challenges for businesses and individuals alike, and that is certainly true for the public pension plan community. Public pension plans do not have the ability to “hit the pause button” when it comes to performing their critical duties. Retirees and beneficiaries depend on the timely receipt of their pension checks and benefit payments that must continue to be processed and paid. Moreover, billions of dollars of pension fund assets have to be managed in a time of tremendous turmoil in the markets. The Shareholder Advocate turned to leaders at public pension plans to hear how they are managing to carry out their essential responsibilities during the pandemic.

Thinking Outside the Box

According to Karen Mazza, Deputy Executive Director for the New York City Employees’ Retirement System (NYCERS): “At times like this, pension systems need to think outside the box while carrying out their fiduciary responsibilities.” Such thinking proved critical to NYCERS as its information technology and security teams developed innovative ways to enable over 450 employees to work securely from home. The crisis highlighted the critical nature of essential support functions, such as mailroom and scanning staff, who receive and enter member documents such as retirement and loan applications and correspondence.

Interconnection and Essential Functions

Glen Grell, Executive Director of the Pennsylvania Public School Employees’ Retirement System (PSERS), agrees with Mazza’s observation that functions supporting the business units are on the front lines in times of crisis. “We realize how interconnected all of our bureaus and units are, and we have a  new sense of what constitutes an ‘essential position’,” Grell said, noting that “the work can’t get done if the mail doesn’t get opened, sorted and scanned to start the queue of workflows.”

The rapid transition to teleworking forced PSERS to adopt new communications and technology models, largely on the fly. “We are now communicating among all senior managers every day,” Grell says. By deploying 230 laptop computers, in addition to 70already distributed under PSERS’ Continuity of Operations Program, PSERS enabled over 90% of staff to work from home.  Mailroom, document imaging, print shop and facilities management were the only units requiring physical presence at PSERS headquarters. PSERS successfully processed and delivered member pension and healthcare benefits to 230,000 annuitants on schedule on March 31, and used technology to conduct retirement exit counseling remotely, so that retirement applications could be prioritized and processed without delay for the membership.

Grell says that the crisis has brought home how much their annuitant members count on PSERS to provide monthly member benefits timely and accurately, regardless of the circumstances. And there is at least one silver lining of the crisis. “All of this will position us well with enhanced capabilities once the immediate situation has passed,” he says.

Importance of Communication

“Now is the time for over-communicating,” says Carolina de Onis, General Counsel to the Teacher Retirement System of Texas (Texas TRS). As de Onis sees it, communication at this time is tied to three basic concepts: risk mitigation, accountability and well-being. She notes that when you aren’t seeing people on a daily or weekly basis, you lose bits of information that may be relevant to the issues you’re dealing with and that “legal issues are rarely one dimensional— you need people with different areas of expertise to identify issues you might not be aware of and to help you problem solve. You need to create a structure around those lines of communication when the normal mechanisms are no longer available.” As for accountability, de Onis says, while we trust our professionals to do their jobs, it’s not about trust. “It’s about ensuring that the work that needs to get done is being done (under difficult circumstances and with different resources),” she says, “and finding new ways to supervise work and to demonstrate to your clients, your organization and your board that you’re on top of the novel, pressing issues this situation has created.” Finally, de Onis notes that many people are feeling isolated and disconnected now: “Connecting with people who are a normal part of your everyday life is healthy,” she says. “People’s situations may change on a dime—perhaps they are home schooling, taking care of elderly relatives or feeling anxiety about a what is going on.” Repeated check-ins to make sure your teams are getting the help and resources they need is essential at this time.

Business Continuity and Disaster Recovery Plan

Gina Ratto, General Counsel to the Orange County Employees Retirement System (OCERS), says that OCERS’ detailed Business Continuity and Disaster Recovery Plan has guided them throughout the process. Like the others quoted here, Ratto highlights the importance of communication, noting that the OCERS Recovery Team had been meeting daily by conference call until they felt comfortable moving to meeting twice a week. In addition, the CEO conducts weekly “all hands” meetings by telephone, and personally telephoned all team members at home to see how they were faring. All employees were issued mobile devices and permitted to “check out” their desk chairs, computer monitors and other items as necessary to make their home offices ergonomically safe and comfortable. The phone system permits staff to receive and handle calls from OCERS members and the public with live operators responding from home. In addition, a very small team of about half a dozen staff work from the office to perform essential activities that cannot be performed from home. Significantly, Ratto notes that March is traditionally OCERS’ heaviest month of the year and that the Member Services team timely processed every retirement application from members seeking a retirement date of April 1 or earlier.  Also helpful in allowing OCERS to move forward in conducting business is the that fact that in California, as in several other states, the governor acted by executive order to relax the state’s open meeting laws with respect to public meetings held via teleconference. OCERS held a board meeting and a meeting of its investment committee with some or all of the trustees telephoning into the meeting and the board room open to the public to observe and participate in the meeting. OCERS intends to hold its next board meeting using Zoom technology, which will alleviate the need to open the board room to the public. Finally, returning once again to the theme of communication, Ratto notes the importance of communicating with members at this incredibly stressful and uncertain time. Shortly after the offices were closed, the OCERS CEO posted a statement to assure members that their benefits were secure, noting: “the most important fact that you need to know is if you are retired, you will get your benefit, paid in full, paid on time. That’s a fact.”

Fiduciary Duty—the Bottom Line

As Brian Bartow, General Counsel to the California State Teachers’ Retirement System (CalSTRS) noted, CalSTRS, like all public pension funds, is a perpetual fund and will continue after this crisis, just as it has after prior crises. After reaffirming the importance of assuring members that they can continue to rely on CalSTRS during this time to pay their benefits on time, he succinctly summarized the bottom line: “We are stewards of that fund and will continue to exercise our duties to safeguard and grow that fund for the sole purpose of providing benefits to our members and beneficiaries—whether we’re in the office or working remotely.”