Pension funds often have an organisational structure in which the interests of the stakeholders are well-aligned. Most pension funds are not-for-profit institutions governed by representatives of employers and employees, which encourages decisions that are in the best interests of plan members.

Nonetheless, it is essential for a proper system of governance to be in place. For instance, it is advisable that pension funds observe a separation of oversight and operational responsibilities. Outsourcing of operational activities should be preceded by an adequate due diligence process. It is also good practice to employ an independent auditor and actuary to review the accounts and a custodian to safeguard the assets.

Disclosure of relevant information to stakeholders and the supervisor is also important. Pension funds should be transparent with their plan members about expected retirement income and administrative and investment costs.

EFRP is convinced that governance constitutes a crucial element in safeguarding the interests of stakeholders. Good governance incorporates appropriate checks and balances, avoids conflicts of interests and stimulates correct behaviour.