First Reference company logo

Inside Internal Controls

News and discussion on implementing risk management

machine cogs image

Governance planning vs. governance plans

Contrary to popular wisdom, lawyer Ronald A. Pink says that planning is not always in an organization’s best interest. Now let me give you some context.

The comment, in Benefits and Pension Monitor, refers to governance plans for pensions and benefits, and the strict limits such plans can place on operations:

“It’s better to have no governance plan that to have a plan and not follow it … governance plans are trouble—if you have one you have to follow it and you can’t get rid of it”, says Pink.

The comments arise from the recent and ongoing debate about pension reforms in Canada. If I understand his sentiment correctly, Pink seems to be suggesting that pension managers and boards of directors are more likely to face liability if they have a pension and benefits governance plan, but fail to follow it in practice, whereas those lacking a defined plan can better defend their governance practices.

Regardless, Pink says that if employers do not manage their pension and benefits plans properly—with or without a governance plan—they “are going to be sued for failing to follow their governance practices.”

governance-planningThe Canadian Institute of Chartered Accountants points out that, “Sponsors have increasingly become the target of lawsuits in matters such as the use of fund surplus, benefit administration, and the payment of expenses from the fund.”

Read the Canadian Institute of Chartered Accountants’ 20 Questions Directors Should Ask about their Role in Pension Governance (in PDF).

Now, the best option might be to have a plan and always follow it, but you might also have heard a poet say that “the best-laid plans of mice and men often go awry“; and where does that leave you?

Adam Gorley
First Reference Human Resources and Internal Controls Compliance Editor

Follow me

Adam Gorley

Editor at First Reference
Adam Gorley, B.A. (Phil.), is a researcher, content provider and editor. He contributes regularly to First Reference Talks and Internal Control blogs, HRinfodesk and other First Reference publications. His areas of focus include broad human resources issues, corporate social responsibility, corporate governance and government policies, information technology and labour market trends.Read more
Follow me

, , , , , , , , , ,

Comments are currently closed.