Significant expected turnover on multiemployer benefit fund trustee boards and the increasing complexity of serving as a trustee are among the key challenges faced by these boards. To address this changing landscape, trust funds are deploying a wide range of initiatives to recruit, select and retain the next generation of trustees.
These are among the findings of the new International Foundation survey report Trends in Multiemployer Trustee Boards: 2019 Survey Results. The survey captures benchmarking data from 233 trust fund representatives including labor and management trustees, plan administrators and appointing authorities.
Here are some key takeaways from the survey results:
Trust Fund Challenges
Multiemployer trust funds face a wide variety of challenges in their daily operations.
- The most frequently cited challenge is concerns about constantly changing laws and regulations, cited by 90.9% of respondents (either somewhat or very prevalent).
- This is followed by the fiduciary liability faced by trustees (76.1%) and the time required to train a competent trustee (72.4%).
- Other prominent challenges include personal concerns about lack of appropriate knowledge or experience with fund issues (69.2%) and the personal liability faced by trustees (68.9%).
- More than two in three respondents (67.1%) cite the loss of trustee board knowledge due to retirements as a prevalent trust fund challenge.
- More than three in five trust fund representatives (63.7%) cite the two-hat dilemma as a trust fund challenge—when trustees experience loyalty concerns between their trust fund and the appointing body which they are a part of.
Trustee Recruitment, Selection and Retention
Responding trust funds have cited some difficulty in recruiting and retaining both labor and management trustees.
- On the labor side, more than one in four (26.4%) respondents state that recruiting new labor trustees is more difficult than it was five years ago, while 17.6% state that retaining new labor trustees is more difficult.
- Those on the management/employer side cite even greater difficulty in recruiting and retaining trustees. About three in five (58.2%) respondents state that recruiting new management/employer trustees is more difficult than it was five years ago, and 37.6% stated that retaining new management/employer trustees is more difficult.
Trust funds use a wide range of strategies to combat this turnover.
- About one-half of responding trust funds (46.8%) use a formal contingency plan for appointing a successor trustee upon an unexpected event, including the resignation or death of a trustee.
- Another two in five (42.5%) have established a formal orientation, mentoring or knowledge-transfer process for new trustees.
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Trust Fund Policies
Trust fund policies dictate how trust funds operate. Maintaining sound fund policies can help ensure compliance, establish consistent decision making, avoid legal liability, increase plan transparency, and assure plan participants and stakeholders that the plan is in good hands.
- Responding trust funds have a wide variety of trust fund policies, most commonly an education/travel/expense reimbursement policy (87.6%), followed by an investment policy (87.6%), a collection policy (81.5%), a conflict-of-interest policy (76.4%) and a records retention and destruction policy (76.4%).
- Also common are cybersecurity policies (71.7%), antiharassment policies (61.8%) and fraud policies (61.4%).
Trust Fund Attributes
As a benchmarking exercise, survey respondents were asked a series of questions regarding their trust fund’s attributes.
- On average, respondents stated that 89.7 hours were spent in service to their fund per year, with a median of 60 hours per year. More than two in five respondents (45.3%) stated that the average time spent by trustees has increased in the past five years, while more than one half (50.6%) stated that there has been no change.
- Most often, trustee meetings are held quarterly (67.0%), followed by six (7.7%) and three (6.4%) times per year.
- Along with the average age of trustees (51.3 years for labor and 55.2 years for management), respondents were asked the approximate generational breakdown of their trustee base. On average, the breakdowns follow a standard demographic pattern, starting with Baby Boomers (born 1946- 64) (33.6%), Generation X (1965-76) (56.1%), Generation Y (1977-1995) (9.3%) and Generation Z (born 1996 to the present) (1.0%).
Download the Multiemployer Trustee Boards Report
Trends in Multiemployer Trustee Boards: 2019 Survey Results is available free to International Foundation members. The survey covers prominent trust fund challenges, trustee recruitment, selection and retention initiatives, trust fund policies, the use of professional trustees and trust fund attributes.
Justin Held, CEBS
Senior Research Analyst at the International Foundation