Multiemployer benefit plans are collectively bargained arrangements between labor unions and multiple employers, typically within the same or related industries. These plans are jointly administered by boards of trustees made up of equal numbers of labor and employer representatives. Trustees carry a fiduciary obligation to act solely in the interests of the plan and its participants.
A central responsibility of the board is ensuring that plan assets are invested prudently and strategically to support long-term participant benefits. One of the most effective tools for accomplishing this goal is a well-designed and actively implemented investment policy.
An investment policy should reflect the plan’s strategic objectives and clearly address risk tolerance, liquidity needs, and both short- and long-term return goals.
Common Governance Pitfalls in Investment Policies
Through our work with benefit plans, we frequently see several challenges that can undermine even well-intentioned investment strategies.
Insufficient Monitoring and Oversight
Given the complexity of today’s investment environment, boards often engage professional advisors to help evaluate opportunities and manage portfolio strategy. Even with professional support, trustees remain responsible for ensuring that asset allocations and performance are reviewed regularly and reported clearly to the board.
Advisors should provide ongoing education and confirm that the portfolio continues to align with the investment policy and trustee objectives. Regular monitoring also allows plans to respond quickly to market shifts, rebalance portfolios, and bring assets back into compliance when necessary.
Outdated Investment Policies
Investment policies should be reviewed and updated on a routine basis. Financial markets evolve rapidly, and policies drafted years ago may no longer reflect current conditions or available opportunities.
Changes in the macroeconomic environment, new asset classes, and evolving regulatory landscapes can all require strategic adjustments to ensure continued alignment with participant goals.
Navigating Volatile Markets
Recent years have brought sustained market volatility driven by global events and shifting economic policy. For plans with significant asset pools, engaging experienced investment professionals can be critical to navigating these complexities.
Advisors should provide timely updates on market conditions and forward-looking insights so trustees can make informed decisions and fulfill their fiduciary responsibilities with confidence.