For social security institutions that have an investment mandate, legislation, policy or decree establishes the general direction of the investment policy and prescribes the types of allowed investment instruments. Furthermore, in order to maximize the long-term rate of return on reserves and at the same time mitigate investment risks, the range of instruments allowed for investments is sufficiently diversified.
Legislation, policy or decree provides for the establishment of internal and external systems of control for the social security institution.
The board ensures that the risks faced by the social security institution are properly identified and managed or averted. These risks may arise in various forms, including but not limited to strategic, operational, political, economic, regulatory, geographic and demographic risks.
There is a board-approved strategic plan that lays down and spells out the key strategies and plans of action to be implemented by the management in order to realize and perform the legislated mandate of the institution.
The board ensures that the institution is performing its mandate efficiently. It establishes a set of standards and benchmarks to evaluate the management’s administration and implementation of the social security programmes.
Legislation, policy or decree establishes the legal liability of the members of the board for failure to discharge their functions.
The selection process ensures the suitability and competence of the members of the board. The term of office of a board member and the basis for its renewal (if renewable) are clear and well defined.
Legislation, policy or decree provides for the board’s independence from political interference to implement its mandate by prescribing the selection process and by defining the grounds for removal from office solely for just cause.
Should the board delegate its functions to a subgroup of the board, to a subgroup of officers at management level and/or to external service providers, such delegated functions are well defined, documented, time bound and subject to review and approval by the board. Legislation, policy or decree provides for the responsibility of the board members for such delegated functions.
Legislation, policy or decree defines the powers and responsibilities of the board. The powers and responsibilities of the board are clearly delineated from those of the management. There are no areas of ambiguity, dilemma or conflict of interest.
