Pension Plans and Proxy Voting
Click image to view full size.
In the United States’ retirement savings system, one of the biggest fiduciary roles of pension plan sponsors is protecting the interests of their beneficiaries. However, a 2020 ruling by the Department of Labor (DOL) barred pension plan fiduciaries from voting on issues related to environmental, social, and governance (ESG) factors. This aims to curb political advocacy and personal influence that’s been rampant in the proxy advisory system. Instead, the DOL recommended focusing on the financial interests of retirement plan participants.
As pension funds move their holdings to private equity, preserving a credible and democratic polling process becomes even more critical — especially considering that only two investment firms control all pension plan fiduciary voting across the country. Having a neutral and established third-party partner for pension plan elections is no longer a want, but a need.
Understanding Proxy Votes and How They Work
A proxy vote is cast by an individual on behalf of another who is not physically present during voting, whether by choice or due to inability to attend. This mechanism applies to the shareholders or board of directors who are eligible to vote on ownership and specific issues.
In proxy voting, a shareholder or board member designates their voting rights to a fellow shareholder or another individual. The company distributes a proxy statement prior to a shareholders’ meeting, which should include all issues to be voted on in the meeting. Shareholders who vote by proxy fill out a proxy card stating how they want to vote on issues. The proxy card may be submitted online, by mail, or over the phone.
During the shareholders’ meeting, votes are counted, including those submitted by proxies, and results are announced based on the majority vote. Proxy voting provides convenience to shareholders and encourages more participation in governance.
In the case of pension plans, fiduciaries act as the proxy voters. These fiduciaries may include plan administrators, trustees, and investment committee members. Similar to other voting members, fiduciaries must follow rules and act in the best interests of the members they’re representing.
Following the DOL ruling on retirement plan proxy voting, fiduciaries can’t vote on ESG-related issues. Instead, proxies must prioritize the financial interests of the participants to maximize their returns.
Pension Plan Nomination Solutions
Proxy voting offers significant advantages to organizations in various ways. Candidates can use it to gather support from members through signatures. In some organizations, it’s used to endorse or confirm nominees before their names appear on the ballot.
Since proxy votes often go to the board, it’s essential that board members are qualified and trusted to act in the members’ best interests. This is where a secure and well-detailed nomination process becomes crucial.
A transparent, fair and thorough nomination process ensures that only the most qualified and representative candidates make it onto the board. This builds confidence in the board’s ability to act in the best interests of the membership and, in effect, assures the members that their proxy votes are in good hands.
Survey & Ballot Systems (SBS) offers an online candidate nomination software that allows you to custom-build your nominee applications. It also allows you to add questions for candidates and makes obtaining electronic signatures or uploading a signed paper petition easy.
Our digital nomination and petition platform streamlines the nomination process for administrators and potential candidates. It lets your nominations committee review candidates and decide who qualifies for the ballot.
Pension Plan Election Solutions
Proxy votes can significantly influence election outcomes, especially in organizations with quorum requirements or where leadership positions are highly contested. A well-defined proxy voting system ensures that votes are cast and counted accurately, reflecting the true pulse of the membership.
Proxy voting also contributes to the success of the election process by addressing logistical challenges. It helps bridge gaps in participation, especially in large or geographically dispersed organizations, where in-person voting may not be feasible for all members. Granted, proxy voting demands a certain level of trust between the members and the board. Voting members must recognize that their proxy votes will be handled responsibly and that election results genuinely represent their collective interests.
SBS’ fully managed voting services provide end-to-end solutions for efficient election management. Backed by decades of industry experience, we can manage in-person, mail-in, hybrid, and online elections for member-based organizations across the country.
Board Meetings
Once new board candidates are voted in, board members typically hold another election at the next scheduled meeting. This election will decide the organization’s new leaders for the upcoming year. Some board members vie for certain positions, while others aspire for higher roles. Board meeting elections are crucial, so a legal counsel often oversees them. Traditionally, secret ballots are required for the votes, but this practice has become less popular as in-person meetings become less common.
Our real-time voting software makes polls secure and anonymous, even during virtual or hybrid meetings. This real-time voting platform is access-controlled and limited to the hosts and participants following a multifactor authentication. Our software is powered by industry-leading security, with data encryption, intrusion prevention, and 24/7 monitoring.
The proxy voting process involving pension plans has grown complex and contentious over the years, highlighting the need for reliable third-party service providers to offer a wide range of proxy voting solutions. SBS is your unbiased provider of end-to-end governance software with proven experience.
Choose SBS as Your Election Partner
SBS provides world-class security, premium support and services, and a tried-and-tested process. We are a privately owned business independent of outside investors. Our commitment to building strong partnerships and investing in innovative solutions allows us to help you accomplish your election goals.
Contact our experts with any questions on proxy voting in pension plans.
Since joining SBS in 2011, Tony has led company communications, branding, and product launches, maintaining SBS as the go-to for governance solutions. He regularly hosts educational webinars and speaks at national trade association events across the United States. Tony’s expertise has earned him media recognition, with features in outlets like Rural Electric Magazine, The Association Adviser podcast, Associations Now, and NBC’s King 5 Mornings in Seattle.