Retirement fund trustees receive governance training
19 May 2014Steven van Schanke, IRF
Steven van Schanke, CEO, IRF.
In an industry that is undergoing significant regulatory changes and battling cases of corruption and poor administration, the spotlight has never shone so brightly on retirement funds. However, talking about reform and then teaching its principles and fine details are two entirely different animals.
With thousands of retirement funds in South Africa, the industry is an influential and powerful tanker that is understandably difficult to turn. That hasn't stopped the Registrar of Pension Funds from preparing "a number of draft regulatory instruments intended to implement new provisions in the Pension Funds Act relating to trustee training, "fit and proper requirements for trustees”, improving fund governance and promoting the harmonisation and consolidation of retirement funds.” (Treasury, 14 March 2014).
The Institute of Retirement Funds Africa (IRFA), SA's leading industry body, have responded to the government directives, as well as the needs of retirement fund members, by creating trustee development training seminars to improve governance which were completed last week in Cape Town, Durban and Johannesburg. These will now be followed up with a second session in September.
The seminars are well timed - the industry has only recently experienced negative publicity after a suspension due to misconduct from the R1.2trillion Government Employees Pension Fund (GEPF), as reported by Bloomberg News.
"The long and the short of it is that The Registrar possesses the power to inspect retirement funds as per section 25 and 26 of the 2007 Pension Funds Amendment Bill. That puts a huge demand on trustees to be compliant and up-to-speed, or there could be an intervention," explains Institute of Retirement Funds Africa (IRFA) CEO, Steven van Schanke.
The list of expectation does not cease at financial control and administration, but extends into ethical conduct as well. Corporate South Africa has been victim to an incessant wave of 'reverse Robin Hood’ corruption ploys and pleading of ignorance in which individuals with authority rob the poor to pay the rich. This has been illustrated by the creation of dubious incentive schemes offered to advisers, the failure to disclose charges to members, and then trustees re-directing responsibility for charges laid against them to service providers.
"Trustees need to be fully aware of what they're signing their name to. Even if the trustee has been 'trained', but it's a few years back, the changes within our industry are moving at lightning pace. It's something that you cannot be lethargic about. Learners will be given NQF level 3 certificates and will receive an in-depth understanding of the responsibility and duties of a trustee. This is perfect for both new trustees and principal officers who are standing for election for the first time, or seeking re-election and needing a refresher course to update their knowledge while building a career in the industry," adds van Schanke.
The leading training specialist at the event, Herme Slabber of Principle Financial Consultants, adds, "Trustees must attain the necessary skills and training within 6 months of appointment, and are expected to retain these skills throughout office. Building the correct fundamental skills through outcomes-based education and training can achieve this. We’re educators first, and so deliver theory with practical case studies, combined with formative and summative assessments – which has been proven to create high calibre trustees. As an accredited provider with the INSETA we believe training in line with unit standards on the NQF is the only way to provide for continuous education of trustees.”
With The Treasury seeking to make retirement saving compulsory for another six million South Africans who are not members of retirement funds, there could be a huge influx of funds to be invested, monitored and managed. Workers will need to understand what they've invested in, and should be updated regularly on the status of their investment - an activity that is sorely lacking at present from many of the funds.
Much has been said about PF 130, issued by The Financial Services Board in 2007 to drive corporate governance in the industry, but more can be done. Its intricate detail and high expectation is admirable, but requires further practical application, guidance and leadership, as with anything in South Africa. Perhaps this training may act as the catalyst to drive accountability, contribute to much-needed retirement reform, and install safeguards for member's hard-earned life savings.