Pension Fund study aligned with King IV

Wayne Hiller-Van Rensburg, President of IRFA.

“Corporate governance extends beyond the traditional definition.”

A critical research perceptions study commissioned earlier this year by the Institute of Retirement Funds Africa aligns itself well with the recently released King IV Guidelines on Corporate Governance.

IRFA President Wayne Hiller-Van Rensburg said, “In terms of overall ranking of the 6 critical dimensions of the research model, current Investment Practices rate the highest by the local retirement industry, followed by Governance Practices, Financial Reporting, Stakeholder Communication Practices, Stakeholder Communication Processes and finally Trustee Development Practices.”

The results from the study indicate that while good governance is the primary goal of any responsible Fund or responsible corporate citizen, the definition of governance itself extends beyond the traditional definition.

In terms of the study, global and local best practice and measurable dimensions of governance should include:

• Stakeholder communication (including surfacing and addressing reasonable expectations and needs)
• Financial reporting and full disclosure (to include policy and strategy for accountable and understandable reporting on Fund performance to all stakeholders.)
• Investment Practice (to include policy and benchmarks against which investment performance will be measured and the management and alleviation of risk.)
• Executive and Trustee Development (to include appraisal of both behavioural as well as professional/technical competencies, structured and regular induction and training processes and on-going learning opportunities.)
• Social responsibility and contribution

Hiller-Van Rensburg added “The study is right on track with King IV, which states that the governing body should lead the value creation process by appreciating that strategy, risk and opportunity, performance and sustainable development which are inseparable elements. The research model has been developed in conjunction with Cohesion Communication, Research and Development led by Research partner Stephanie Griffith and followed an extensive literature search to determine best practices both locally and internationally. The critical measurement dimensions of the research model are fully compliant with the FSB Circular PF130 (that looks at governance of funds) as well as the recently released King IV report on corporate governance, notably in the areas of ethical and responsible leadership, performance appraisal and risk management as well as addressing reasonable stakeholder needs, expectations and rights.”

Further findings from the IRFA study indicate that the practice of sound governance is recognised as being both facilitated and bound by the catalyst of effective stakeholder engagement. This engagement should include all stakeholders and include full disclosure, on-going assessment of stakeholder needs and expectations and ways to communicate and meet these needs. This refers to Principle 5.1 of King in this instance.

For a full report of how the local retirement industry rates itself against these critical assessment as well as deviation across the demographic filters, the industry shall have to wait until the study is released at the IRFA annual conference on the 28 - 30stAugust at the Durban ICC.