Industry breakthrough! LI-MIT solution

In examination of many funds in the retirement industry there are common areas of concern:

1. Boards of trustees and their short term advisors have a problem in assessing the amount of Fidelity and Professional Indemnity Cover that their fund should affect.
2. Many fund Boards of Management (Trustees) do not have the necessary tools, time and affordability to do an appraisal of the fund. Identification of governance shortfalls and implementation of processes and policies to cover these shortfalls is imperative to a fund’s health.
3. PF 130 requires that all trustees and principal officers should be assessed once a year for their effectiveness and needs
4. Much of the training of trustees is misdirected and often falls short of addressing the actual needs of the Board. Training agendas should be compiled by identifying categories and individual needs through specific analysis pertinent to the needs of the fund.
5. The directing of risk management and mitigation in areas of identified highest risk is one of the highest priorities for Boards of Management but often these risks are not easily evidenced.

The LI-MIT model was developed in 2013 by a collaboration of Marsh SA, Camargue Underwriting Managers and FQ Financial Skills with the intent of providing solutions to the five problem areas above. Subsequent Alpha and Beta testing has proved successful and the LI-MIT process has gained market recognition and approval as a result of many funds having undertaken the process.

The LI-MIT process is utilised by the fund trustees and principal officer answering a web-based questionnaire. The answers to the questionnaire in conjunction with extracts from the fund financial statement and information from the fund administrator form the basis for the analysis and report which satisfies all of the areas of concern above.

The limit of indemnity is expressed as maximum and minimum Rand amounts which provide both the trustees and advisors with a solid basis for debating the level of Fidelity and PI cover to be put in place for their fund. Training needs are identified by both category and individual. The requirement of PF 130 for assessment of the board and principal officer is satisfied and governance and risk areas are highlighted and graphically illustrated in the report.

The LI-MIT solution is rapidly gaining impetus in the industry and has proved to be a valuable tool for fund health.