How retirement funds can contribute to SA’s transformation

South Africa; and,

Developing investment strategies with a developmental aspect.

Ndlovu stresses that prior to adopting any of the above, trustees need to consider the implications and formulate a policy on each of the following: Black Empowerment

This encompasses all aspects addressed by the B-BBEE Codes and is the most obvious and easiest principle to consider.

In terms of regulation 28 of the Pension Funds Act, all funds should be considering the B-BBEE credentials of their suppliers and many funds have set explicit targets for their suppliers to achieve or, at the very least, strive towards.

Ndlovu says that OMCC advises their clients to look beyond the total score achieved by their suppliers and to instead consider the detailed scores. Funds can then engage with their suppliers on the areas where they are scoring poorly.

The objective is to use the power retirement funds have as large investors to get the broader financial industry to take black empowerment seriously and to actively work towards improving all aspects covered by the scorecard. Changing scorecards can mean that the score becomes a moving target, but this should not deter funds’ commitment to the principle of improving their suppliers’ contribution to transformation.

The scorecard covers a range of transformation aspects including the profile of staff, ownership, skills development and procurement policies. The scorecard accords a weighting to each of these aspects and Ndlovu indicates that most of OMCC’s clients accepted the weightings as given.

However, Ndlovu notes, some clients prefer to apply their own weightings. “Ownership, for example, is often given a much higher weighting. We however caution clients against considering one aspect