Hire pro­fes­sional trustees

Finweek English Edition - - Retirement fund trustees -

NEW DE­MANDS, DU­TIES and even risks fac­ing trustees have been cov­ered in the pre­ced­ing ar­ti­cles. The trustee’s role in look­ing af­ter what for many peo­ple is likely to be their big­gest in­vest­ment and only source of in­come af­ter re­tire­ment has never been more im­por­tant. It’s sur­pris­ing any­body wants to take on this oner­ous task.

Against this back­ground, a pos­si­ble so­lu­tion is in­creas­ingly be­ing ex­plored in South Africa – the ap­point­ment of pro­fes­sional trustees who are in­de­pen­dent of em­ploy­ers and em­ploy­ees and paid for ac­cord­ing to the ex­pe­ri­ence and guid­ance they pro­vide.

Such peo­ple would not nec­es­sar­ily re­place boards of trustees com­pris­ing em­ploy­ers and em­ploy­ees, nor the con­sul­tancy ser­vices of ben­e­fit ser­vice providers, says Wayne van Rens­burg, prin­ci­pal con­sul­tant at Glen­rand MIB Ben­e­fit Ser­vices.

Pro­fes­sional trustees would add a new layer of con­sul­tancy to funds.

Rather, he sug­gests, pro­fes­sional trustees would add a new layer of con­sul­tancy to pen­sion and prov­i­dent funds.

“This is a highly con­tentious is­sue and any pro­fes­sional trustee would have to have demon­stra­ble in­de­pen­dence and be re­quired to share fidu­ciary re­spon­si­bil­ity for the ad­vice he or she pro­vides,” he says.

Van Rens­burg en­vis­ages the role of a pro­fes­sional trustee as ad­vis­ing on nu­mer­ous com­plex is­sues that trustees drawn from the ranks of em­ploy­ers and em­ploy­ees are ill-equipped to deal with.

“Re­tire­ment funds are run by peo­ple with full-time jobs who of­ten don’t have the time or the in­dus­try ex­po­sure to be the ex­perts the Act re­quires them to be or the abil­ity to deal with com­plex leg­is­la­tion such

as the Fi­nan­cial Sec­tor Char­ter, Pen­sion Funds Act and the In­come Tax Act.

“In other words, they are set up for fail­ure and if they do, they could find their per­sonal as­sets on the line.”

This is where he be­lieves a new class of ad­viser in the form of a pro­fes­sional trustee would play a valu­able role.

Deloitte’s sur­vey on re­tire­ment fund gov­er­nance found that only 22% of boards in­cluded in­de­pen­dent trustees. “We do not con­sider this suf­fi­cient, as the ap­point­ment of in­de­pen­dent trustees re­in­forces the prin­ci­ples of trans- parency and ob­jec­tiv­ity and aug­ments or com­ple­ments the skills of trustees,” says Ge­orge Cavaleros, a part­ner at Deloitte Fi­nan­cial Ser­vices. The com­pany sup­ports the in­tro­duc­tion of re­mu­ner­ated trustees, ex­ec­u­tive and non-ex­ec­u­tive, who will be ac­count­able for non-per­for­mance and who will en­hance gov­er­nance lev­els and

The ap­point­ment of in­de­pen­dent trustees re­in­forces the prin­ci­ples of trans­parency and ob­jec­tiv­ity and com­ple­ments

the skills of trustees.

the pro­tec­tion of mem­bers’ in­ter­ests.

“One sug­ges­tion, which might not prove pop­u­lar, is for funds meet­ing cer­tain cri­te­ria to be com­pelled to ap­point an in­de­pen­dent trustee to their board,” says Cavaleros.

A new class

of ad­viser would play a valu­able role. Wayne van Rens­burg

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