Hire professional 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