Trustee development indispensable
Complex regulations and responsibilities call for skilled trustees
Trustee development is important to the Institute of Retirement Funds Africa (IRFA) as part of its greater social development focus, according to Geraldine Fowler, IRFA vice-president.
She says the need for trustee development comes from: a lack of financial literacy, which is a worldwide phenomenon; the changing economic, legislative and investment environments; an increase in trustee responsibilities; and a need for trustees of funds to perform their fiduciary duties and be knowledgeable participants in the industry.
“As an emerging and developing economy South Africa has an everchanging retirement fund industry and legislative environment, which is evident in the release of the recent second draft of the proposed default regulations.
“Furthermore, the global and local economic and investment environments are becoming ever more complex, and volatile.
“All this results in more and more responsibilities being placed on the shoulders of those who are custodians and trustees of public funds, the savings of employees and, notably, retirement savings,” says Fowler.
She says the current economic and market instability is presenting huge challenges to retirement funds and responsible trustees of retirement funds. Growing levels and complexity of regulations adds another layer of responsibility and problems pertaining to implementation, as does policy uncertainty and pending legislation around pension funding and social development.
“In addition to needing to be fiscally responsible, an increased focus on governance and stakeholder engagement processes is also playing a role in terms of ever increasing trustee accountability.
“Within this environment, research shows that not enough is done to empower custodians and trustees to better understand the environment they are working in, and thus being able to effectively discharge their critical responsibilities to society and the members and pensioners of retirement funds.
“An additional factor is that very often trustees of retirement funds are elected by employees from the workplace and do not possess the required knowledge or skills to cope with the growing barrage of responsibility,” says Fowler.
The IRFA’s own member and industry needs survey undertaken earlier this year shows that trustees of retirement funds have high needs for developmental programmes, be these workshops, seminars or training courses, which correlates strongly with a best practices study the institute undertook in 2016 on industry’s perceived compliance in term of trustee development.
Fowler says the IRFA, as the leading industry body, is placing strong emphasis on meeting these crucial needs with several initiatives planned for 2017, including:
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“The IRFA sees trustee development as contributing both to the boards of retirement funds as well as members of these funds,” says Fowler. “In short, we believe that up-skilling retirement fund trustees will contribute to socioeconomic welfare on the broader scale.”