Regularise pension fund boards: IPEC
THE Insurance and Pension Commission (IPEC) has directed pension funds to regularise their boards by ensuring that their board directors are fully and properly constituted.
In terms of provisions of Section 22 of the Pensions and Provident Funds Act (Chapter 24: 32), all pension funds are required to regularise anomalies relating to the constitution and qualifications of board directors within six months.
To allow for a holistic resolution of the process, IPEC had deferred the regularisation directive, pending gazetting of the Pension and Provident Funds Regulations.
“Given that the gazetting of the regulations has taken longer than anticipated by the commission due to circumstances beyond our control, the commission is, therefore, calling upon all funds to regularise, by fully and properly constituting their board of funds, in terms of the requirements set out in the Act.
“The mandate to regularise boards of funds derives from Section 22T of the Act, which states that every fund shall have a board consisting of at least five members and a maximum of nine members, of which at least one-half shall be elected by the members of the fund and the other board members shall be appointed by participating employers,” said IPEC Commissioner Dr Grace Muradzikwa in the circular.
She said Section 22(2) of the Act also stated that a fund shall appoint at least one independent expert member who, in the opinion of the fund, shall assist the board members in exercising their functions.
“Funds are, therefore, called upon to also comply with this mandatory provision of the law,” she said.
According to the Act, in electing or appointing the members of the board, the fund shall also endeavour to ensure that gender equality and geographical representation are attained as required under Section 22(8) of the Act.
The minimum academic qualification for a person who wishes to become a member of the board shall be five O Level passes with a grade of C or better and a diploma in business or a related field.
More importantly, Section 24(3) of the API requires that every fund should ensure that its board has an appropriate diversity of skills, experience, or qualifications for managing the fund.
These include skills, experience, or qualifications in the law relating to pensions and trusts, the principles relating to the financial management of funds, the investment of assets in such funds, and the risk management of funds, among many others.
“Unless exempted by the Commission, every board member should undergo training on core skills within six months of appointment or election as a board member. This requirement is in terms of Section 26(l) of the Act,” said Dr Muradzikwa.
She also reminded that all board members should hold office for such a period stipulated in the fund rules, which period in terms of Section 2J(1) of the Act shall not exceed ten years.
All pension funds are therefore requested to have fully constituted boards by May 30, 2024, and submit the information as per the Excel template, covering all the funds, and in the case of administrators, all funds under administration.
“For funds undergoing dissolution, kindly indicate this position by providing a list of all such funds and the responsible board members or management committee members overseeing the dissolution process of the fund,” reads the circular.
“Funds are, therefore, called upon to also comply with this mandatory provision of the law,”