Pension fund trustees in the spotlight

The board of trustees of your pension fund could be costing you your retirement – literally.

“Many lessons should be learned from the Steinhoff happenings,” says Henry Dul of Independent Trustee Services. “Boards rely extensively on the work of the auditors to ensure that funds have solid investments and that they comply with the law. It’s not the auditor’s job to ensure that everything is above board in a fund – that is ultimately the trustees’ job,” says Dul, who literally wrote the book on the responsibilities of retirement fund trustees.

Jacobus Troveri, chairman of the Gijima pension and provident fund, has been in the retirement fund trustee game for three years. He says local retirement fund trustees have been left shaken by the Steinhoff collapse, saying it “affected more than just the Government Employees’ Pension Fund; it touched pretty much every institutional investor in South Africa. The issue boils down to trusted advisers and the ecosystem that has been built around them. Trustees of funds pay a large premium to these advisers to ensure that they receive considered advice. If this falls apart, then the entire chain is compromised.”

Mathias Sithole, the principal actuarial consultant at Liberty Corporate, says: “The complexity of retirement funds places a significant burden on the trustees, who are tasked with governing and managing them. Although trustees should seek expert advice and services where necessary, they are ultimately responsible for the decisions taken and the mandates given to service providers.

“There is therefore a need for trustees to be sufficiently trained and knowledgeable to execute their responsibilities competently, independently and free of conflicts of interest. Stronger regulation should go a long way towards addressing this.”

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