/ 21 April 2017

Trustee development indispensable

Geraldine Fowler
Geraldine Fowler

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 ever-changing 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:

  • Participation in the Financial Services Board (FSB) Planning Group held on April 10, which dealt with the need for a prescribed Trustee Accreditation Programme that the FSB has worked on for some time. A workgroup will now be put into place, which IRFA will participate in;
  • A planned Navigator Workshop around death benefits;
  • Planned workshops on industry transformation;
  • A series of seminars on trustee development in terms of financial literacy and investment practices; and
  • A proposed partnership in terms of delivering accredited courses in trusteeship and board participation to IRFA members and industry.
  • “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.”

    Members’ confidence increases

    The Institute of Retirement Funds Africa (IRFA) represents the interests of its member funds, service providers and other interested stakeholders in the broader retirement arena.

    The institute forges strong partnerships with thought leaders, retirement funds, service providers, members and local and international industry bodies so as to deliver maximum value in the retirement space.

    Surveying member and industry requirements has always been important to the IRFA as it continues to seek ways to provide the right services and knowledge to sustain best practices in the industry. The third of these studies was administered electronically to over 4 000 potential respondents in March this year, and findings will be used for the purposes of strategic review and programme planning.

    The study was conducted by external research partners to ensure confidentiality and objectivity. The survey itself is comprehensive and all results have been filtered by demographic variables to ensure targeted and focused service delivery.

    While the full research report is available on request, this is a brief snapshot of key findings.

    Core elements of the IRFA’s strategy are knowledge and information transfer, developmental initiatives, focused research, and member and industry support. Consultation and collaboration with all stakeholders remain priorities for the institute.

    One of the key findings from the survey shows that the membership base and broader industry requires more from the IRFA regarding navigating the future. Industry requirements from the IRFA have increased on average of 7% in terms of each of its core functions since last surveyed in 2013.

    Members and industry rating of the IRFA’s product and service package indicates that the institute is moving in the right direction.

    In terms of the top three service ratings, the provision of industry-related information, the provision of legal and technical information, and the provision of research into industry standards, trends and practices rank the highest in this battery. This is a pleasing ranking for the institute, as 2016 saw IRFA release two of its first research studies at the annual conference.

    Industry and member perceptions as to the value of research and benchmarking in both the perceived role of IRFA as well as delivery of research in 2016 was gratifying and continued focus will be placed on this service.

    Industry requirements from IRFA in terms of knowledge and skills transfer remain high and the organisation will continue to partner with industry to provide information, learning and developmental opportunities.

    Clearly industry perceives IRFA to contribute to industry standards practices and knowledge, and its perceived contribution has increased since 2013.

    Many suggestions have been provided by stakeholders on how this contribution could be built upon and these suggestions will be taken into account when planning programmes, content and services.

    The IRFA modelled the research battery on reputation around the following definitions and criteria: “Reputation is the sum of impressions held by an organisation’s stakeholders. Reputation is in the eye of the beholder. It is not what leadership insists, but what others perceive it to be. Reputation is a dynamic phenomenon; it is subject to change and it emerges as an effect of bi-directional processes,” says Professor Charles Fombrun of the Reputation Institute.

    It is also important to note that in modelling the survey questions, IRFA was aware that the reputation of the institute is determined by the perceived delivery and behaviour of all of its representatives, from management board through to staff, and anyone who represents the IRFA in the public and industry domain.

    While the IRFA’s ratings remain sound according to the research, Wayne Hiller van Rensburg, president and chairperson of the IRFA emphasises that the institute will continue to work on delivery and innovation.