Call to join quest for financial freedom and security

IRFA president and chairperson, Wayne Hiller van Rensburg

IRFA president and chairperson, Wayne Hiller van Rensburg

The 2018 Institute of Retirement Funds Africa (IRFA) Annual Conference, which is the biggest pensions’ conference on the continent, is the culmination of a three-year project, according to Wayne Hiller van Rensburg, IRFA president and chairperson.

He says the three-year undertaking started with the 2016 conference theme of “Navigating the Future Through Changing Times”, which was about examining policies and scanning the world’s retirement landscape to see what it is that we could do to improve pensions outcomes in South Africa.

“The 2017 conference theme of ‘Social Development, Partnering for Change’ was an important progression, because it emphasised the value of all the stakeholders partnering to achieve better outcomes, which led to 2018 and what we need to do to achieve the theme of ‘Reaching out for Financial Security and Freedom’,” explains Hiller van Rensburg.

He contends that one of the most important attributes of the IRFA conference is that it assists in making all the retirement industry stakeholders aware of the issues in the pension environment, and informs them of some of the strategies and actions they can implement to transform and improve both the country’s retirement and socioeconomic conditions.

Hiller van Rensburg says the IRFA is working towards a Pan-African footprint and co-operation.

“We already have a strong southern African footprint that includes delegates from most Southern African Development Community (SADC) countries attending our conference. However, the development of a pan-African pension solution would make more sense than a regional solution.

“This year we have a master-class session at the conference that will look at pension fund investments and opportunities within Africa, entitled ‘Retirement Fund Investments – Working for Africa.’”

Geraldine Fowler, IRFA vice president, confirms the importance of the development of a pan-African retirement fund sector perspective.

She says the IRFA 2018 conference will embrace the policies of inclusiveness and co-operation in reaching out to the people of Africa as partners in “Reaching out for Financial Security and Freedom”.

“By extending the institute’s 2016 and 2017 conference themes to this year’s theme we are focussing on the need for upliftment and empowerment through the creation of financial security for all who live on the African continent, with some key goals being financial inclusion, financial literacy and retirement readiness.

“This year’s conference comes at a time when there is a greater sense of urgency in both the retirement and broader financial services sectors, recognising the dire need for us to change the mind-set of people to one of saving for their retirement more extensively, and at a greater pace.

“There is an industry-wide appreciation for the need to encourage financial literacy, which will promote the importance of saving for retirement to achieve financial freedom, rather than being a prisoner to dependency on the family or the state.”

Fowler says that through recognising the members of retirement funds as a crucial part of the collaborative process, the IRFA will undertake a survey, run by a PhD student, which will deal with whether the industry really listens to its members.

“For example, we need to ask ourselves what a retirement fund would look like if it was designed by the fund’s members. The IRFA recognises that member feedback and input is crucial to the retirement fund system.”

Fowler says the IRFA is committed to collaboration as an effective means to contribute purposely and significantly to achieving the financial upliftment and empowerment of the people of Africa. “We invite all interested parties to join us on this quest,” she adds.

Visit www.irf-conference.co.za for more information about the IRFA 2018 Annual Conference.

Asset owners need to exercise their broader responsibilities

South Africa has one of the largest funded pension industries in the world in terms of assets, according to Wayne Hiller van Rensburg, president and chairperson of the Institute of Retirement Funds Africa (IRFA).

He says by asset size, South Africa has the 11th largest pension industry in the world, with assets of 110% of GDP – unusually large for an emerging market.

However, the country is challenged by the fact that most people who belong to a pension fund are either employed or self-employed, with a large percentage of the population having no retirement savings and being dependent on the state.

‘Despite the fact that South Africa has a large pensions’ asset base, a pertinent question is: where are the assets being invested?” asks Hiller van Rensburg.

“While a large chunk is being invested in the JSE, it begs the question that if there is such a large ownership of the JSE by institutions, how is that ownership being exercised?

“I don’t think that many institutional asset owners understand what impact they can have on economic development if they choose to exercise their ability to engage with management as shareholders who are intent on making their capital active and productive with regards to job creation, transformation and sustainability.

“Too often asset ownership does not talk to how the investment will impact on the lives of someone who lives in a rural village. Instead the focus remains on building the business and not addressing broader societal needs.

“One of the big challenges South Africa faces is the need for infrastructure development investment.

“I believe there is a need for innovation, and for the pensions fund industry to co-operate more closely with regulators and policy-makers in terms of using their ownership to improve socioeconomic conditions of both members and broader society.

“The South African pensions industry has a significant influence on the economy of the country and could have a greater influence on its socioeconomic development, which isn’t being properly exercised at the moment,” says Hiller van Rensburg.

However he points out that pension fund trustees’ first responsibility is to the direct beneficiaries of the fund, and they run the risk of breaching their fiduciary duty by taking on more investment risk than what is accepted by the industry’s status quo.

“We understand why these safety measures are in place. That is why we say that there really is a need to look at how pension funds can invest in a way that benefits both the members and society as a whole, without breaching their fiduciary responsibilities.

“There is recognition for the need to transform by: becoming more inclusive; better aligned to the needs and values of the purchasers of the retirement fund industry’s services; and improving retirement outcomes.”

Hiller van Rensburg says it is exactly these questions that the IRFA conference will begin to address.

“The conference theme of ‘Reaching out for Financial Security and Freedom’ encourages delegates to explore ways that funds can act in the interests of both their members and society as a whole.

“Our keynote speaker is talking on exactly that topic – what does financial freedom mean, and how can it be achieved in a broad sense.

“We also have a panel that includes the regulator, which will look at the issue in more focus by discussing ‘Policy as a Tool for Upliftment’.

“A second panel will examine ‘Transforming and Empowering — A Practical Approach to Upliftment’, which will examine how marginalised groups can be included into the pension system as fund members right through to fiduciaries and service providers, and how all of these aspects contribute to a better pensions outcome for South Africans.

“Education is another necessary tool for societal transformation, which is the reason the IRFA conference includes an ‘Education – The most powerful weapon to change the world’ session that will look at the need for financial education as a tool to address the savings and inequality shortcomings in the current South African landscape.