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Corporate governance of retirement funds refers to the funds rules, policies and processes (i.e. how the fund is governed). Increasingly, good governance is being recognised as essential for good business. Effective corporate governance is underpinned by ethical leadership.

In the context of retirement funds, what does it mean to be ethical? This relates to the ‘moral code’ of the board (i.e. the integrity of the board of trustees), which should be guided by codes and policies representing best practice. This moral code should be integrated in the decision-making process to ensure that trustees always act in the best interest of the fund and its beneficiaries, stakeholders and broader society.


This article provides high-level guidance for retirement fund trustees and retirement fund members to understand how ethics can be incorporated into retirement fund board governance.

What guiding principles are in place for retirement funds to consider?

Both the Financial Sector Conduct Authority (FSCA) PF Circular no.130 (PF 130) and the King IV Report on Corporate Governance for South Africa (King IV) provide guidance for corporate governance in retirement funds.

Financial Sector Conduct Authority PF Circular no.130

Point 1 of the preamble to PF 130 relating to good governance of retirement funds highlights that boards of trustees have a fiduciary relationship to funds and therefore must act with integrity. It further states that governance includes “values and ethical principles which require a certain standard of behaviour of the board”.

The Circular, among other things, proposes putting certain policies in place such as a code of conduct outlining the duties and obligations of the board. The Circular also suggests that should a member breach the code of conduct, appropriate actions are taken against them (after consideration of any argument in the board member’s defence).

King IV Report on Corporate Governance for South Africa

King IV lists several outcomes that should come as a result of implementing its underlying principles. One of these governance outcomes is achieving an ethical culture. This culture can be achieved through the application of the code’s underlying principles relating to leadership and ethics, namely:

  • Principle 1: The governing body should lead ethically and effectively.
    Ethical and effective leadership is exemplified by integrity, competence, responsibility, accountability, fairness and transparency. Members of the board of the fund should individually and collectively cultivate these characteristics and exhibit them in their conduct as set out in the practices under Principle 1.
  • Principle 2: The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.
    The board should ensure that the ethics of the fund is governed effectively. When outsourced, the board should satisfy itself that the fund’s service providers manage their ethics effectively through codes of conduct, ethics policies and supporting processes.

What does this mean practically for trustees?

Over and above the members of the board acting and leading ethically, the fund should also draft policies determining its approach to ethics (a code of conduct or ethics policy for example). This can incorporate the board members’ duties and obligations, the fund’s values and how these should be integrated in the decision-making process. The policy can also provide detail on monitoring processes, any applicable codes or policies that need to be complied with and how this is monitored and reported to the fund’s members, beneficiaries and other stakeholders.

For further detail, the underlying principles of King IV provide recommended practices to assist boards in achieving a best-practice approach to corporate governance and ethics.




  1. Pension Funds Act:
  2. FSCA Circular PF 130:
  3. King IV:


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What experts say: “Ethics is considering what is good and right for the self and the other, and can be expressed in terms of the golden rule, namely, ‘to treat others as you would like to be treated yourself’. In the context of organisations, ethics refers to ethical values applied to decision-making, conduct and the relationship between the organisation, its stakeholders and broader society.”

– King IV