Here’s why the new (and compulsory) Trustee Training Toolkit (TTK) is a crucial arrow in a trustee’s quiver.
Ironically, once you’ve completed module two of the TTK you will understand the value of it. Module 2, Good Governance of Pension Funds, deals with sections 7C and 7D of the Pension Funds Act 1956 (PFA) that describe the objectives and duties of trustees of a pension fund. Importantly, the PFA stipulates that trustees have a fiduciary duty to all members. This includes applying their minds to every decision, from ensuring the fund remains financially sound to determining how death benefits should be paid. If you are elected or appointed as a trustee, you are legally bound to these duties.
A trustee appointment comes with great responsibility. Collectively, the boards of trustees in South Africa preside over R5.6 trillion in assets. You must know what is expected of you and be equipped to fulfil this responsibility. The new and improved TTK of the Financial Sector Conduct Authority (FSCA), launched in September 2023, aims to do just that.
A changing world
At the FSCA’s online launch event of the TTK the Deputy Commissioner, Astrid Ludin, explained that world leaders recently endorsed the G20/OECD Principles of Corporate Governance. These principles were first issued in 1990 and are viewed as the international standard for corporate governance. The revisions saw substantial changes, among others a chapter on sustainability and resilience to help companies manage climate-related and other sustainability risks and opportunities.
“Governance principles are not static and have to keep pace with changes in our external environment, in our economy and our society. And in the same way, the Trustee Toolkit needed to be updated,” she added.
“More importantly it shows that trustees as directors of boards of retirement funds need to be constantly alive to changes in their environment to make sure they provide the correct stewardship to the savings of workers.”
Although section 7 D(1)(e) of the Act allows board members to seek expert advice where they lack knowledge and expertise, board members are ultimately accountable for all good governance of the fund.
“They may delegate functions but they are not relieved of the function,” said Zareena Camroodien, Departmental Head of Fund Governance and Trustee Conduct at the FSCA. “That’s why you must be empowered to make informed decisions. You are in a position of trust of other people’s money. After completion, a trustee ought to be better equipped to digest and evaluate advice instead of slavishly following it.”
“We see it in various situations where there’s a hands-off approach because the service providers have done it. But that’s not correct. The trustees have to check every aspect, whether it’s investments, administration or death benefits distribution.”
Transforming the retirement fund industry
Radesh Maharaj, chairman of Batseta, praised the development of the TTK, especially the role it can play in transformation. “Skills development plays a crucial role in the transformation of the retirement industry in South Africa by increasing diversity in our sector. It opens up new opportunities for women and other previously disadvantaged members. Education is a core part of our transformation journey.”
Maharaj also spoke of the dangerous culture of the overbearing principal officer, trustee or clique within the board. “All trustees’ voices should be heard. The TTK will help to empower trustees and to erase that corporate culture,” Radesh concluded.
Register here for the TTK and start learning.