Leon Greyling, COO of the ICTS Group of Companies

One of the speakers at the recent EBnet Evolutionaries Conference mentioned that today’s answers will more than likely be outdated by tomorrow. It’s a phrase that probably raises your eyebrows when thinking about technology and member’s needs and wants, but it’s important to contemplate its governance implications in your role as a decision maker.

One cannot dispute that the rate of change is accelerating – and the things learnt yesterday may, at best, be outdated, or at worst be irrelevant, by tomorrow. So where does that leave those fiduciaries, like trustees and management committee representatives (mancos), who make decisions affecting the long term financial well-being of others?

The legislation does give us some clue as to what is expected. Section 7A of the Pension Funds Act requires that trustees:

1. Attain the level of skill and training as may be prescribed by the Regulator within 6 months from date of appointment, and

2. To retain the prescribed level of skills and training throughout the board member’s term of appointment.

The current training prescribed by the Regulator is the Trustee Toolkit – made up of 22 online modules, which must be completed within six months of the trustee’s appointment to the board. The Trustee Toolkit is a giant leap forward in supporting the notion that trustees need to have some level of knowledge in order to be able to make decisions on assets totalling around 50% of the country’s Gross Domestic Product (GDP) – the size of the retirement industry in South Africa.

The Toolkit itself provides a solid foundation of knowledge for newly appointed trustees, covering many relevant topics from a legislative point of view. This gives a new trustee a good introduction to the world of retirement funds.

So point (1) above ✓

But knowledge is different to competence. And I think this is the spirit or intention of point (2). It’s one thing to be able to recite the legislation, but quite another to be able to apply it in a real world context. Let’s take, for example, Section 37C. The Toolkit gives a new trustee a wonderful overview of the legal process to follow when distributing death benefits from a retirement fund, but doesn’t give any insights into the nuances of how to determine if a family member was indeed financially dependent or not. Or share any case studies with practical relevance or learnings.

What’s more, while the content of the Toolkit is certainly comprehensive, it doesn’t cover all the issues that a decision maker will face in a trustee or manco meeting – the financial statements or cashflow statements of a fund or sub-fund come to mind.

And finally, Section 7A doesn’t make the Toolkit mandatory for mancos who make decisions for their sub-fund within an umbrella fund structure. And, let’s be real here, depending on the umbrella fund’s level of flexibility, mancos very often do make decisions around investments, benefit structures, initial recommendations for death benefits and let’s not forget, service provider selection.

So there are some gaps.

Learning and personal development are lifelong endeavours. If you are going to take on personal liability for the decisions you make (and, believe me, you do), it’s in everyone’s best interest that you position yourself to make those decisions competently.

Completing the Trustee Toolkit is the first step in your journey to competence. Being deliberate about updating your knowledge on an ongoing basis includes things like enrolling in further courses that offer more enriched, practical content, attending conferences, reading the legal and technical updates your fund or service providers may share and keeping up with the news, trends and research in the industry.

ENDS