Spelling Out a Strategy for Observing Good Governance in Managing Retirement Fund

1. Spelling Out a Strategy for Observing Good Governance in Managing Retirement Fund Faith Letlala 19 August 2013

2. Good Governance Strategy • Agenda - Sound Template from Circular PF No. 130 • Overview of Good Governance • Governance By The Board • Governance By The Board of the Operations of the Fund • Management of Stakeholder Relationships

3. Good Governance Strategy - Accountability • Stakeholders – members, sponsors, employers, dependents & nominees • Retirement Fund exists for purpose of the benefit of its members • BoT & PO (integral to good governance) are fiduciaries. Acting in good faith with integrity • Legal framework – pensions law, common law, customary law, regulation, fund rules, codes of conduct & policies

4. Good Governance Strategy – Governance by the Board • Board as fiduciaries responsible & accountable for Fund • Delegation is NOT equal to Responsibility – the buck stops with the Board! • Easiest guide for Board is not forgetting that members are first in respect of Fund • Chairperson – strategic leader of Fund • Principal Officer – governance and compliance official for Fund

5. Good Governance Strategy – Governance by the Board • Code of Conduct is important & imperative • Conflicts of Interest (COI) • BoT should be independent for benefit of members • COI Avoidance helps to eradicate COI • Unavoidable COI to be managed and mitigated • Declaration Forms

6. Good Governance Strategy – Governance by the Board • BoT – competency is key, work smart by using Sub-Committees as permitted & governed (terms of reference, fund rules) • Educate new Board members & also go through continuous improvement training for all Board members – education is not an event • Sub-Committee e.g. Investment Sub-Com, Risk Benefits Sub-Com, Audit & Risk Sub-Com, Communication Sub-Com

7. Good Governance Strategy - Governance by the Board of the Operations of the Fund • Governance is key • Oversight of Fund activities key for Board – controls & measure have to be in place • Operations have to be sound and monitored • Use expert advisers & providers – actuary, EB consultant, investment consultant, legal & other expertise (e.g. insurers & investment management)

8. Good Governance Strategy - Governance by the Board of the Operations of the Fund • Risk Management (have a policy in place) • ID risks facing Fund • Assess impact of risks to Fund • Mitigate risks with controls • Monitor risks & associated controls in place

9. Good Governance Strategy - Governance by the Board of the Operations of the Fund • Investment Policy Statements (IPS) • Usage of investment consultant • Custodian of assets (know literally where assets are • Are there Proxy / SRI / Incubation Policies in place, where deemed imperative • Assets in insurance policies, pooled policies, segregated policies • have relevant performance benchmarks • Understand asset class risks & returns, asset managers

10. Good Governance Strategy - Management of Stakeholder Relationships • Communication & Access to Information • - Board has to have access to all info relevant to Fund • -Confidentiality (guard against missusers of information) • - Information about Fund belongs to Fund, not service providers

11. Good Governance Strategy - Management of Stakeholder Relationships • Communication Policy (content for members & beneficiaries) • -should be in place to interact with members & beneficiaries • - illustrate benefit calculations, method & timing of benefit payments • - changes to regulatory environment • - financial reporting from financials • - funding status & funding method of Fund • - Changes in investment strategy • - fund returns vs benchmarks • - Contact details of Fund registered office

12. Good Governance Strategy - Management of Stakeholder Relationships • Communicate clearly with members, sponsors & employers • Act and communicate in good faith with members, sponsors & employers • Have a procurement system in place to guide service provider selection & review