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Much is being spoken and written about the need and indeed trustees’ duty of diligence, care and skill, that requires funds to formulate, implement, monitor and regularly review their business strategy. Typically, this should address areas such as:

  • fund management (trustees, consultants, administrators, actuary, auditor, underwriter etc),
  • member communication,
  • benefit structure,
  • investments,
  • ancillary benefits (e.g. housing loans) and
  • reporting.


Once a strategy has been formulated, a structure should be established to implement and monitor compliance with the strategy. In practice, the implementation and maintenance of the required structure, is mostly the responsibility of the fund’s administrator, assisted by the participating employers.

Matters do become difficult when new ideas are tabled at a trustee meetings, without even appearing on the agenda and without supporting documentation. Decisions are then taken on a haphazard basis, without reference to a rational framework as should normally be offered by a proper strategy. This leads to inconsistent, frequently even conflicting policies that have not been considered properly by all parties concerned, that may be inefficient or ineffective and may expose the trustees to legal challenge and censure. By now most trustees will be aware that they may incur liability in their personal capacity, should it be proven that they acted recklessly or negligently.

The typical occupational (employer sponsored) retirement fund is a group scheme intended to offer a fair compromise for the average member, between what is nice to have and what is economically justifiable. Of course the minority more sophisticated, financially knowledgeable member wants to have a wide range of choices in terms of contribution, benefits and investments while the majority less sophisticated member does not benefit from such flexibility but has to share the costs.

We have in the recent past seen many funds convert from the protected interim/final interest regime to the market linked monthly investment return regime. This was of course at the time markets only knew one direction, and that was up. With the more recent experience of markets turning down, many of the less sophisticated members will not be pleased with what the next benefit statement will show and will start asking questions that trustees may find difficult to answer. How many funds have actually effected this change in consequence of a strategy review and redefinition and how many have done so as the consequence of opportunistic self centered pressure by specific individuals?

What to do?

Trustees, more specifically, the chairperson should resist discussion on any changes in the fund’s strategy that does not flow from a formal strategy review and that is not supported by a formal, documented procedure. All parties to the fund should have been given an opportunity to comment and to highlight all potential implications in terms of risks, costs, procedures, formalities, member communication, income tax, rules. For good measure and as a matter of principle, all parties to the fund should be required to formally declare their interest.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.

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