To answer this question, one needs to differentiate between a person with previous experience as a trustee and a novice. Members are required to be represented on a board of trustees in terms of the Income Tax Act and a standard requirement of NAMFISA. Member trustees are elected by the members of the fund. Often these trustees do not have any background to the management of an institution or to financial matters which is largely what pension fund business is all about. Being a financial institution established to promote government’s socio-economic goals and objectives it enjoys unique tax incentives but is at the same time also subject to very stringent legal and regulatory requirements. A significant part of the business of a pension fund is therefore about compliance, i.e. meeting the requirements of the law and this places onerous demands on a trustee.

If a novice joins a board of trustees, in our experience, it takes at least a year before the person starts to participate in the discussions at trustee meetings and this presupposes that the person would have gained some confidence through a proper induction and formal trustee training. As the person starts to participate in the discussions her/she starts to apply his/her mind to the issues at hand and starts to understand the business of a pension fund ever more and better. It would normally then only be after 2 to 3 years of serving on a board that a person starts to add value to the proceedings at board meetings.

Effectively a novice will require a learning period of around 3 years. Any term of office of less than 5 years would make the process of training up a novice as a trustee very costly and inefficient. We would therefore propagate that rules should set the term of office of a trustee at 5 years.

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.