What is Today’s Trustee about?
It’s about grassroots empowerment. It’s about more than R4,5 trillion invested by SA retirement funds on behalf of over eight million members and their dependents, making for a total estimated constituency of perhaps 30 million people. This makes it by far the largest of any in South Africa, even larger than the national voters’ roll, providing the glue for a social compact.
It’s about your democratic rights as fund members. These include your rights as stakeholders in South Africa’s largest companies.
Because it represents your future security. Because the better your benefits, the better your financial wellness.
Because it gives you influence over SA’s corporate environment, since your retirement fund is critical to the collective which supports the economy as a whole.
The Pension Funds Act enables members of retirement funds to elect half of their trustee boards. These boards appoint managers for your fund. The managers are accountable to the trustees who, in turn, are accountable to you.
To decide who is best to manage your money, and the terms on which they are to manage it. Your trustees can set benchmarks for performance and define mandates for investment, right down to how fund managers should vote on your behalf at meetings of company shareholders.
Can’t I just leave it to the professionals?
It’s your choice. You can also choose to participate and take responsibility for your financial wellbeing. The least you should do is ensure that you elect trustees who are competent and skilled to represent your interests.
What role does Today’s Trustee play?
Precisely to help promote such competence and skills. While many trustees are financially sophisticated, many aren’t. Whether drawn from ranks of blue- or white-collar workers, they all need to be kept aware of the fiduciary duties to those whom they represent. They must also be kept informed of significant developments in the retirement-fund industry that affect them. This includes being alive to controversies on which they should make known their own views.
The numbers we’re talking?
There are approximately 3 000 active funds, including multi-employer umbrella funds, that report to the Financial Sector Conduct Authority (previously the Financial Services Board). Each fund must have a minimum of four trustees and a principal officer. In addition, there are such huge public-sector funds as Eskom and Transnet as well as those managed by the Public Investment Corporation (asset manager of the Government Employees Pension Fund, amongst others).
Taken together there are approximately eight million members of SA retirement funds, each with an average of three to four dependents. In effect, all South Africans are affected by retirement funds’ performance through the investments that they make.
For the individual, retirement funds are often the dominant savings vehicle. For the nation, they are the critical pillar of the entire financial system.
The decisions trustees can influence?
Investment performance, transparency and accountability. Shareholder activism and social impact. Stewardship in matters of corporate governance. Empowerment and transformation. There are influences into every corner of the SA economy’s mining, financial and consumer sectors. They have a role in shaping government policy too.
The progress being made?
Change in the retirement-fund industry is continuous. Today’s Trustee tries to assist trustees and principal officers to keep abreast of the processes. The more that financial literacy becomes pervasive, the more that significant industry issues are aired for debate, the greater that awareness and confidence to participate are stimulated, the better for trustees to serve as fiduciaries in their fund members’ best interests.
Today’s Trustee’s overriding philosophy?
To help accelerate the achievement of a stakeholder democracy, fundamentally part and parcel of an economy inclusive of all citizens.