Johannesburg - Trustees should be paid and need specialised training to help them fulfil their corporate governance roles and live up to pension fund members' expectations, an industry expert has said.
"I think training is absolutely essential," said retirement fund leader for PricewaterhouseCoopers (PWC) Gert Kapp. "Trustees need to have specialised skills to make a contribution on a technical level in an environment that is becoming increasingly legislated and regulated."
The Pension Fund Act requires at least 50% of a board of trustees to be elected by employees who are members of the fund, while the other half may be elected by the employer. Employees who act as trustees may sometimes lack the expertise to fulfil their role competently.
Trustees need to deal with funding levels; they have to match assets with liabilities and make investment decisions among other tasks.
"I think training is the function of the fund and that the employer can make a valuable contribution towards the training of trustees," said Kapp.
The largest challenge for trustees is living up to member expectations in a time of economic crisis, as well as regulatory changes and corporate governance challenges in view of the King report (which tables regulations for the financial sector).
To pay or not to pay
Because of increased responsibilities and a heavier workload, Kapp said it has to be debated whether trustees should be paid.
PWC is conducting a trustee remuneration survey to establish a best practice guide. Kapp said the group hopes to make a case for trustee remuneration, and to have a benchmark for pay levels.
"I don't think you should do it for free. You have to know the Pension Fund Act and the latest developments in the industry while also preparing for meetings," said Kapp.
Changes in the Pension Funds Act have resulted in an increased personal risk associated with the job. According to Kapp, potential legal implications for trustees are on the increase and they should receive a level of compensation for this.
International trends have shown that at least one trustee on a board receives payment; non-independent trustees are only remunerated if they are pensioners.
In South Africa only independent trustees are paid if the board decides to do so.
"Perhaps funds should start increasing the payments to trustees to ensure that their role is taken more seriously and that more people aspire to becoming skilled trustees," said Kapp.