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

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

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

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

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

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

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)

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

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

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

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

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