1. PENSION LAWYERS ASSOCIATION SEMINAR
REPORT BACK FROM IPEBLA CONFERENCE
Speaker: Paul Williams
JHB: 15 August 2017
CT: 17 August 2017

2. General overview of conference
IPEBLA holds a biennial conference
Purpose: to share knowledge and experience
Venue: Prague, Czech Republic
135 delegates (11 South African) from 22 countries
Mostly breakaway sessions, each topic explored from the perspective of different jurisdictions
Full report available:

3. General international themes
Worldwide concern regarding insufficient retirement savings
Move away from state-funded pensions to occupational and/or private pensions
Retirement and Normal Retirement Date are outdated concepts
DC is (largely) the future
Fund costs are under close scrutiny

4. Respects in which SA is an outlier
Minimal state old age provision
Extent of inequality
Earliest to move from DB to DC (and unique in being employee-driven) - has had to grapple with DC issues earlier than other countries
Not imminently faced with a demographic time- bomb

5. What are we doing well in SA?
Governance/regulatory environment
Advanced regulation of trustee duties (PF Act, PF Circular 130, Trustee Training Toolkit etc)
US/Canada - Employer is often the pension plan sponsor (“two hats theory”) – structural conflict of interest
Proactive regulator – reactive in other jurisdictions

6. What are we doing well in SA?
Thought leadership at policy level
Identified challenges arising from DC environment
Leakage through inusfficient preservation
High fees and ill-suited investments/products
Decumulation phase
Implementation of solutions (albeit slow)
Trustee responsibility: defaults; annuity strategy
Providers switch to outcomes based approach

7. What are we doing well in SA?
Focus on ESG principles for investment
Reg 28; Code for Responsible Investing in SA; ASISA draft regulations
No specific recognition in many jurisdictions
Highly developed pension and financial services industry
Result of an earlier transition from DB to DC and the inadequacy of State pension
Consumer choice, but over-dominance?

8. What could we do better in SA?
Amongst the worst retirement savings rates in the world
Primary reasons:
No preservation – cash on withdrawal;
The popularity of provident funds – cash on retirement;
Socio-economic reasons – competing needs;
The inadequacy of the State Old Age Pension

9. What could we do better in SA?
Fees eat too heavily into retirement savings
DC – members bear fees; no employer pressure to control
Market has favoured complex, high fee products
No regulation until now:
Draft Default Regulations
TCF principles
Other countries:
legislation, directives or guidelines - disclosure
litigation

10. What could we do better in SA?
Auto-enrolment
UK - Obligation on employers to enrol all employees, but employees have 3 months to opt-out
Germany following suit – 2018
A distant prospect for SA

11. Conclusions We need to stop beating ourselves up
We are setting the regulatory pace in some areas:
Default Regs
ESG
The industry is not the untamed beast we are sometimes led to believe
We need to be careful not to over-regulate
Impact on costs
Risk stifling innovation
The problem is not the industry but the lack of savings in it

12. THANK YOU