27four Investment Managers
10th August 2016
Is your pension fund talking to you?
A research study commissioned earlier this year by the Institute of Retirement Funds Africa (IRFA), has yielded important findings in terms of the retirement industry’s rating of itself in terms of Pension and Provident Fund governance and stakeholder engagement. The study has also assisted in defining perceived best practices in the industry in terms of investment practices, financial reporting and trustee induction and development.
The research model developed and managed by local organisational researcher Stephanie Griffiths, a past Executive Chairperson of the International Association of Business Communicators, followed an extensive literature search to determine best practices both locally and on an international scale.
The critical measurement dimensions of the research model which is co-sponsored by the SABC Pension Fund and supported in terms survey administration by the Financial Services Board, are fully compliant with the FSB Circular PF130 (which relate to conflict of interest), as well as the recently released King IV report on corporate governance, notably in the areas of ethical and responsible leadership, performance appraisal and risk management as well as addressing reasonable stakeholder needs, expectations and rights.
IRFA President Wayne Hiller-Van Rensburg notes that the study clearly indicates the importance of engagement beyond regulatory requirements in the governance mix. “Our research has shown us that engagement with all industry stakeholders is regarded as a key component in this mix by best practice organisations and stakeholders alike.”
Stakeholders of best practices funds are defined as any person, group or organisation that has an interest or concern in the specific Fund or industry, according to the findings. What this means is that the playing field has widened considerably and the best practices model of the study indicates that the term stakeholder has a broadened scope.
Hiller-Van Rensburg emphasised, “Active and sustainable engagement with members, pensioners, service providers, organised labour and other interested parties has become mandatory. The study shows that collaboration between funds and service providers in communicating with members and pensioners and in delivering the service package is seen as a priority. The practice of stakeholder engagement requires consistent and rigorous assessment and measurement of stakeholder perceptions, attitudes, and service needs. It requires open and honest communication as well as financial reporting and member education practices which raise stakeholder awareness, strengthen trust and confidence in the industry, improve stakeholder understanding and influence stakeholder behaviour in terms retirement funding.”
So how does local industry rate itself against these best practice engagement processes? There is work to be done according to Hiller-Van Rensburg, particularly in the field of measurement as well as in terms of member education. Overall compliance and best practices with regard to fund communication processes has been rated by local industry at 62,81%. High ratings to the variables in this battery are communicating in a cost effective manner, ensuring that stakeholder communication includes information on the operations, administration and investments of the fund and communicating consistently and transparently with all stakeholders.
Hiller-Van Rensburg concludes, “Low ratings are being exhibited by companies with regards to communicating all environmental, social and governmental impacts of fund operation, as well as measuring the effectiveness of stakeholder communication based on stakeholder understanding and behaviour as well as fully utilising all relevant channels for stakeholder engagement. Thus said these shortcomings will be unpacked and discussed at the IRFA conference.”
Full results of the study will be presented and work shopped at the IRFA conference to be held in Durban on the 28th-30th August.
Source: Money Marketing
By Janice Roberts