Page 37 - MiNDSPACE Issue 2 2022 - Old Mutual Corporate

good thing
As unexciting as governance is to some, news headlines regularly show how disastrous it can be if the rules are ignored. This goes for umbrella retirement funds too.
the Zondo commission. After all, when you’re sitting in the dark on a cold winter’s night of loadshedding, you are nowhere near the boardroom decisions that brought you there.
SuperFund has a good relationship with its regulators – and we don’t just have one. There’s a whole range of regulators who help to govern the industry, either directly or indirectly.
The Financial Sector Conduct Authority (FSCA) is our primary regulator and looks at things like market conduct and fairness of outcomes. There’s also the Reserve Bank’s Prudential Authority, which monitors solvency, liquidity and other financial aspects to make sure the system is stable. Because the remit of retirement funds is so wide, we are also regulated by the Receiver of Revenue (SARS). No money can be taken out of a retirement fund without approval from SARS, so we have constant interactions with them as members retire or leave our fund. Every participating employer must also be approved by SARS to be able to enjoy the tax benefits that come with being part of a retirement fund. That doesn’t happen automatically. It’s all regulated and governed. If you look at the governance scandals that have happened in South Africa – and they are legion – none have happened in commercial umbrella funds.
Certainly at SuperFund, governance is the last thing members need to worry about. In this case, boring, mundane and unexciting are very good things indeed. M
Fiduciaries – whether directors of state-owned enterprises (SOEs), private or listed companies, or members of boards of trustees – need to keep that top of mind as they perform their mundane, yet critical, job of governance.
WHY GOVERNANCE MATTERS FOR RETIREMENT FUNDS
In December 2021 National Treasury released a discussion paper on the governance of umbrella funds with a particular focus on commercial umbrella funds. ‘While some multi-employer funds appear to be well run, the National Treasury is concerned about the governance of others and the consequences of poor governance on member outcomes,’ it noted.
This is understandable if you consider that the top five commercial group retirement funds in South Africa – which includes the Old Mutual SuperFund – each has at least R40 billion in assets under management. That’s about the same as a listed company. Fund trustees therefore carry a significant burden of responsibility. Doing the right thing is non-negotiable.
Just how important good governance is, is one of the many lessons that South Africans are taking from the reports of
Good governance requires this level of granularity and going beyond the tick-box exercises and regulatory requirements so that the best, most appropriate processes are put in place at all levels.
At SuperFund specifically, we have standards of governance that everyone must adhere to. Yes, clean audits are expected,
but SuperFund goes beyond the minimum standards. We view governance as critical for the stability and resilience of the industry as a whole.
For example, the majority of SuperFund’s management board members are independent trustees, including the chairperson, the principal officer and
the chair of the investment subcommittee. There is
a broad balance of skills, experience and expertise, which sets the tone from the top. It ensures that the widest set of perspectives in the room is considered when frameworks or processes
are put in place, and that governance is done right.
In terms of processes, the board holds annual reviews of its entire investment strategy, measuring all SuperFund’s
WORKING WITH OUR REGULATORS
expertSPACE governance
ABy Malusi Ndlovu
s a topic of discussion,
investments against the universe of available institutional investment options. The standard question they ask is: Are our portfolio options – the default and the member choice – the best of their kind, or can we get something else that performs better?
corporate governance is boring, mundane and unexciting. Still,
a lack of governance can spell disaster for any enterprise and has severe ramifications for all stakeholders.
Then there’s an additional layer which applies to each of SuperFund’s nearly 6 000 participating employers. It requires taking into account each employer’s circumstances so that they and their employees are offered the correct investment options and insurance providers.
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