THE Insurance and Pensions Commission (Ipec) has reiterated that pension funds must have qualified boards and member representation in decision-making processes as it moves to instil good corporate governance practices in the US$1,7 billion pensions industry.
A board of funds or board of trustees is the governing body responsible for overseeing a pension fund. It ensures that the fund is managed in the best interests of its members and beneficiaries.
Ipec’s pensions and life department manager Polite Chidumwa said the insurance and pensions regulator was working to make sure that the contributions were not wiped out over time, which involved ensuring proper governance structures.
“What we also do is look at the corporate governance issues. As I have indicated, Section 22 of the Pension and Provident Fund Act is very clear in terms of who is supposed to be appointed to be part of the board of funds,” v he said.
“This board of funds plays a very crucial role, for example, in appointing these service providers and ensuring that those service providers are reporting to the owners of the pension fund through the board of funds.
“So, we put regulations in terms of the minimum qualifications that those who have been appointed to run the affairs of the pension fund should have so that they appreciate their role and what they're supposed to do.”
Chidumwa said the regulator also provided guidance in terms of the composition of the board of funds.
“And if you look at Section 22 up to Section 26, it is very clear to say those people who are coming in should have diverse skills so that when these service providers are giving a report back on what they have done, they can have that knowledge to interrogate, to say, oh, is this making sense and is it being done to the good of funds?” the executive said.
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He said the regulator also did capacity building for the member's representatives.
“So, we also have what is called the members’ representatives who are elected by the members themselves so that when they sit, they will be representing the interests of the member,” Chidumwa said.
“There are no decisions that are done that just reflect personal interests, but which then reflect the interests of the members who those, by those members, represent. We also do even capacity building in terms of those who have been appointed to just educate them so that they are aware of what they are supposed to do.”
Ipec is currently engaged in several reforms to ensure that member contributions to pension funds do not lose value as payouts to pensioners continue to decline owing to exchange rate volatility.
Ipec in June last year said 135 trustees of pension fund boards were facing the chop for exceeding their term limits and for failing to listen to the regulator to vacate those positions.
