Issue: June/July 2006
Old Mutual Corporate

Do you know where your fund stands governance wise?

"It has always been acknowledged that there is nothing glamorous about good governance. At a corporate level, asset managers are known to put a premium of up to 20% on the existence of good governance structures within a company. Members of a retirement fund would no doubt do the same," says John Kotze, Head of Old Mutual Actuaries and Consultants.

Assess for yourself! Is your Fund's governance sinking your fund or helping it float on air?

This self-assessment questionnaire aims to illustrate that good governance is not as elusive as one may think, that it is not costly to implement and that the value-add can be appreciable.

Circle the answer that is most accurate for your Fund.

Q1   Does your Fund have a documented Code of Conduct, signed by all Trustees, against which the Trustees' management of the Fund is assessed?

  1. NO
  2. Yes, but it is not used actively
  3. No, but our internal governances and controls are strong
  4. yes, and it has made a difference to the management of our Fund

Q2   What steps have your Trustees taken to learn about their duties and responsibilities as a Trustee, and grow their knowledge on an ongoing basis?

  1. Attending basic trustee training; attending trustee meetings with 'on-the-job learning'
  2. Basic trustee training; attending and participating in trustee meetings
  3. Upfront and ongoing trustee training; attending and participating in trustee meetings
  4. Upfront and ongoing trustee training; preparing for, attending and actively participating in trustee meetings; review of relevant media

Q3   Does your Fund have an Investment Policy Statement (IPS)?

  1. No
  2. No, but we are about to implement one OR Yes, but we have not reviewed it in the last 3 years
  3. Yes, and we do review investment performance relative to the IPS at least annually
  4. Yes, and it is used actively, driving regular reviews

Q4   Does your Fund have a Risk Benefit Policy Statement (RBPS)?

  1. No
  2. No, but we are about to implement one OR Yes, but we have not reviewed it in the last 3 years
  3. Yes, we review risk benefits relative to the RBPS at least every 2 years
  4. Yes, and it is used actively, driving regular annual reviews

Q5   How effictively does your Fund communicate issues such as benefit structures, changes, investment performance etc?

  1. There is a member booklet and members get annual benefit statements
  2. (1) + members have access to all relevant fund reports and rules through internal intranets
  3. (2) + regular member newsletters that aim to make complex issues easier to understand
  4. (3) + members are encouraged/afforded access to appropriate personal financial advice

Q6   When last did you go out to tender for your administration and consulting services?

  1. Not for the last 10 years
  2. Not for the last 5 years
  3. Not for the last 3-5 years (mainly to allow for surplus process to run its course)
  4. We have a defined process that sees these services tendered for every 3 years, at least

Q7   How rigorously do you assess service provider deliveries relative to service level agreements?

  1. Rely on report-backs at trustee meetings
  2. Rely on service providers to keep us informed on a regular basis
  3. Principal Officer plays an active role monitoring service delivery
  4. Measurements / milestones have been defined for all key deliveries, and are actively monitored and reported

Q8   What steps do the Trustees take to ensure that thre are no conflicts?

  1. Limited
  2. Trustees and service providers required to make declaration of any potential conflicts at the start of each Trustee meeting
  3. (2) + potential conflicts are checked with each significant decision; a gifts policy/register is kept
  4. (3) + separate service providers are selected for key services and/or formal disclosure of incentives are obtained to ensure that no conflicts exist, Principal Officer does not work for a service provider

Q9   When last did you check whether your level of fidelity cover was sufficient?

  1. What is "fidelity cover"? OR I don't know!
  2. Not for the last 5-10 years
  3. Not for the last 3-5 years
  4. We have a defined process. This is reviewed every 2 years, at least

Q10  How much of your Fund management is proactive and happens by design?

  1. Trustee meetings are low on the company agenda and are regularly postponed for lack of a quorum
  2. We have delegated this role to our consultants, who define the agenda and suggest the appropriate actions, which the Trustees rubber-stamp
  3. Trustees actively apply their mind to issues and, while consultants guide, Trustees own the decisions and define the actions
  4. There is a formal calendar of events defined before the start of each year against which actions/agendas are defined and active measurement occurs; formal planning occurs with each new event
(Take score of 1-4 for each question and sum...)
SCORE 10 - 19 
SCORE 20-26 =
SCORE 27 - 34 = 
35 - 40 = 
Please read on Room to improve. Read Quick Wins of relevant questions. Governance risks are minimal, Now for best practice. Well done - good governance has become the norm!

Theme        Quick Wins or Other Ideas

Trustee Code of Conduct

  • Contact OMAC for a draft Code of Conduct (free)
  • It is important to personalise this for your Fund and implement it actively

Trustee Duties & Responsibilities

  • Contact OMAC for a Trustee Self-Assessment Questionnaire (free)
  • Develop a formal induction programme for new trustees and an ongoing training programme for all trustees

Investment Policy Statement

  • A must-do if not already in place
  • Vital that there Is active performance monitoring, in line with IPS objectives

Risk Benefit Policy Statement

  • A must-do if not already in place (This defines principles, objectives and strategy for risk benefits, the balance between retirement and risk benefits and cross-subsidisation.)


  • Roll-out in conjunction with a formal communication plan
  • Contact OMAC for a pension projector that could help members better manage their retirement expectations (free)

Service Provider Selection

  • Decide a policy on what factors would cause service provision to go out to tender and with what frequency
  • Develop measurement criteria for selection purposes
  • Always get at least three quotes for any service

Service Provider Assessment

  • Ensure an appropriate process is in place to monitor quality and timely service delivery

Conflicts of Interest

  • As per actions suggested in answers
  • Consider obtaining second opinions if in doubt

Fidelity Cover

  • Agree a basis for such cover levels
  • Simple review can then happen annually
  • Triggers for an immediate review include increase in size of Fund or increase in risk benefit cover levels

Active Fund Management

  • It all begins with a plan!

To find out more, please contact: John Kotze on 021 509 5392 / or Craig Aitchison on 011 217 1681 /

This questionnaire has been designed by Old Mutual Actuaries and Consultants.