Edition: Mar - May 2014


A fresh voice

Trade unions and the POA have taken the initiative to establish a representative organisation for trustees of pension funds. Its intentions are clear, and it can have real clout.

Isaac Ramuta
Ramputa . . . independent breakout

What trustees have long needed, they’re on track to get. It takes the form of a new body, called Batseta, now being born.

Credibility as a forum for trustee interaction and representation derives from its founding participants. It will exclusively embrace trustees and the Principal Officers Association. Already on board are major trade-union federations Cosatu, Fedusa and Nactu.

As such, it potentially covers the full workers’ political spectrum; from Solidarity (associated with Fedusa) on the right to the National Union of Metalworkers (notwithstanding other disagreements with Cosatu) on the left. “We are part of the process and are fully behind this launch,” says Numsa national benefit coordinator Sam Tsiane.

Credibility also derives from its leadership. Supported by the membership and infrastructure of the POA, its guiding light as chair of the steering committee is experienced unionist Isaac Ramputa. He envisages that Batseta will be an “independent voice representing funds through their fiduciaries”, having three main roles within the industry.

Although previously mentioned (TT Dec ’13-Feb ’14), they’re worth repeating:

  • An influential and effective fiduciary body lobbying National Treasury, the Financial Services Board and other government structures;
  • A facilitator of stakeholder engagements;
  • The leading standard-setter in matters of industry governance and ethics.

It will fill a chasm in the plethora of pensionfund industry and regulatory bodies. One way or another, all are concerned with the pivotal role of trustees. But none is devoted to speaking exclusively for trustees themselves. This is Batseta’s distinguishing characteristic.

When it comes to retirement reform, for example, to whom can National Treasury turn for a trustee perspective? Or if the FSB wants comment on say a redrafted PF130 circular, setting out a host of trustee obligations for fund governance, how does it elicit responses from the horse’s mouth?

Not only from trustees through their service providers, surely, because their interests needn’t necessarily be one and the same; in any event, the service providers themselves would require trustee input from somewhere. Nor can it be from the Institute of Retirement Funds, a body interwoven with service providers.

Don’t conclude from this that there’s a hostility to service providers. Far from it. For the underlying theme is independence, for Batseta to liaise and communicate from its own platform. More than this, and hoping that it won’t sound cheeky, Batseta would welcome funding from service providers – provided it is “blind”, not identifiable to the donor and not in anticipation of strings attached. There must be those wanting to underpin lip-service with altruism.

It intends to run a full gamut of committees: investment, legal & technical, education & communications, conferences & seminars and so on. “We’ll simply proceed as if the IRF doesn’t exist”, says Ramputa. “The way the IRF is structured, it’s conflicted . There’s obviously nothing wrong with service providers doing jobs for our funds, as they must, but when it comes to trustees making decisions it should be without their influence.”

While it’s accepted that service providers also have at heart the best interests of pension funds, a principle not to be comprised is that trustees deal with them as equal partners. A line must be drawn because, between service providers and trustees, there are also different objectives.

For instance, trustees are obliged to perform specific fiduciary duties in the interests of their funds; service providers, being profit-driven commercial enterprises, are dissimilar. Functions of the former are to appoint, oversee and mandate the latter.

He believes that the new organisation should be funded by its members. The steering committee, which comprises representatives of the three union federations and the POA, is working on a formula as to how. Budgets have yet to be set.

The preference will be for members to pay an annual levy to the FSB as its collection agent. The key stakeholders, Ramputa says, are in “constant interactions” with government and the FSB which are also helping with ideas on how the organisation should best be established.

Whether they can additionally assist with funding could perhaps be explored too. Both National Treasury and the FSB have identified trustee training as essential. They’re introducing “fit and proper” standards for board appointments. Somebody will need to pay for this training, especially if the elevation of shop stewards to trustees is to be encouraged.

The POA, for one, is in the vanguard of professionalisation that in future will be driven through the new organisation. The FSB, for its part, offers free training and accreditation through an interactive toolkit. There should also be possibilities in better coordination with Setas (levy-funded Skills Education Training Authorities) to contribute financially.

While it’s premature for Ramputa openly to discuss such detail, beyond emphasising that there are no short cuts in bringing trustees up to FSB requirements, Batseta already has plans for a training initiative. In the pipeline is a programme that will take a first batch of 30 trainees on a course to help them understand investment and guide them on the sorts of questions to be asked when engaging with companies. There’ll also be a practical element where trainees accompany trustees on company visits.


Born in Olifantsfontein 54 years ago, Isaac Ramputa grew up mostly in Mabopane (a township later included in Bophuthswana). Schooled mostly in the Winterveld, he matriculated from Vlakfontein Technical in Mamelodi north of Pretoria.

Started work as a credit clerk in a furniture store. Moved to a pharmaceuticals-distribution company, then became an interpreter in the Department of Justice and later in the Industrial Court. Worked in the courts at Delmas, notorious for the years-long treason trial that he dropped in frequently to observe.

In 1990 he joined the National Union of Metalworkers (Numsa) as an organiser, switching in 1994 to a regional organiser at Cosatu-aligned Sasbo (the finance union) where he is today is its assistant general secretary.

His interest in pension funds was sparked when he joined the labour movement during the 1980s’ protests over mandatory pensions preservation – the argument being that workers’ funds were being used to support apartheid programmes – and the widespread conversion of funds from defined-benefit to defined-contribution arrangements.

“Few people understood these massively important issues,” Ramputa recalls. “I began to appreciate that workers’ capital, properly used, can obtain leverage with JSE-listed companies and the investment industry. We could dictate where and how our monies should be invested. We’re still battling with this.”

To move it along, he wants proper research on how much of these companies “the workers actually own”. This would place the unions on a stronger footing to engage with those companies on how the union members’ capital is invested.

For all the union rhetoric on the virtues and defects of capitalism, there’s a functional reality in the capitalistic nature of pension funds. “Whether we like it or not, we are owners in JSE-listed companies. Our money keeps these companies going. Ownership gives us the right to address the inequalities as we see them”, Ramputa insists.

They’d include, for instance, pay disparities. But equally important are objectives identified in the Financial Sector Charter where access to finance is a priority. Then come social and sustainable investments: use of water resources, focus on agricultural areas, enterprise development, support for infrastructure and upliftment projects.

And for some specific questions put to Ramputa:

TT: By law, trustees are accountable to their funds and not to the constituencies which elect them. How does this play out in an environment where shop stewards are elected by unions?

Ramputa: It’s really a question of how these trustees, elected to represent the interests of workers, approach the matter. To avoid conflict, it should be possible for the union and trustees to meet and talk through workers’ interests and union resolutions to be implemented. The trustees as per their fiduciary responsibility, after careful consideration, will process decisions in their boards as long as it is in the interest of the members. There are decisions, like the appointment of service providers, that trustees must make alone in the funds’ interests. Trustees are normally shop stewards, within union structures, so they should have a forum to discuss and become familiar with the issues of union members and the resolutions of their unions.

There are many small pension funds, lacking economies of scale and therefore cost efficiencies. What’s your view on umbrella arrangements?

A better solution for us is bigger industrial or bargaining-council funds. Their advantage is that we will retain the ability to elect trustees.

When funds do go into institution-sponsored umbrellas, how important do you see the role of management committees as the workplace link between employer and employee?

We support this link to members. Hence our call to have worker trustees on the boards of umbrellas.

Unions have been inclined to oppose remuneration for worker trustees, on the basis that it is part of their jobs as shop stewards. Given that many trustees are quite well paid, for instance on umbrellas, shouldn’t this position be reviewed?

As a general principle, there is nothing wrong with payment of trustees. The problem is in the quantum.

Usually, trustees serve terms of only three years or so. Given the amount of training now required, shouldn’t they be encouraged to serve for longer?

We support trustees serving longer than three years provided they’re doing their jobs properly. They must be elected as required and report to members on what they do.

Several large institutions offer trustee training without charge. Are you happy with this?

No. Training should be independent of service providers. There are reputable organisations that provide training in accordance with Seta requirements and standards. We’d prefer that they be used.


“Independence” has multi-faceted connotations. In practising it at the level of pension-fund trustees, bearing in mind who has the deep pockets and self-imposed agendas to promote social responsibility, a number of considerations are moot. Amongst them:

  • Resistance to the provision of trustee training by financial institutions has stemmed from the intrusion of brand marketing and product promotion. But more often than not these days, institutions are sensitive to such objections. They’re accommodated by engaging credible trainers, with no ties to the institution, and paying for the face-to-face programmes with no obligations on the trainees. At most, the trainees will know the identity of the training sponsor and perhaps use its venue. In principle, there’s no obvious reason that this should be unacceptable;
  • When it comes to Batseta’s proposed legal & technical committee, this committee will presumably need legal and technical support. If advice is not to come from pension lawyers, who are themselves service providers, then there might be one of two ways to address it: either for trustees to consult with professionals who remain outside the committee, and then to make recommendations on an assessment of their viewpoints; or for the committee to express itself on principles rather than details. Pension lawyers and industry bodies are competent to address regulators of their own accord on the nitty-gritty of draft bills and circulars, as they do with enthusiasm, so there’s little apparent need for replication through the Batseta platform;
  • Then there are conferences and exhibitions. Not only will they be revenue-raisers, which require sponsorship from service providers, but they’ll also be fora for interaction with trustees. There’s nothing wrong with this either, for it doesn’t open the door to integrity compromises, provided they don’t degenerate into a feast of expectation for gifts and paid-for partying that sometimes blights similar events. Batseta can further distinguish itself by seeking stringent controls.