Edition: Dec 2014 - Feb 2015
Fuel for debate
There's a vital governance issue on the matter of independence. It'll have be properly thought through and resolved.
Here's the problem:
The supplementary question, then, is who will assess the principal officer's performance. Put differently, it's about what will happen in circumstances where the sponsor/employer is happy but the trustees aren't.
Don't send your answers on a postcard, thanks, because SA Post Office cannot promise delivery. But please do email your suggestions to TT or, better still, Batseta. Since it's the representative body for principal officers and trustees, it will need to provide guidance on getting between a rock and a hard place.
On the one hand, it would support a position where the PO is employed and remunerated exclusively by the fund. On the other, it won't want to prevent the sponsor/employer from contributing because the contribution would result in a saving for the fund.
This is how an anonymous query succinctly conveys it:
I am of the view that the PO must functionally report to the chairperson and board of trustees as the work of the PO is in relation to executing the business of the fund. The employer is merely the sponsor of the fund, according Financial Services Board circular PF 130.
At present with my fund, however, the PO reports to the company's remuneration manager. This would appear to be a conflict of interests, especially taking into account s13A of the Pension Funds Act.
So I'm asking where would be the most appropriate place for the office of the PO within the employer's business to ensure credibility of the role in the fund and to avoid potential conflicts with the employer.
As the PO is employed and remunerated by the employer, there needs to be an administrative link for salary, budgeting, leave, training and other employeeadministration matters. Yet I have noted that many POs employed by other employers are reporting for administrative purposes either to the human-resources executive, the chief financial officer, the chief operating officer, the group risk executive or even the chief executive officer. This will obviously be influenced by the employer's particular structure.
Then there is the PO's performance assessment. It cannot be done by the employer as the PO executes work for or on behalf of the trustee board. The employer would at best provide a highly subjective opinion, contrary to the board which has direct oversight of the PO's work.
These are conundrums, to be sure, for the pension-funds regulator too.