Edition: March - May 2015
Editorials

FIRST WORD

10 and counting...up

Thanks to those who’ve made it possible.

cover mar 05

 

This edition marks the 10th birthday of Today’s Trustee. It’s a milestone worth recording, if only to elicit the response: “So long already?”

Long indeed. For those at the rougher end of criticisms, it’s probably long enough.

What’s certainly been long – and sharp, and stimulating – has been the learning curve. At the time, the content of that first edition in March 2005 seemed a proud achievement. These days, dusting it off after all these years, it looks overly ambitious. Yet its main objective, to help enhance awareness amongst retirement-fund trustees of their rights and responsibilities, has remained a constant.

The magazine must have had some success in what it set out to do or it wouldn’t still be around, let alone to have carved a niche in the retirement-fund industry. That it has changed reflects a decade of tumultuous change where, let it be claimed, a public forum to highlight and debate those changes could hardly have been more necessary; amongst policymakers, regulators, service providers and the myriad other role-players intimately involved in shaping the futures and fortunes of South Africans.

TT has focused, and will continue to focus, exclusively on retirement funds and predominantly on their governance. It means, at the institutional level, a concentration on trustees and principal officers. For theirs is the domain of real influence, provided they have the competence and confidence in asserting it, to make the policy interventions and run their funds in ways most likely to ensure the best outcomes for both members and the broader society.

The journey to encourage that competence and confidence has barely begun. So too with the consumer financial education that necessarily underpins it.

The environment in which TT began was wholly different from today. Back then, National Treasury had just launched its first discussion paper on industry reform. There was optimism that the 50/50 employer/member representation on funds’ boards would foster the co-determination intended.

HE SAID IT

The cover story in the TT launch edition was a comprehensive question-and-answer with Trevor Manuel. Lest we forget, he was then the widely admired minister of finance. With good reason. His comments in the interview were as prescient as they were aspirational, resonating with modern-day relevance. Here’s an example:

Shareholder activism is critical. The fact is becoming increasingly recognised internationally.

At the Nedlac retirement fund trustees conference, I compared the role of elected trustees to that of David pitted against the Goliath that the wealth, power and knowledge of fund managers represent. This is the spirit that we need to see permeate the trustee environment – the willingness to stand up for the rights of members and to protect their savings in the face of sharp finance talk.

Such vigilance should be directed not only at financial performance, but also the social desirability of investment plans. Such an approach contributes to good governance both of the fund and of the entities in which the fund holds equity.

We must realise that in SA shareholder activism is still a new concept. We are still to establish the parameters of trustee training. I therefore do not wish to be prescriptive on the matter, but do strongly encourage funds to exercise voting rights attached to the shares they hold, or at the very least educate themselves with respect to the issue.

A decade on, reflect.

The first King report on corporate governance, recognising the importance of pension funds as substantial providers of capital, was in an operational infancy for its recommendations on “sustainability” and “stakeholder engagement”. Such concepts, novel in the jargon of the day, were given traction by the Financial Sector Charter voluntarily adopted towards the end of 2004.

On reflection, these were the sorts of events from which progress might be measured. Much of it might be more perceptual than substantive, but they set the tone for the intensive dialogues and adaptations to follow. Reform has been incremental, umbrella funds have been introduced and doomsayers – following the flurry of tsunami-threatening determinations from youthful Pension Funds Adjudicator Vuyani Ngalwana – have been confounded over the past decade by the exceptionally strong share-price performances of the industry’s JSE-listed service providers.

Clearly, there’s a distance still to go on improvements in accountability and transparency throughout the industry (inclusive of the regulator) particularly in facilitating comparisons and competitiveness on charges (inclusive of curatorships).  The impact of fresh compliance requirements, from ‘treating customers fairly’ to PF130 on fund governance as legal directives, will need to be weighed against the cost effectiveness of their practical implementation.

A consolidated voice of independent trustees and principal officers, through Batseta, has yet to hold sway. Similarly, such initiatives as the voluntary Code for Responsible Investing and the gazetted Financial Sector Charter must still come fully into their own.

In all these, TT hopes to play a continuing and constructive role.

The 10-year milestone could never have been achieved without the unwavering support of our ASISA-related institutional sponsors. While they have been able to reach a targeted readership with their advertisements and advertorials, they have fundamentally provided the financial resource for the magazine’s distribution without charge to its unique database of retirement-fund trustees and principal officers. Special thanks are due to Liberty Corporate for its contribution to the costly maintenance of this database.

Without their approach of wanting to foster trustee communication as an industry service, the exercise would have been impossible. At no stage has any sponsor even intimated at a compromise of editorial independence. Ours has been a model partnership.

This is the occasion for expressing appreciation to them all.

Allan Greenblo,
Editorial Director