Issue: April/June 2010


Become a PERV

Or adopt any other term that better describes the liveliness and excitement of what pensions are about. Find the right name and the right perceptions might more easily follow. No longer are pension funds about savings alone. They’re now a centrepiece in the ‘new capitalism’ gradually being born.

“Pensions are so boring,” said the young lady, a prominent TV anchor, explaining why she wouldn’t be interested in hosting a show on the subject. She’s right, partially and worryingly.

Central is the connotation that the word denotes. Pensions aren’t commonly perceived as an issue for the here and now. They’re something out there, for the distant future, that concerns pensioners – old people – which younger generations cannot foresee themselves becoming. The matter is too complex, too technical and too remote to distract them from indulgences at the shopping mall.

Often grudging about deductions made from their salaries or wages as contributions to an occupational pension fund, frequently on the lookout for ways to exit mandatory savings for diversion into household exigencies or consumption pleasures, they’re comforted by delusion. It’s that ‘somebody’ else will take care of their futures for them.

That ‘somebody’ will be one institution or another; an institution whose advertising promise is their financial security. Then there are pension funds, in the merry-go-round of members hopping off and cashing out with each jobs switch, under control of other ‘somebodies’; the trustees, who in turn delegate functions to supply lines of service providers, all of them responsible. And of course there’s government too, ultimately sitting atop the whole regulatory and legislative shebang, the provider of last resort.

It’s easy, for the many so inclined, to apportion responsibility at anybody except themselves. To the extent that they do, pensions are indeed boring. One day, which will surely come, the reality will hit. It will be too late. It will herald a social crisis in retirement funding every bit as ominous as HIV/Aids.

There’s an enduring paradox in consumer behaviour. People will trek from store to store in search of lowest prices, from foodstuffs to home appliances. They’ll scream at increases in interest rates that affect their mortgages and debt repayments. For these are things they understand. They can count the contents of their pockets.

But ask them about pensions, where lifetime savings reside, and chances are they’ll be clueless. They’ll know how their benefit statements this year compare with last. Yet will they know whether, let alone why, their investments performed as they have?

Or whether they have the right administrator; for that matter, who the administrator actually is or what an administrator is really supposed to do? Or whether costs to the fund – charged by the multiplicity of advisors, all seeking to help for a fee – are competitive and commensurate with value created?

Will the trustees themselves, supposedly accountable, have the answers? Certainly not all and possibly not most, depressingly.

Boredom and ignorance are intertwined. Both, in this context, derive from a cultural illness or a sense of impotence that pensions responsibility is beyond the remit of ordinary mortals. Put it down, if you will, to a lack of education or awareness.

Institutional efforts to overcome these barriers aren’t for want of trying, which isn’t to suggest that there isn’t a need for trying harder. That is surely the starter in jacking up the abominably low savings base and minimising the frolics to which vast pools of money are vulnerable.

There’s perhaps another dimension, arguably as critical. It’s in the image that “pensions” denotes. The word fails to represent fund members as shareholders, and hence as ultimate owners, of companies where their savings are invested. To have a pension is to be a shareowner. And to be a shareowner, amongst the aggregate of fund members in their millions, is to have real power in the world of corporate behaviour; if only it were realised and exercised.

word fails to represent fund members as shareholders, and hence as ultimate owners, of companies where their savings are invested. To have a pension is to be a shareowner. And to be a shareowner, amongst the aggregate of fund members in their millions, is to have real power in the world of corporate behaviour; if only it were realised and exercised.

As conservative French president Nicolas Sarkozy put it, the question is not what will replace capitalism but what kind of capitalism is wanted. There’s no need to embark on an extensive search for the answer. Key elements are already accepted. They’re set out in the UN principles for responsible investment which, at their core, embrace bottom-up people participation.

Globally, and no less in SA, pensions relate to empowerment. This applies to the individual (because no retirement money means no post-job purchasing power); to JSE-listed companies (because of the influence that pension funds are entitled to assert), and to the economy itself (because pension savings are a cornerstone of the nation’s capital).

To keep plugging away with more of the same marketing and educational messages is limited in their effectiveness for so long as “pensions” are seen as boring. To shift the perception from stultifying to stimulating, a rose by another name might smell a lot sweeter in the nose of the smeller.

For size, try “personal empowerment rights vehicle”. At least, when empowerment and rights are all the rage, it captures the pervasive dynamic of pensions. And, in case you hadn’t noticed, it offers a rather provocative acronym as well.

Better minds will think of something better. Go for it. But go.

Allan Greenblo,
Editorial Director

Audrey Mothupi

Mothupi...with thanks


This is the last Today’s Trustee edition in its present form. From the next edition, in July, it will be supported with sponsorship from the Academy of the Association for Savings & Investment South Africa (ASISA) which represents over 150 savings and investment institutions. The full text of the ASISA announcement is published elsewhere in this edition.

The partnership between the Academy and TT is to be heartily welcomed. It is intended to assist in the attainment of mutual objectives and it will considerably strengthen the publication’s base.

The character of TT editorial won’t change, not only because independence is fundamental to credibility. TT expresses views, and will continue to express views, with which neither the Academy nor ASISA might want to be identified.

There is promise of some significant changes. Amongst them:

  • More content of a purely educational nature customdesigned for trustees;
  • Website development as a means to supply updated information and to facilitate communication between trustees;
  • TT will no longer depend for its revenues on advertising and won’t need to seek it. Where advertisements are placed, the revenues will flow to the Academy for its initiatives in trustee education.

For having brought TT to this exciting phase, much appreciation is due to the numerous advertisers which have shared our vision and loyally supported the publication since its inception five years ago. Nobody has done so more than Liberty exco member Audrey Mothupi.

Without her, this stage would not have been reached. Her enthusiasm has been an inspiration. Liberty has always been the largest single contractual advertiser and, because of her, Liberty has substantially funded the database of trustees in a joint venture with TT.

As the publication launches into a new beginning, be assured that it will strive to maintain and improve the standard of service on which its reputation has been built. The expectations of the Academy, the members of ASISA and the retirement-fund industry as a whole, must be met. It’s the trustees who matter most.