The Relevance of Ethics and Values in Pension Fund Management.€¦ · •Due diligence...
Transcript of The Relevance of Ethics and Values in Pension Fund Management.€¦ · •Due diligence...
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The Relevance of Ethics and Values in Pension Fund Management.
Phineas P. Sesinyi (Mr.)
Date: 25 February 2019
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Presentation Outline
The Industry at a Glance
Fund Governance
Ethics and Values for Pension Fund Management
Code of Conduct
The Regulatory Fit & Proper Rule
Conclusion
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Retirement Funds Industry @ a Glance
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Retirement Funds Industry
(90)
Retirement Funds
(86)
Pension Funds
(Stand Alone)
(80)
Umbrella Funds
(6)
(282 sub-funds)
Related Business
(4)
Fund Administrators
(4)
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At a Glance (2017)
259 301 Members
Total Pension Assets
P82.2b 34%
COVERAGE
12.3 % of Population58 % of formal
working Population
74%
22%
4%
Equity
bonds
cash
other
66%Offshore Investment
Local Investment
45% of GDP
82.275.173.8
59.458.751.4
P E NS
I O N
P ’Billion
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Fund Governance
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• Section 13 of the Retirement Funds Act (2014) states“that every licensed Fund shall have a Board , whichshall be the governing body of the Fund”
• As a governing body, the Act requires the Board tohandle the daily operations of the Fund and ensure thatits administration of the Fund comply with the Act andthe Fund Rules.
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Fund Governance
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• The Board has a fiduciary responsibility towards the Fund members to act with due care ,diligence, in good faith, and in the best interests of the members (s14).
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Fund Governance
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• The fiduciary responsibility brings the Question of Ethics and Values for Board members.
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Ethics and Values
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• Ethics are moral principles that govern a personsconduct;
• Values are fundamental beliefs that a person has.
• Section 14 (2) requires the Board to adopt a Code ofConduct (or moral principles) /Ethics for the standardsof conduct for its Board members.
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Ethics and Values
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• Regulation 15, requires that Boardmembers and other service providers signthe Code of Conduct.
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Code of Conduct (Ethics and Values)
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• The Code of Conduct shall state the Values of the PensionFund which must be embraced by both the Boardmembers and stakeholders/service providers ( R15 (2)(b)).
• To monitor the Board members’ conduct andperformance towards the Code of Conduct , Regulation 14of the Retirement Funds Regulations, requires that aBoard assesses its performance annually and submit areport to the Regulatory Authority.
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Regulatory Fit & Proper Rule
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• Above the Code of Conduct, the Board membersundergo the Regulatory Fit & Proper Assessment,prior to serving in the Board of a Pension Fund.
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Regulatory Fit & Proper Rule
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• Qualifications and technical skills, theRegulatory Authority shall also assess for Fit &Proper, subject to these key indicators:
i. Criminal Indicators: Dishonesty,embezzlement of funds, criminalconvictions, Money Laundering…
ii. Financial Indicators: Financialmisconduct, judgement debt, bankruptcy…
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Regulatory Fit & Proper Rule
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iii.Supervisory Indicators: history of non-compliance, failure to cooperate, providingincorrect information…
iv. Other indicators: disciplinary measures byprofessional bodies/association, disqualified fromany company directorship…
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In Summary
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• Having moral principles determines the core valuesthat guide the sustainable management of a PensionFund.
• The Board members have a fiduciary duty towardsmembers, ensuring that they act in utmost good faith,professional, ethical and in the best interests of themembers at all times.
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In Summary
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• Proper conduct of Board members provides a fertileground for sustainable growth of a Pension Fund.
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• Proper due diligence on boarding serviceproviders.
• Sustainable investment strategies.• Due diligence measures-AML/CFT.• Proper monitoring of SLAs.• Annual Board Performance Assessments.
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Thank You !
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