Alexander Forbes Financial Services last week Thursday unveiled their first ever aggressive plan aimed at educating trustees of pension funds in Botswana on some of the most pertinent issues relating to the management of retirement funds.
The Pension Fund Trustee Guide in Botswana, launched at the luxurious Phakalane Golf Estate, included a training seminar for trustees on matters pertaining to the efficient and prudent management of Pension Fund monies on behalf of members.
Motshabi Mokone, a consultant at Alexander Forbes Financial Service, said the launching of the Trustee Guide and other on-going training programmes aim to strengthen trustee education resulting in achieving the objective of developing a profitable and highly developed retirement funding industry.
The fund is currently the second largest industry in the Botswana market, (after mining industry), with total assets of approximately P24 billion. The industry was boosted by Botswana Public Officer Pension Fund (BPOPF) which was established in 2001 and now stands at P 13 billion.
The launch of the Trustee Guide also adds to calls in the financial sector of re-aligning the local situation to the international demands entailing strong regulatory measures and accountability at all levels.
It is also hoped that, with the launch of the document and the on-going training programmes, the trustees will be able to understand their fudiciary duties and mandates to ensure that the fund performs to expectations.
It is thought that the equivalent of the Financial Service Authority (FSA), to be discussed by parliament at the next seating, will take over the regulation of the fund. Presently, the fund is regulated by the Ministry of Finance and Development Planning, through the office of the Registrar of Pension and Provident Funds, and Botswana Unified Revenue Services.
“In view of the size of this market, and the responsibility that comes with being a trustee, we at Alexander Forbes Financial Services believe that it is imperative that trustees are equipped with the necessary skills to efficiently and professionally manage employees’ retirement fund savings, in accordance with the Pension and Provident Funds Act and the Income Tax Act,” she explained.
She said from the government’s perspective, a successful retirement industry is very important as it reduces the burden of poverty and destitution, which may be exacerbated by dependent citizens beyond age 60, who have not made provisions for their retirement.
“In recognition of the important role bestowed upon trustees, we decided to design this Trustee Guide,” she added.
Moreover, Mokone explained that the objective of retirement planning is to provide income to individuals once they reach “post-employable age”, which in Botswana ranges between 55 to 60 years of Age. Mokone stressed that having been employed for approximately 30 years, and being accustomed to a monthly salary, it is important for individuals to make provisions for this time where they will no longer be deemed employable, but still need income to sustain their basic needs.
Though some individuals are able to make these provisions on their own, Mokone highlighted that employers have identified that the majority of employees are unable to maintain these long-term savings at least to a level that will guarantee a comfortable retirement.
As a result, Mokone said employers have set up pension/retirement funds for their employees, where the employer assists employees to save for retirement by contributing a portion of the employee’s salary towards a retirement savings account, which is then paid to the employee once he/she reaches retirement age, as a replacement of their monthly salary.
“These funds are managed by a board of trustees. It is these Trustees who are ultimately responsible for the effective management of the P24 billion worth of assets in the retirement fund industry,” she added.
Mokone said this gives the employee the comfort of knowing that once they reach retirement age, they are guaranteed a monthly income that will allow them to retire comfortably, and maintain the lifestyle that they were accustomed to while actively employed.