Sunday, September 27, 2020

BIFM drills Botswana Pension Funds Trustees on best practices

The Board of Trustees have been urged to ensure that financial reports issued by their respective Fund enable stakeholders to make informed assessments of the Fund’s performance and its short-medium and long term prospects.   

The advice was made at the annual BIFM trustees’ training that was held in the capital Gaborone this past week.

Globally, retirement Funds remain an important part of the institutional investor industry which consists of retirement funds, asset managers, insurance companies and custodians, nominees and service providers who act under mandate in respect of any investment decisions and activities.

It transpired at the BIFM training that Funds are losing value because the companies/entities that the Funds are investing in there tend to be mismanagement.

This can be evidenced by the recent scandals that one of the biggest funds in the country – Botswana Public Officers Pension Funds (BPOPF) found itself in.

Making a presentation on the, ‘ingredients for succeeding as Trustee on an effective pension Fund,’ Dr Len Konar, of Outsourced Risk and Compliance Assessment said the Board of Trustees should comprise of the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively.

In appointing electing and appointing the Board of Trustees, Konar advised that “employers or sponsors should use their powers of appointment to ensure that the Board has members with the necessary expertise and experience. They should use external expertise on specific matters outside the knowledge, skills and expertise of the board when required.”

Members of the trustee Board he said they should act with independence of mind, regardless of who elected or appointed them. They should also not act as representatives of their constituencies and meetings of the Board should be understood as forums for collective bargaining. Doing so causes conflicts between the interests of those who appointed or elected the board members and the interests of the Fund itself.

The Board should ensure that its arrangements for delegation within its own structures promote independent judgement and assists with balance of power and effective discharge of its duties. It is further recommended that the Board should ensure that it has access to professional and independent guidance on corporate governance and its legal duties and also that it has support to coordinate the functioning of the Board and its committees.

In all of the recommendations, Konar assured the participants that he will soon develop a code of conduct which will be signed by the Funds on an annual basis. He shall also develop and annual Board of Trustees plan and develop a board charter based on organisation regulations. These developments were welcomed by the participants.

The macro view and benefits of corporate governance stipulates that retirement funds that follow and mandate responsible investing principles and practices wield significant power for enhancement of the checks and balances that are essential for an overall effective ecosystem of corporate governance and positive value creation     

The BIFM Trustee’s training was this year held under the theme ‘Good pension fund governance and responsible investing.’

The BIHL subsidiary says the initiative to give back and equip the trustees of the various pension funds that BIFM manages, with the skills they need to be successful managers of their Funds.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.