OVER 100 trustees of pension fund boards are facing the chop for exceeding their term limits and for failing to heed the regulator’s instruction to vacate their positions, businessdigest reports.
A board of trustees presides over a private business, nonprofit organisation, or charitable foundation, whereas a board of directors may preside over a public corporation, private business, or non-profit organisation.
Pension funds have a board of trustees appointed or elected to manage a fund on behalf of and for the benefit of fund members.
Last year, the Insurance and Pensions Commission (Ipec) gave the offending trustees up to March 31 this year to vacate their positions after preliminary findings from offsite inspections revealed that some had served for between 10 and 20 years, in breach of governance procedures.
“The SI (Statutory Instrument) 8 of 2017 introduced the term limits, two-term limits for a pension fund board. The idea is to allow renewal. Also, it’s part of good governance. Once there is too much familiarity, for example, the next 30 years, we are like there is really nothing to come out,” Ipec Pensions and Life director Cuthbert Munjoma said, in a recent interview.
“It becomes an insatiable situation. But if you need, then have renewal. When new people come in, it will ensure governance, accountability, continuity, and oversight is not compromised. So, that was the thinking. But, the weak point with SI 8 of 2017 was it didn't speak about the transition.”
He said that the Pension and Provident Funds Act [Chapter 24:32], effective September 2, 2022, was now clearer in terms of transition.
“If you have already served 10 years before, you are no longer eligible for reappointment post September 2022-23. The assumption is you had a term limit, you are bearing it,” Munjoma said.
- In Conversation with Trevor: ‘Why I am passionate about start-ups’
- In Conversation with Trevor: ‘Why I am passionate about start-ups’
- Econet Life launches micro-pension fund product
- Wafer-thin capital markets send shivers
Keep Reading
“One hundred and thirty-five members of boards of funds have terms of offices. Beyond the term, limits 33% of Trustees (Board of Fund Members) do not have COP (certificate of proficiency).”
Munjoma, however, said despite earlier communication, compliance had remained very low with scores of trustees still clinging to their positions.
He added that some of the trustees were not making it during the fitness and probate assessments.
“So, we are saying it’s law, it's not us. It's the lawmakers. Our role is to enforce compliance. If you had served before, fine. So, we did an exercise to say how many have exceeded term limits. But the idea is to comply with this new law, where if they are due then you are not eligible,” Munjoma said.
“So, the message went out. Anybody with a term that is due should leave or at least renew it. These guys are sent to us for fitness and probate assessments. If one wants to be a board of trustees, they elect you, they nominate you, come to Ipec. They see the relevant qualifications, experience, everything.”
He said it was important not to duplicate skills.
As of last year, only 31% of pension fund boards had properly constituted boards of trustees as provided for in fund rules, while 42% had no boards.
