Title - Now more than ever - Beneficiary Funds & Trustees Duties
Title BCom University of the Witwatersrand Certified Financial Planning (CFP) Advanced Diploma in Financial Planning (University of the Orange Free State) Chairperson of the Financial Planning Institute s Employee Benefits Committee Member of the FIA EXCO Sits on the editorial board of the Financial Planner Jennifer is the MD of the Retirement Fund Division and has a wealth of employee benefit experience and serves on several of the Industry Boards where she is able to give input to the various authorities regarding policy issues.
What went wrong iro the Living Hands debacle? Gaps in legislation Governed by the Master of the High Court iro Trust Property Control Act No regulatory body Little supervision
More protection for Beneficiaries New Beneficiary Funds wef 1 January 2009 governed by PFA: Taxation? S13B license for administrators Rules approved by FSB
More protection for Beneficiaries New Beneficiary Funds (Cont d) Access to the Adjudicator Trustees need to comply with PF 130 Investments need to comply with Regulation 28 Submit Annual Financial Statements to FSB
Living Hands losses would at the very least be mitigated had they been regulated via the PFA Regulation 28: 5-10% investment in the employer Annually audited financial statements PF 130 Principal Officer and Auditors whistle blowing powers
What is a Trustees role iro Beneficiary Funds? Discharging their duty in terms of S37 C Selecting and reviewing beneficiary funds
When are monies paid into a Beneficiary Fund? S37 C: Identify and trace dependants Equitably distribute Decide on appropriate manner of payment
When do we pay monies into a Beneficiary Fund? 1. Pay directly to the beneficiary Unless the beneficiary can t manage their own affairs 2. Common law practice to pay to legal guardian Unless guardian isn t capable of managing the benefit
When do we pay monies into a Beneficiary Fund? Factors to consider: Amount of benefit Guardian s financial literacy Ability of the guardian to administer the monies Maintenance needs of the child
When do we pay monies into a Beneficiary Fund? No legally appointed guardian Care giver has a fiduciary duty toward the beneficiary No legal duty Care giver may change
Trustees duties - selecting a Beneficiary Fund Trustees have a fiduciary duty: act with due care & diligence: Those entrusted must prudently manage monies Ensure beneficiary has ongoing financial support
Trustees duties - selecting a Beneficiary Fund PF 130 requires service provider policies Policy to set out: Governance Operational requirements Initial & ongoing reviews
Service provider policy governance issues Governance issues Details of the Trustees independent trustees / sponsor Ben Fund Trustees - Code of Conduct Conflicts of interest PI insurance
Service provider policy governance issues Governance issues (Cont d) Governance policies iro SP s / independence? Investment policy statement Rebates or fees earned by fund s SP s Financial statements
Service Provider Policy operational issues Operational Issues Fees Standard and delivery on service level agreements Turn around times: Responding to beneficiary s queries Paying out income / capital to beneficiaries Facilities to liaise with beneficiaries: Country wide offices?
Review Trustees to investigate soundness / appropriateness of beneficiary fund: Inception Periodic review
In a nut shell Beneficiary funds provide more protection Trustees duty Decision as to payment method To ensure appropriate beneficiary fund selected & continue to be most appropriate to protect beneficiaries interests
Any Questions?