Your pension trustee owes you a good lot of excellent service. But do we even know what to expect to from them? The pension law allows private pension companies to set up schemes and administer them. This was surely an exciting development for the financial services industry as well as contributors. The SSNIT monopoly on pension was broken and that gave room for some ‘privitisation’ of pension funds. As exciting as that was, it also came with some responsibilities, prominent among them (or at least expected) are efficiency in managing the funds, heightened accountability and excellent customer service on the part of service providers and awareness on the part of contributors.
Considering the fact that some service providers can still be substandard in the face of regulations, contributors need to be aware of what is going on as part of planning for their retirement. What do we expect private trustees that have joined the fray? Section 121 of the ACT 766 describes the functions of Trustees thus;
A trustee licensed under this Act shall, in addition to other duties imposed by a trust deed, perform the following functions: (a) secure scheme registration; (b) appoint pension fund managers, custodians and other service providers and ensure their compliance with regulatory requirements or guidelines; (c) maintain investment policy statements and internal control procedures that may be prescribed by the Board; (d) ensure that the investment of funds of the scheme is diversified to minimize investment risk; (e) act as a provident trustee in financing relationship with its members; (f) discharge the duties of a trustee; (g) process transfer and payment requests as contained in the trust; (h) keep proper accounting records and a members’ register; (i) prepare and lodge annual audited financial statements, scheme and investment reports and other relevant records that the Board may require; and (j) perform other functions as may be directed by the Board. (ACT 766, Section 121)
Basically they are to set up scheme to place us in them, collect our contributions, oversee investments as done by fund manager, keep data of contributions, scheme investments and returns, scheme’s liabilities, all relevant administrative data, supervise the supporting service providers and generally manage the scheme. In addition, they should execute the transfer of your account when you are moving companies. Another important aspect is the administering of all costs to the scheme. Since cost has a direct impact on the value of the fund, this remains a very critical function.
Trustees are to help with accountability by providing regular statement to members of scheme. Retirement comes and they should process your benefit in a speedy and professional manner. The private trustees have not been as much tested with that yet may be except a few withdrawals from the 3rd tier and some situations of the death of contributors.
Therefore if your scheme does well, praise your Trustee, if it goes bad hold them to it. This goes for all trustees including SSNIT who are the trustees for the 1st tier scheme. I might just chip in that private pension trustees could be Corporate Trustees who are body corporates looking after your scheme or individuals who are licensed by the regulators.
Usually for companies who go for self-management of their pensions, a section of the employees would be nominated and presented to the regulators for licensing. This group of persons would then be the trustees of your workplace scheme. Whichever trusteeship option applies to your scheme, the same level of responsibilities is placed on them and you need to be aware to demand appropriately. It is the same for persons who are self-employed and have enrolled in a personal pension with a corporate pension trustees.
The regulator has positioned itself to deal with service issues of service providers and especially trustees who would make us unhappy. Never hesitate to reach the regulator if you suspect that your scheme is in trouble. Never hesitate to call for a change of trustee if the existing one is not performing. However, it is quite evident the business-like approach in which some of the trustees are delivering, and we hope time, competition and other developments would make the system better to the benefit of contributors.
This could also be seen of SSNIT who hitherto had somewhat negative perceptions about their service. They should get some credit for recent projects embarked on to enhance reach and services. Now with 4% of contributions sliced off from their collections they receive less and they have to be more efficient in managing what comes to them in order to meet their obligations. Remember you pay your trustee to work for your future and deservedly you should get your just reward.
Author: Yaw Korankye Antwi
The author is a Pensions Expert and a Certified Risk Management Professional.