Business

Role of trustees in management of pension schemes

PIA FORUM with DOREEN KAMBAGANJI
The Board of Trustees of pension schemes hold fund assets in trust for their beneficiaries of the pension schemes. They stand in a position of trust or fiduciary relationship and therefore must always act with integrity.
The role of a pension scheme trustee is crucial to the delivery of good member outcomes. Pension scheme trustees therefore play an important role in ensuring effective scheme governance in management of schemes. The trustees hold the legal title of the pension scheme assets and are therefore supposed to ensure that those assets are used to provide benefits for members.
According to the Pension Scheme Regulation Act No. 28 of 1996 (as amended by Act No.27 of 2005), the trustees have the management and control functions and are appointed by both the employees and employers (50%-50%). They are therefore responsible for the administration of the pension schemes and compliance requirement that apply to these schemes.
However, since trustees are not experts in pensions, they appoint experts called pension scheme administrators and managers. You should have a clear agreement with the provider about what services they are providing, to what extent and standard, what action will be taken if the service falls short of that standard and who pays for the remedial work.
Some services that can be offered by administrators include putting appropriate processes in place to ensure proper record keeping, capturing and managing scheme information. Administrators may also provide member communication services, sending out annual statements and other member documentation.
Fund managers will advice you on investments and will invest on your behalf. Administrators and managers have to work in line with the Act.
Trustees may also delegate the management of the scheme to look after the day-to-day administration of the scheme to a pension provider. This may include adding new members and ensuring records are complete and accurate.
Some other key duties of trustees are:
• Receipt of pension contributions from the employer
• Making sure that pension contributions are prudently invested
• Monitoring the various service providers such as fund managers, administrators and
custodians
• Ensuring and taking appropriate measures to protect the assets of the fund
• Formulating rights and obligations of the members in the pension plan rules, a copy of
which shall be given to each member
• Provide each member with an annual benefit statement showing members actual benefits
and the members accrued portable benefits
• Carrying out actuarial valuations every five years and submitting a copy to the Registrar
• Preparations and timely submission of quarterly returns and annual audited financial
statement
• Communicating matters relating to the same to the members
Trustees need to communicate certain information to members of the scheme. The information communicated should be accurate, clear, understandable and engaging, and meets members’ needs from the point they join the scheme until they retire.
It is common knowledge that many members have little or no interest in their pension until they reach retirement. Therefore, it is the duty of the trustees to spur this interest and keep the members engaged by providing accurate, clear, understandable and engaging. Information should also be provided at the right time using a right channel.
Remember that you cannot be a trustee if:
• Have been sentenced to imprisonment by a court for fraud or dishonesty for six months or more
• Are bankrupt
• Have been previously involved in the management or administration of a scheme which was deregistered for any failure on the part of management or administration
• Disallowed under any other written law from holding such an office
• Considered by the Board to be in any way detrimental to the scheme
For more information or queries, contact on us on email: pia@pia.org.zm or call us on 0211 251008. You can also visit our website: www.pia.org.zm






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