When speaking about pension the assumption is that everyone knows exactly what a pension is about, how to go about saving towards it but this is not always the case.For those of us and you who may have one or two questions we’ve got you covered. When shall the guideline be implemented? When shall the guideline be implemented? Implementation is from 1st July 2019 which will follow a tiered approach: Implement in Year 1 – Large Schemes >5bn – by 30 June 2020 Implement in Year 2 – Small Schemes up to 5bn – by 30 June 2021 What is the cost of implementing the guideline? What is the cost of implementing the guideline? The cost is varied dependent on the scheme although the Authority has ensured it is manageable as schemes have been provided with templates to ease implementation and a flexible approach to comply with the Guidelines. How does one ensure compliance to the guidelines? How does one ensure compliance to the guidelines? To ensure compliance, trustees are required to self-assess their scheme on a quarterly period on whether or not they have been able to implement the clauses stipulated in the Guidelines through the good governance checklist. Additionally, they are to fill and submit to the Authority the Appendix 5 -the Scheme Governance Disclosure statement. Does the guideline apply to umbrella schemes? Yes. The Guidelines apply to individual trustees as well as individual directors of corporate trustees. Therefore, the individual directors of the corporate trustees are required to adhere to the guideline. Can an administrator be a trust secretary? Yes. An administrator can be appointed as a trustee secretary of a scheme. The board of trustees may appoint a trust secretary from the staff of the administrator of the scheme. The trust secretary shall participate in the meetings of the board of trustees as an ex-officio member without the right to vote on any of the decisions of the board Should one attach supporting documents when reporting? Where supporting documents are available, a scanned copy can be attached to the good governance report checklist Is the training of trustees mandatory? How long should they stay before being trained? Yes. All trustees of the scheme should be trained in the necessary knowledge of carrying out their functions and responsibilities. Trustees should be trained six (6) months after being elected or nominated into the board of trustees. What are the repercussions of not complying with the guidelines? The risk score of the scheme will be reduced as some of the parameters of the risk score are dependent on the scheme’s governance. Ultimately, those trustees who refuse to comply can be disqualified as trustees. Trustee Term- Can the evaluation of the trustees be used as a basis of extending their second term if the evaluation is good? A good evaluation of a trustee’s performance in the board of trustees can be used as a basis of re-appointment but not a determinant. A trustee seeking re- election still needs to be elected or nominated by the members or the sponsor of the scheme. How many boards can a trustee sit on or chair ? A trustee can only sit on three (3) boards as a member and two (2) boards as the chairman of the board of trustees. Can an administrator or a Trust Secretary vote if they sit on the BOT? A trust secretary who has been appointed from the staff of the administrator of the scheme cannot vote in decisions made by the board of trustees. However, where one of trustees has been appointed the scheme secretary, they can vote. Are there term limits for service providers? Specify the 5-year term limits for auditors There are no term limits for service providers. Board of Trustees are required to constantly review the performance of the service providers ensuring that they conform to the service level agreement. The Guidelines recommend that trustees should conduct a review of the external auditor at least once every five (5) years and where they replace the External Auditor they may not reappoint the auditor for a two (2) year period. Is it necessary to change service providers every 3 years? It is not necessary to change service providers every three (3) years. However, it is good practice to review the performance of service providers frequently based on the service level agreement and where necessary change the service providers. In the first year of implementation, what areas of the Guidelines should be given priority and which areas should they start with? The Authority has conducted a survey to determine the areas where schemes have been able to implement and the challenges they have experienced while setting up governance structures. The survey will guide the Authority to identify priority areas that schemes should address. Schemes will be required to submit quarterly reports that will be used by the Authority to monitor progress in implementation. Scheme with current compliance issues- what is the way forward in terms of the guidelines? Schemes with compliance issues and existing remedial plans shall be required to adhere with the set remedial plans except where advised differently by the Authority. More clarity is required on the conflict of interest policy; and in the agenda what does it mean? Schemes should have a conflict-of-interest policy that guides the manner in which trustees deal/handle conflict of interest between the trustee and the scheme or between the service providers and the scheme. To ensure trustees record conflict of interests the trustee meetings should have an item on conflict of interest declaration. Does the trust secretary have to be a lawyer? No. It is only preferable for one to be a Lawyer. A trust secretary can also be one who possesses a law qualification, a certified public secretary or has prior experience as a trust secretary. Who determines whether one is Financially Qualified? The body regulating the qualification determine who has the requisite qualification. In this case the Institute of Certified Public Accountants Kenya (ICPAK) will determine those who are financially qualified. Does the scheme need to have Business Continuity Plans (BCPs) Schemes do not need to have Business Continuity Plans (BCPs). However, schemes should engage service providers with adequate BCP plans that are reviewed at least once every year. Do schemes need to have risk registers? Can the Authority assist in developing them? Yes. Schemes need to establish and maintain a risk register. The risk register should identify the risks, the board’s assessment of the risks and the measures implemented to manage the risks identified. The Authority is currently developing a template that will assist schemes without a risk register develop one. How can trustees be insulated from Money Laundering and Corruption? Board of Trustees can take up an indemnity cover to protect them from risks associated in carrying out their duties. However, where they are found culpable of not exercising the fiduciary duty or contravening the Law they can be charged individually or collectively as trustees of the scheme. Is it in order to co-opt expertise on an advice basis if there is a particular skill gap in the Board of Trustees? Yes. Trustees can engage the services of experts to provide consultancy services or to co-opt experts to sit in the committees of the board to provide guidance to the board of trustees provided that such engagement shall be done through a competitive process and the process provided for in the scheme rules of the scheme. Can RBA review the time period required to fill a board vacancy to less than 12 months? Yes. Trustees can engage the services of experts to provide consultancy services or to co-opt experts to sit in the committees of the board to provide guidance to the board of trustees provided that such engagement shall be done through a competitive process and the process provided for in the scheme rules of the scheme. RBA should provide remuneration ranges for trustees Yes. Trustees can engage the services of experts to provide consultancy services or to co-opt experts to sit in the committees of the board to provide guidance to the board of trustees provided that such engagement shall be done through a competitive process and the process provided for in the scheme rules of the scheme. What is the role of the sponsor in trustee remuneration? The role of the sponsor is limited in trustee remuneration. The Act gives mandate to members of schemes to approve the remuneration to be given to board of trustees. However, the board of trustees need to seek concurrence from the sponsor while drafting the remuneration guidelines that propose the remuneration to be given to trustees
