Frequently Asked Questions

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?

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?

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.

    1. 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.

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.

 

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

Where supporting documents are available, a scanned copy can be attached to the good governance report checklist

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.

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.

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.

A trustee can only sit on three (3) boards as a member and two (2) boards as the chairman of the board of trustees.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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