Investment choices undermined – IoDZ

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Over half of trustees managing the country’s pension funds are untrained, the Institute of Directors of Zimbabwe (IoDZ) said last week, warning that this could be the reason why these schemes are losing value.

Source.

In a research presented at a financial markets conference in Harare last week, IoDZ chairperson Susan Mutangadura said she was worried that there was little intervention by trustees of pension funds in the way funds were administered by fund managers.

About 24% of these trustees seldom queried the decisions made by fund managers, she said, warning that these shortcomings resulted in resources being wasted.

Pension funds are key investors in the equity and property markets.

“Research into pension funds, which are key investors, has shown that formal trustees training has been undertaken in less than 50% of schemes,” Mutangadura said.

She said the research was conducted by the Insurance and Pensions Commission’s (IPEC).

“Thirty two percent of schemes trustees rarely disagreed with external advisers (auditors, legal advisors and actuaries) (and) 24% never disagreed with their advisors…pension funds have lost value. My question is therefore if we improve the governance structures, could we see an improvement in performance? When the market moves will we be ready?” Mutangadura asked.

She said while these technical skills are important for the management of pension funds in the country, what was more important was to have high levels of corporate governance in pension funds, institutional investors and insurance companies, who are the key investors on the financial markets.

She said appropriate governance practices would speak to the core of the fund and aims at working towards creating the best possible outcomes for all stakeholders.

Mutangadura called for responsible investment, which integrates environmental, social and corporate governance considerations into investment management processes and ownership practices.

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