RBA orders mandatory training for all pension scheme trustees

RBA Chief Executive, Edward Odundo. Majority of trustees are not trained in best management practices. [PHOTO: FILE]

By NICHOLAS WAITATHU

Majority of trustees managing retirement benefit schemes in the country are not trained in best management practices.

According to the Retirement Benefit Authority (RBA) only two to three trustees are trained in every scheme. There are 1,200 registered pension schemes in the country. 

The regulator has issued new guidelines requiring all the trustees to be trained by the end of 2014 in order to enhance sound management.

 The regulator is currently implementing the Retirement Benefits (Capacity Building of Trustees of Retirement Benefits Schemes) Prudential Guidelines Number RBA 001 of 2013.

Retirement benefit schemes according to the regulations are supposed to have a minimum and maximum of three and nine trustees respectively.

RBA Chief Executive Edward Odundo said the new guidelines seek to facilitate training for the better administration of retirement benefits schemes in the country.

“Trustees have a huge responsibility of ensuring members’ funds are prudently managed and invested,” he said in an interview.

This, he added, means that trustees must understand their fiduciary duty, as they are personally liable for their actions.  He confirmed that in the 1,200 registered retirement benefits schemes in the country, only a third of the trustees have been trained forcing the regulator to enhance the training.

Those already trained, he said, have not benefited the schemes, owing to the current labour market dynamics, for example, changing of jobs. “There is need to train the trustees so that they can exercise sound management of the members. More so to expose them to the changing market scenarios, “he said.

Other players

He added the trustees require more training to enable them relate well with other players in the industry such as fund managers, administrators, custodians, and financial experts.

RBA in conjunction with the College of Insurance, (Kenya), Association of Retirement Benefits Schemes and the Humber Centre for Employee Benefits (Canada) has developed a trustee-training programme dubbed The Retirement Benefits Trustee Certification Programme.  Odundo stressed that each scheme shall be required to give evidence of compliance with the outlined guidelines, which would include but be not limited to a certificate issued pursuant to training under the trustees development programme.

In June this year, National Treasury Cabinet Secretary Henry Rotich, while presenting the Sh1.6 trillion budget in parliament, proposed far reaching changes in some key industries in the financial sector, the pension industry being one of them.

The changes are aimed at overhauling the RBA Act to create a new law to perform separate functions.

One Act of parliament will oversee supervision of the entire industry while the other one will police pension institutions.  Last year, the value of pension assets at Sh548.8 billion was equivalent to 14.5 per cent of the country’s gross domestic product but below the international benchmark of 20 per cent and vision 2030’s target of 30 per cent.

Odundo said reforms in the sector would enhance capacity along the value chain. 

“All trustees and directors of retirement benefit schemes must undergo training by the end of 2014,” he added.