|
FIMA may have fundamentally changed the economics of running a small retirement fund.
The issue is no longer simply whether your fund can comply with FIMA. The more uncomfortable question for trustees is: Can it afford to comply and still remain economically viable? FIMA expects substantially more from a board than attending meetings and approving papers. Trustees must exercise meaningful oversight of governance, risk, compliance, service providers, and the fund's operations, supported by policies, controls, systems, records, and evidence that these responsibilities are actually being discharged. And all of this comes at a price. Administrators face more demanding requirements for systems, backups, trained staff, compliance procedures, financial resources and reporting. Add actuarial services, auditing, legal advice, compliance, technology, cybersecurity and increasingly sophisticated governance requirements, and the cost burden begins to mount. Service providers are already reviewing their fees to reflect the additional work FIMA imposes. For a large fund, these costs can be spread across thousands of members and substantial assets. A small fund must carry much the same regulatory infrastructure over a far smaller base. At some point, the cost per member, or as a percentage of fund assets, may become difficult to justify. That does not mean every small fund should immediately move into an umbrella fund. Independence, employer-specific arrangements and control over governance may have real value. But FIMA means trustees can no longer assume that the structure which worked yesterday remains appropriate tomorrow. Every board should therefore be asking: What does it now cost us to operate our fund? What has FIMA added to that cost? What will it cost in another two or three years? And are our members still receiving sufficient value for maintaining a stand-alone fund? The article leaves trustees with perhaps the most important strategic question of the new regulatory era: Can our fund remain small enough to be personal, but strong enough to carry the cost, expertise and governance expectations FIMA now demands? If your board has not yet asked that question, this article should be on the agenda of your next trustee meeting. Read the full article contributed by Vincent Shimutwikeni & Sabrina Jacobs: Directors - Retirement Funds Institute of Namibia (RFIN) here |
||||
|
|
||||
| |
|
|||