The state of Governance in the Kenyan Pensions Industry.

This week, our lead consultant Patricia Wanjama under the kind invite from Zurit Consulting. had the honor of discussing corporate governance from a Pensions standpoint to Trustees representing various schemes around the Country, and as well members to various Schemes. The training objectives briefly included:
# A refresher on the Pillars of Corporate Governance, with an in-depth look at the frameworks under the Retirement Benefits Act Cap 197, and its compliance requirements based on the risk based model of supervision;
# We reflected on the various roles of the governance actors within the Pension Sector;
# We also discussed practical scenarios that Trustees and Members face and shared ideas on how future governance failures can be avoided.

To us, this was an eye opener to some of the governance challenges that ‘the men (and women) in the arena’ face, as aptly described by Theodore Roosevelt.

Some of these include:
* A feeling that the current 3 year term mandated for Trustees may be too short for a Trustee looking to make a long term impact for the benefit of the scheme.
* The state of the economy which sometimes impacts the viability of some Schemes.
* The need to socialise, not commercialize the Pensions Industry so as to innovate around preserving critical needs of retirees, the same way medical related pension products have been included.
* Relevant member engagement as regards educating the current workforce (especially employment members under the age of 35yrs) as to the importance of financial planning; having a retirement plan as one of their options.
* Increased collaboration with the Regulator to ensure the growth and oversight of the industry.

Else, the other governance pitfalls we discussed included:
i. Weak oversight and accountability-have clear lines of responsibility between service providers, putting in place proper governance frameworks, schedule Board evaluations and voluntary governance audits
ii. Regulatory non-compliance-to the Act and its regulations
iii.Poor investment management-lack of investments skill in the Board, poor due diligence of investments & lack of oversight over investment management processes
iv.Lack of transparency and communication- poor to no member update, low member engagement, non-disclosure of performance or update on member benefits and accurate calculations; and involvement in governance and decision making
v.Conflicts of interest- lack of identification, disclosure, management and misuse of fiduciary positions by various service providers
vi.Corruption and Fraud- payment irregularities, facilitation, unethical practices
vii.Inefficient administration- delay in benefit processing, document losses
viii. Outdated & irrelevant scheme and governance documents- in view of changing environment
ix.Lack of Trustee training and capacity building- for relevant knowledge and skills

Call us today to upskill your scheme on all matters governance!