Servant as leader: Critical requirements for the appointment and training of retirement fund trustees

• Main Authors: L.M. Magda Hewitt, Faul La Grange
• Format: Article
• Language: English
• Published: AOSIS 2017-09-01
• Series: South African Journal of Human Resource Management
• Subjects: pension funds; profile; qualities; fund governance; legislative; character; human resources practitioner
• Online Access: https://sajhrm.co.za/index.php/sajhrm/article/view/879

Orientation: The South African retirement fund industry ranks among the 15 largest retirement fund industries internationally, with some 8 million members and assets under management of close to R2 trillion. However, to be successful, retirement funds need good governance. Research purpose: To explore the most critical servant leadership qualities required that can serve as profile in the selection, appointment and training of retirement fund trustees (RFTs) to serve on boards of trustees of retirement funds in the South African context. Motivation for the study: The South African National Treasury’s retirement reform proposal clearly articulates government’s concern for the poor governance of retirement fund assets by appointed boards of trustees and the broader implications on social and economic security in retirement. It promotes the regulation of standards relating to the minimum qualifications and expertise needed to be appointed to serve on a board of trustees (BoTs). Although the measures proposed by government to improve fund governance and the role of the RFTs are sound in principle, it does not inform the character, leadership qualities or leadership competence desired for RFTs, thus leaving the management of funds in the hands of people who must make investment decisions when they themselves are not fully committed. Research design, approach and method: The research question was addressed through an extensive literature review and a qualitative methodology using a semi-structured interview; fieldwork that included personal observations; and notes with six active, high-profile, respected, purposefully selected RFTs. An interpretive approach was adopted to provide elaborative interpretations of phenomena without having to rely on numerical measurement. Main findings: A strong similitude exists between servant leader qualities, as found in the literature, and those qualities identified and required to be appointed as a RFT. Literature findings support that limitations impacting on good retirement fund governance are (1) lack of knowledge, (2) lack of experience, (3) independence and (4) lack of capacity of RFTs. Legislative and regulatory framework changed in recent years, resulting in an increased complexity in managing the affairs of retirement funds. A great need for qualified and skilled RFTs was expressed. Practical and managerial implications: Servant leadership qualities proved useful to profile and aid the selection, appointment and training of RFTs in a meaningful way, thereby benefiting the broader South African retirement fund industry and social welfare of all South Africans. The importance of the role human resources practitioners can play to aid their employees to correctly select and appoint a RFT cannot be emphasised enough. Contribution: The many practical contributions of the study were evident from the real and tangible outcomes of using a servant leader’s profile to select, appoint and train prospective RFTs to serve on the BoTs of pension funds, to ensure that social justice is upheld for those members of society who cannot protect themselves.