Place pension funds management under closer scrutiny – Munroe
Director of the National Integrity Action Forum (NIAF), Professor Trevor Munroe, has called for more rigorous scrutiny in the administration of private and public pension funds.
"Lest you forget, it was ineffective governance which contributed to the near collapse of our banking and financial systems in the mid-1990s, ballooning our debt from seven per cent of GDP in the early ‘90s to laying the basis for the well over 130 per cent where it is today," said Munroe.
"The enemies of effective governance are secrecy, lack of information, absence of accountability,” Professor Munroe told participants at a pension forum organized by the Financial Services Commission at the Jamaica Conference Centre last Thursday.
“Conversely, the foundation principles of effective governance are openness, transparency and accountability," he said.
According to Professor Munroe, "these are principles which have been seriously lacking and remain deficient in so many aspects of national life. Pension management prior to the 2005 Pensions Act was no exception to this deficit of effective governance."
He urged trustees, members and pensioners to be more proactive in the role they play.
"No more can a trustee board be made up only of persons nominated by the sponsors or the employer alone or exclusively," said Professor Munroe.
He went on to suggest that "deviant behaviour too common in relation to either delay or non-transmission of statutory deductions by employers to tax authorities is not to be countenanced in relation to members' contributions to the fund."
"Regulation 10 G (of the Pension Act) requires, and you must insist, that contributions of the members shall be remitted to the investment managers within one week of the end of the month in which deductions were made,' Professor Munroe implored.
At the end of June 2011 funds under management in pension schemes, both superannuation and approved retirement schemes, totalled $255 billion with active membership of approximately 85,154.
That represents just about 6.71 per cent of the employed labour force.
The bulk of the funds under management, 45.56 per cent, are invested in government securities, while pooled funds stood at 25.12 per cent.
While the government is now in the process of establishing a contributory pension scheme for public sector workers, there currently exist a national insurance scheme which offers some benefits to government workers.
"May I add one concern and recommendation, which I made during my time in the Senate, that is, that the public pensions system be brought in the purview of similar pensions governance arrangements," he said.
Professor Munroe said it could not be right or effective governance that the National Insurance Fund, which has net assets of $60 billion available for payout in benefits, be under less rigorous governance arrangements than the private schemes regulated by the Financial Services Commission.
Proper governance arrangements of pension schemes are fundamental to achieving the national goals under vision 2030, he said.