Trustee, manco and member learning for 2025

Toni Cantin, Head of the ICTS Academy

The South African retirement fund industry is changing, and it is more important than ever for trustees, manco’s and members to understand how these changes affect them. Trustees and management committees must be well-informed to make the right decisions, while members need financial knowledge to manage their retirement savings wisely. Here are some key topics that will be important in 2025:

New rules are shaping how retirement funds work. A big change is the Two-Pot Retirement System, which affects how and when members can access their savings. Trustees must help members understand how to make the best choices for their future. The Conduct of Financial Institutions Bill is a total overhaul of the retirement legal landscape that will affect trustees, manco’s and service providers. Adherence to this piece of principles based legislation (when promulgated) will require deep understanding of its implications.

Many decision makers may not be aware that the Protection of Personal Information Act (POPIA) requires ongoing training to remain updated and vigilant on practices to follow and breaches that need to be reported to the Information Regulator.

The Financial Sector Conduct Authority (FSCA) also sets rules to help funds stay on track. Particularly topical right now is the Joint Conduct Standard 2 of 2024 on Cybersecurity and Resilience with which the financial sector must comply by 1 June 2025.  Retirement funds are an attractive environment cyberattacks, so cybersecurity is a top priority. Trustees and manco’s must know how to protect fund information and prevent cyber fraud.  Pension funds are prime targets for scammers, and members need to be aware of phishing scams and other tricks used to steal their money. Simple cybersecurity training can help members and trustees stay safe online.

With the economy being unpredictable, trustees and manco’s need to know how to invest their members’ benefits wisely. Understanding investment strategies, managing risk, and considering good housekeeping factors like  (ESG principles), is recommended.

Trustees should learn how to read annual financial statements to keep track of a fund’s health and ensure they balance their books. And manco’s should at least be able to understand the financial information, like cashflow statements and assets & liabilities matching reports that may be presented to them.

For members, financial education is key for themselves and their families. Many do not understand the basics of financial planning or the benefits of keeping money invested rather than withdrawing it early. Learning about the effects of early withdrawals and how savings grow over time can help members make better decisions. In fact, this is so important, the FSCA has issued a draft Conduct Standard on Financial Education that sets out how funds will need to communicate (or rather educate) their members in the future.

The success of a retirement fund depends on how engaged its members are. One major issue in 2025 will be making sure members understand the Two-Pot System. Some may be tempted to withdraw money right away, not realising how it affects their long-term savings. Trustees should provide workshops and guidance to help members make the best choices.

Another key area is understanding benefit statements. Many members struggle to interpret their fund statements and do not know if they are saving enough. More education and support on this topic will help people plan better for retirement.

With the compulsory preservation of their retirement pots until retirement, members now, more than ever, need guidance on annuity options and post-retirement planning. Many retirees spend their lump sums too quickly, leaving them struggling later in life. By providing financial education, funds can help retirees manage their money better.

Trustees and manco’s must understand their responsibilities and risks. They need to be aware of potential legal problems, including trustee liability, conflicts of interest, and governance issues.

A common challenge among both private and umbrella funds is dealing with death benefits. Many disputes happen when family members disagree about how benefits should be paid out. Trustees and manco’s need training on managing these cases fairly and legally.

Trustees and manco’s should also know how to work with the Pension Funds Adjudicator (PFA) to resolve complaints effectively. Avoiding legal battles and resolving disputes quickly can save time and money.

The retirement fund industry in South Africa is changing fast – trustees and manco’s must stay informed. By learning about new regulations, investment strategies, cybersecurity, and member engagement, trustees can help ensure retirement funds stay strong. At the same time, helping members improve their financial knowledge will lead to better retirement outcomes. Prioritising education in these areas will create a more secure future for both trustees and members.

ENDS.