Do boards of trustees of South African retirement funds owe fiduciary duties to both the funds and fund members? The debate continues
Abstract
Over the years, the South African retirement fund industry has experienced major
regulatory changes. These changes were aimed at imposing a higher standard of
governance on the boards of trustees governing various pension funds. As such,
there has been a debate within the retirement fund industry as to whom the board,
as the governing and managing body of the retirement fund, is accountable. South
African courts and tribunals adjudicating pension fund related disputes and the
retirement industry at large seem to share the view that the board of trustees is
accountable to both the fund and its members. In that the board of trustees owes
fiduciary duties to both the fund and its members, meaning that the board is required
to act in the best interest of the fund and its members. However, in this paper I
demonstrate that the boards of trustees of South African Pension Funds are
accountable to and owe fiduciary duties only to the fund they serve and not members
of those funds. Furthermore, I submit that at the very best the board owes a duty of
good faith towards the members of the fund. In order to substantiate my
submissions, I distinguish the legal position relating to trust law from the law relating
to retirement funds in South Africa.