The advent of the Jamaica Debt Exchange has put the spotlight once again on pensions and many employees contributing to a superannuation fund are anxious about the potential impact the JDX arrangement will have on their retirement plans. Each week we stress the importance of being adequately informed in order to reap the greatest benefits from your retirement savings. It thus might be useful to understand in a little more detail the various roles that are involved in your pension fund and how these professionals might be able to assist you in gaining even more knowledge. Bear in mind much of the functions are determined by regulation.

Board of Trustees

It is the Board of Trustees that is ultimately responsible for the management of the pension fund. They are required to be registered with the Financial Services Commission (FSC) and prove that they are fit for the task. The Board should have representatives from the both the employer and the members. It is thus important for you to know who the board members are as they make all the important decisions such as who will be chosen as the investment manager, the administrator, or the actuary. The trustees are responsible for ensuring that every employee receives an annual statement detailing the accumulated funds contributed by the employee and the employer and any interest, as applicable. Trustees are have a duty to ensure that members receive Handbooks informing them of their benefits and are updated or consulted as necessary on all important decisions and events regarding the pension fund. In general, trustees are required to ensure that the operations of the pension fund are compliant with the legislation and that the pension fund is able to provide the benefits promised by the employer.

Administrator

This is usually a company hired by the trustees to keep track of the contributions and payments from the plan.  It is the administrator that will arrange the payment of pension annuities, lump sums, and refunds on behalf of the trustees. Under the Pensions (Superannuation Funds and Retirement Schemes) Act they are required to be approved as administrators by the Financial Services Commission (FSC). administrators are required to provide the trustees with frequent reports relating to the operation of the pension fund. If they receive a complaint, they are required to log that complaint and respond within 14 days to the complainant after making a decision and no later than three months after receiving the complaint. Although under the legislation it is the Board of Trustees that is responsible for providing Member Statements and Handbooks, in the majority of cases the Board outsources that task to the administrator.

Investment manager

Investment managers are hired by the trustees to manage the money of the pension plan and are required to periodically report on the status of the investments to the trustees. Thus they provide very technical advice to ensure that the fund is able to meet its objective of providing a pension benefit as described in the Trust Deed and Rules to the membership of the fund. Investment managers are required to be licensed as such with the FSC.  A very important document produced by the investment manager for the trustees is the Statement of Investment Policies and Principles (SIPP). This document details the plan for investing the funds and setting a target yield or return.

Financial Services Commission

The FSC regulates pension funds and the various players within the industry. They have the power to issue and revoke licences for investment managers and administrators, and to approve or decline requests for registration by pension funds and trustees. The law provides for an employee making a complaint or report to the FSC if they believe their pension benefits are in jeopardy. Once the FSC receives such a complaint they will conduct an investigation.

You

In the interest of ensuring that you stay focused on all your retirement matters you should

Speak with a retirement consultant to ensure that you have crafted a sound plan which takes into account as many sources of retirement income as possible and will result in you realising your vision for retirement.

Store all documents that you receive as a contributor or plan member. Most important are pay slips and your Member’s Statements.

Purchase copies of the laws which are applicable to each type of savings Plan. In Jamaica these include the National Insurance Scheme Act, the National Housing Trust Act, The Income Tax Act, the Pensions (Superannuation Funds and Retirement Schemes) Act and The Pensions Regulations.  You can purchase them from the government printing office located downtown Kingston.

Obtain a copy of the Members’ Handbook and the Trust Deed and Rules.  These documents will help you to understand what your benefits will be upon retirement.

Make queries if you are unsure about something.  There is no such thing as a stupid or foolish question.

Make a complaint if you are not satisfied. Depending on the nature of your dissatisfaction, you may complain to your trustees, to the administrator, the investment manager or to the FSC.

Karen Hutchison is a partner in the Retirement and Employee Benefits Consulting firm Milestones and Lifestyle Planning Services (http://www.milestoneslifestyle.com) and may be contacted via email at: khutchinson@milestoneslifestyle.com