Independent Trustee

"An important option available to a Board of Trustees to minimize their risk is to appoint expertise on the fund where they lack that expertise. An independent trustee with the necessary skills will add immense value to the running of the fund's affairs. Independent is defined in the Oxford Advanced Learner's Dictionary of Current English as 'not dependent on or controlled by (other persons or things). In addition to being personally liable together with the remaining trustees, an independent trustee is totally independent from any of the other stakeholders in the fund. The significance of this is that this person only has the Fund to be concerned with and will only serve the best interest of the fund.

According to the third edition of the PWC survey on Retirement fund strategic matters and remuneration, 99% of specialist retirement funds and 49% of standalone retirement funds employ independent trustees. In countries like the United Kingdom retirement fund trustees use the services of independent trustees extensively.

An independent trustee should be truly independent, not attached to any service provider in particular with regard to substantial shareholding, either way, or a service - or procurement agreement. An independent trustee should have extensive experience in the retirement fund market. The independent trustee's experience should preferably not be limited to a certain field related to the retirement fund market, i.e. investments only, he should rather be a generalist instead of a specialist. Should specialized advice be required the trustees should utilize the services of specialists.

The independent trustee should be able to understand and communicate with all the trustees and members of the fund. Experience in the trade union market would be a major advantage in the case of unionized funds. A formal qualification related to retirement funds should be part of the independent trustees' curriculum vitae. Independent trustees are there to provide general retirement fund expertise to the board of trustees to assist the board in evaluating proposals and making correct decisions in addition to providing the highly desirable independence."

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