Wednesday 7 August 2024 | Written by Talaia Mika | Published in Economy, Local, National
Talaia Mika reports.
The reviews indicated that the current structure grants excessive decision-making authority to one role, posing increased risks to the Fund.
To mitigate these risks, the reviews recommended a redistribution of responsibilities to enhance oversight and accountability.
Held at the Sinai Hall on Wednesday last week, the first consultation attracted fewer than 10 attendees and despite the modest turnout, those present expressed their support for the ongoing review.
They also raised questions that were addressed by the CINSF presenters, including chief executive officer Damien Beddoes.
The primary focus of the consultation was to gather feedback on key governance areas, specifically the roles and responsibilities between the Board and the Trustee, and the Board appointment process.
The key issues highlighted in the review include:
The CINSF Board proposed changes to the Board appointment process, advocating for a “fit and proper persons test”, along with qualifications, skills, and experience requirements.
Additionally, they suggest amending the representation model to include industry-specific expertise and longer appointment terms. However, the existing Cook Islands National Superannuation Act 2000 lacks provisions to implement these governance enhancements.
Beyond governance, the Board aims to clarify the tax and VAT position of the Fund, protect member benefits and make minor corrections and clarifications to the CINS Act 2000.
They are also seeking input on proposed changes to pension benefits, particularly for single pensioners, and are surveying stakeholders on the current contribution rates and potential adjustments.
Meanwhile, given the Fund’s history, the Board is keen on enhancing management to add value for members and strengthening board governance as the Board’s responsibilities have increased with the Fund’s growth of over $260 million.
However, the CINS Act 2000 restricts the Board’s ability to make necessary improvements, such as addressing changes in tax and VAT laws or establishing a rigorous selection process for Board appointments.
According to the presenters, the Crown Law Office has confirmed that proposed governance improvements cannot be incorporated under the current Act.
The current Act allows for four representative Board Members and additional appointments but does not mandate a fit and proper persons test or require specific skills and experience.
This gap exposes the Fund to the risk of unqualified Board Members managing significant amounts of members’ money, the consultation heard.
The board is also seeking feedback on placing member benefits into regulation, requiring Cabinet approval for amendments. They also propose adjustments to the pension benefits, offering options tailored to individual circumstances and soliciting feedback on current contribution rates.
The Fund with regards to “changes and rates” has maintained a 5 per cent contribution rate from both employees and employers since its inception.
The Board is considering increasing these rates based on international recommendations of 10-15 per cent for pension schemes, to ensure long-term financial stability for members at retirement. Options include no change, a gradual increase to 6 per cent in 2025, or an increase to 7.5 per cent over five years.
Meanwhile, there will be other consultations in Pa Enua starting on August 12 in Aitutaki.