Managing Employees Savings Schemes: Can Governance be improved and Costs Reduced?

1. 28th Nov,
2017
Manama, Bahrain
Managing Employee Savings Schemes:
Can Governance be Improved and Costs Reduced?
Sohail Jaffer
Managing Director, Business Development Dubai, Capita, UK

2. Employee
Employer
(Plan Sponsor)
Asset
Managers
Fund
Administrators
Custodian
Banks
Actuaries
Lawyers
Stakeholders in an Employee Saving Scheme
Service Providers
Trustees / Non
Executive
Directors
(NED’s)

3. What encompasses Good Governance of an Employee Savings Schemes ?
Should continue to
meet investors’
requirements
Evolve Methodology
to ensure that it
continues to meet
market needs
Managed in a way
that ensures
commitment to
impartiality,
transparency and
accuracy
In Good Governance
there is no luxury of
leaving decisions half
way because future
is unpredictable
Managing complex uncertainty of external environment
An Investment committee shall evaluate portfolio performance regularly; Be voice of employees whose
hard earned money is being invested

4. A Paradox
In General, we live in a world which has relatively low expectations from Governance ?
Good Better Best Great
Governance
Unheard
Music to
our ears
Delightful

5. Then, what constituent shall we Improve to Improve Governance of a scheme ?
Good Better Best Great
Scheme’s Risk Management
Governance
Risk
Management

6. Identifying, Acknowledging, Managing, Mitigating RISKS
Weighing risks leading
to prudent Risk
Management &
responsibility to
manage crisis
Safeguarding cash &
Managing
Compensation
NO to highly risky
business strategies that
earned better returns
for scheme in the short-
term, but expose the
scheme and
organization to what we
later know as fatal risk
Going beyond
Scenario Planning :
Boards end up doing a
lot of scenario planning,
like asking whether ETF,
Value Investing, Growth
Investing or SRI
Investing makes more
sense at a given point in
time
Good Governance is even more important in turbulent times
Meaningful governance reforms

7. In spite of Good Governance we witness …
Schemes and certain Financial
Instruments characterising
them turned out to be far
riskier than what managers
realized
Too tempting to underplay or
disregard risk because the
company believes it has been
hedged in some way, typically
through some sort of financial
instrument or some other
"insurance" process
Discover that risks virtually
ignored, or had almost entirely
discounted, are the ones that
became the biggest problems
of all
Going beyond obvious mistakes and ignoring key risks, whole practice of risk management is extremely difficult these days
because key economic factors are so volatile. So even when risks are clearly identified, it's so hard for managers and other
stakeholders of scheme to make plans in this kind of volatility
Hence, an excellent Risk Management
framework is absolutely necessary

8. Good
Governance
Prudent
Risk
Management
So, how do we achieve Prudent Risk Management for Improved or Good Governance ?
Maximum ownership to
remain in-house
Constituting Committees
viz.
Management
Investment
Risk
Audit
Increasing fiduciary
responsibilities
(Non Executive Directors
and Trustees)
Stronger pension
supervision and
monitoring using IT
Segregation of duties
A culture of Best practice
and building its
Champions
Deployment of Digital
Applications so as to
reduce cost and offer a
real time visibility of
portfolio to the customer

9. I believe good corporate governance is critical in
enhancing competitiveness and creating industry -
leading profitable growth and superior returns for
every stakeholder of the institution
Shiv Nadar, Indian industrialist, philanthropist, founder and chairman of HCL
Technologies
The future of any corporation is as good as the value
system of the leaders and followers in the
organization
N. R. Narayana Murthy, Indian industrialist and Co-founder of Infosys
Technologies

10. Thank You
Sohail Jaffer
Managing Director
Business Development Insurance Services
Capita Middle East
DIFC, PO Box 49983,
Dubai, UAE
Mobile: +97150 429 6876
Email: sohail.jaffer@capita.co.uk
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and shall not in this regard imply obligations for the entity or anybody else towards the readers of the presentation.
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replace the knowledge and the judgment of the readers who should make all appropriate inquiries.