Speaker 0:
Hello and welcome to presenting the principal officer today. I'm joined by Mr Bon Mkhize, principal officer at the KwaZulu Natal Joint Municipal Pension Funds and Provident Fund. Welcome, Bon.

Speaker 1:
Thank you so much. Chloe. Pleased to be to meet with you.

Speaker 0:
So, bon. Can you provide an overview of the KwaZulu Natal Joint Municipal Pension and Provident Fund and its purpose in supporting municipal employees? Retirement needs?

Speaker 1:
Yes. Thank you very much. Chloe. Yes? Uh, the fund was established in 1942. Uh, that was superannuation fund, um, which was the the first of the three funds that was established in 1942.

Speaker 1:
And it's a DB fund. And in 1976 the second fund was born, Uh, that was the retirement fund,

Speaker 1:
Um, the retirement fund and the Superannuation Fund. They are both defined benefit funds. And in 1996 then a third fund was established. That was the DC fund, which is the KwaZulu Natal Joint Municipal Provident Fund. So the all the three funds are here to support

Speaker 1:
municipal employees, especially, um, with retirement outcomes. So, um, all these three funds, um, available especially for the province of KwaZulu Natal. The all the municipalities in KwaZulu Natal has to be, uh, associated employees of the three funds.

Speaker 0:
So then how does the fund bon differentiate itself from other pension funds in terms of structure, governance and investment strategies?

Speaker 1:
I would say it's diversity and inclusion, because we do know that since we are in KwaZulu Natal, we are based in KwaZulu Natal. So we strive to ensure that, uh, we we are diverse enough just to cater for all our municipal employees and, uh, in the boardroom as well as the staff compliment. We try to mimic,

Speaker 1:
um, the the the population of KwaZulu Natal. So all races are welcomed in our fund. So it is the fund of choice, and it's a fund for everybody. Every municipal employees in KwaZulu Natal.

Speaker 1:
Um, not only the diversity and inclusion in the boardroom and and staff compliment, but I can say these three funds have always been getting clean audit. Uh, from, uh, the Auditor General, which is very unique because

Speaker 1:
we know that some funds, especially in our space in the municipal, uh, sector, they do have, uh, uh, quite a number of governance issues. So our fund is one of the cleanest if I may put it that way.

Speaker 1:
And that has been confirmed by the number of awards that we we we got, uh, from the industry. And, um, we are one of the cleanest fund. And, uh, one other thing that I wanted to highlight is even our communication strategy. It talks to the target audience needs especially,

Speaker 1:
uh, because we do understand the the members that we serve that they are too diverse. So the communication strategy seek to address that. And one other thing I wanted to mention is that we are a member centric fund. Even that is why even our financial literacy programmes they seek to address all that.

Speaker 0:
So how does the fund then ensure transparency and accountability in the operations and decision making process of of the fund?

Speaker 1:
Yes. Um, we make use of financial highlights just to ensure that members understand,

Speaker 1:
um, all the figures in our a FS. We do understand that not everybody has got an accounting background. So we try to simplify our reporting to the members. And in addition to that, even valuation reports we do share valuation reports with the members, um, in the form of posting them on to the website.

Speaker 1:
And in addition to that, we do call an annual information meeting where we invite all members, uh, of of of the fund, including pensioners. And in that session, we try to, uh, give them report backs one on the

Speaker 1:
financial, Um uh, highlights. And in addition, we do invite the, um the the the actuary to come and present to our members and simplify the valuation reports so that they do understand,

Speaker 1:
uh, what we stand for. And in addition to that, we do have an interactive webpage, and that webpage is available to to all the members to utilise even when they want to complain and comment. It is, uh, available as a tap, uh, in our interactive webpage. So we do have regular independent and in-house audits as well, just to ensure that the our governance is stronger.

Speaker 0:
So it seems to me as though the fund, uh, really leverages the use of technology, um, in their in their offerings to members. But I'd like to understand. Or maybe you can provide us insights into the performance of the fund and the key factors that are influencing its investment outcomes.

Speaker 1:
Yes, uh, this fund has always been performing very well, And, um, I can even say even in times when, uh, markets are not, uh, uh favourable. Uh, we strive to ensure that

Speaker 1:
performance is one of the key component because we understand that our members, uh, they live on their pension, especially on the pensioner side. And even our active members, uh, they they need to see their figures growing.

Speaker 1:
And we make use of local and international managers just to ensure that, uh, we we we diversify our our portfolios just to ensure that our members do see positive returns in the market. And, um, we make sure that all the non-performing asset managers we we get rid of them

Speaker 1:
them and ensure that we do have a robust engagement with asset managers just to ensure that we keep them on their toes and thus giving us all those returns. Because to us, um, getting returns for the members is our high priority. While we ensure that good governance as well is adhered to

Speaker 0:
so bon you mentioned financial literacy of members. What strategies or initiatives are being implemented by NJ MP F to ensure and enhance financial literacy and to educate members about their pension benefits.

Speaker 1:
Yes, Uh, we do make use of, uh, going green project. So, uh, where we go through to each and every municipality in the province, uh, teaching them on how, uh, sustainability is important. And, um, in in terms of, um, we we we are planting the seeds and, uh, in In doing so, we are trying to teach them, uh, to save

Speaker 1:
because we believe that I I if we we plant the seed, uh, that you take the seed as your initial contribution to that you invest so that at some stage during the time of of harvesting, it's during your your time of your retirement. So that is when Now you have to make sure that all those seeds, they are coming handy, uh, during your time of retirement.

Speaker 1:
And, uh, and in addition to that, we we do have members road shows and as well, pensioner in where we visit members, uh, across all corners of KwaZulu Natal.

Speaker 1:
And, uh, we partner with SARS. Uh, we partner with a pension fund adjudicator. We punch, we punch, we partner with FFC a as well, and even NR a to to a certain degree just to give them an overall financial understanding of what may impact them, Uh, during their life. So we do have a a financial literacy programme.

Speaker 1:
We, uh, playing cards. And we make sure that with each of of all those cards that we distribute to them, they they have an information and and messages of saving. So we're trying to encourage them to save even when they are playing cards. Because we do understand that it's not only about teaching members how to save, but as we're teaching communities because cards are

Speaker 1:
are getting played with, uh, communities as well. So that that is now, uh uh, uh, our 1% contribution to communities about, uh, saving. And as well we do issue the piggy bank drive, uh, where we we give members, uh, the piggy bank, uh, just to ensure that they, they they they save. We encourage the culture of saving

Speaker 1:
because we understand that even, uh, members or even Children at their young age, they have to save er in those piggy banks. Uh, just to ensure that, um, when they grow and they become our future members, uh, at least they will understand the culture of saving.

Speaker 0:
Thank you very much for that. Bon. So moving on to ESG, how does the NJ MP F then integrate ESG within its invest investment decision?

Speaker 1:
Yes. The ESG is critical factor. Uh, in whatever, uh, investment decision one makes so back in 2014, we are one of the few funds, uh, that, uh, incorporated UN PR I principles that used to teach us about responsible investment investing.

Speaker 1:
And, um, as a result, uh, even the C ISA principles that seek to talk about responsible investing, uh, was incorporated in our IP S. So ESG was practised even back then. And even with our asset managers, we used to engage. We used to have a robust discussion on how they they,

Speaker 1:
uh, they incorporate the CR ISA principles. And to a certain degree, we used to push them to be signatory to UN PR. I and, um, most of our asset managers, they they are signatories to that,

Speaker 1:
and ESG is very critical. And even back in 2019 when FSC a, um, came up with a guidance notice one, of 2019 and that dealt with, um, principles of responsible investment and we were one of the few funds that incorporated the

Speaker 1:
in our IP S. So as a fund, it is our practise that we try and, uh, incorporate whatever, uh, principles that seek to enhance our investment policy statement. So even alternative investment options. Uh, it's something that we, um, incorporated in our IP S

Speaker 1:
not only incorporated on our IP S, but we decided to look for projects that can assist us in getting all those better returns. Because we understand that sometimes, uh, the the the JSE or even global, uh, listings might not give us good returns. So we look at

Speaker 1:
to alternatives as as, uh, part of our practise to ensure that we do have projects. We do have, uh, um, other unlisted opportunities where we can invest to just enhance our performance. Bois.

Speaker 0:
So then, can you discuss any reasons or upcoming changes or developments within the muni municipal pension fund that may impact its members?

Speaker 1:
Oh, yes. No, thank you very much. Um, there is a famous, uh, uh, conduct standard one, that was issued by FSC a this year. In actual fact, all funds was supposed to to to comply with conduct standard one by 19th Feb 2023. So that sought to, um,

Speaker 1:
ask members to get as much information about members as possible. Because we do understand that there is this issue of unclaimed benefit in our industry. And, uh, we're trying to cap that, uh, by getting as much information as possible. And there is a famous one that is now going around Chloe, uh, that seek to deal with the two part system,

Speaker 1:
uh, where members will get early access to their pension moneys. So, uh, in doing that, but the FSC a and national treasury, they are planning to, uh, emphasise on the issue of compulsory, uh, preservation. So which is very

Speaker 1:
the key Because we've seen members losing, uh, their benefit after changing jobs. So this is going to address all those issues, uh, that we used to have in in the industry and as well, the regulation 28 has been, uh, improved.

Speaker 1:
Uh, our regulation 28 seek to, um, allow us to invest as much as 45% globally. Uh, so outside South Africa. So, uh, it's a good initiative, uh, where we can invest as much as we can.

Speaker 1:
And so it gives us no excuse to, uh, give members all those positive outcomes. So it's a it's a a very, uh um, a good initiative from the powers that be just to ensure that members are well looked after.

Speaker 0:
OK, so how does the fund then collaborate bon with other stakeholders in the pension fund industry such as municipalities, regulatory bodies and industry associations to address the shared concerns and to enhance the pension landscape?

Speaker 1:
No, no, thank you very much, Chloe. A very good question. Um, we do, um, uh, collaborate with, uh, industry players, Um, including bait A and R FA.

Speaker 1:
Uh, so with Baeta, I'm even the vice chair currently of bait A which seek to, um, educate, uh, pe pension funds in general, not only in the municipal space, but pension fund A across the whole of South Africa, even in Africa. And, um, even on R FA, Uh, we do have a significant

Speaker 1:
and representation there, so because we we love to collaborate with all those industry players just to ensure that, um, not only our fund benefit from our understanding and from our knowledge and experience, but the whole, uh industry landscape. So we do partner even with asset owners Forum, um, of which I'm serving in the investment we working committee.

Speaker 1:
Uh, I'm one of the members of the working committee that seek to, um, look at the project, um, investable project, uh, from government and even from even private firms where pension funds can collaborate in investing in those projects because we believe that, uh, the infra infrastructure

Speaker 1:
structure is very important as well. So we we we can do whatever we do. We can invest as much as we can invest, but, uh, making impact to us is very key. Uh, just to ensure that members as well they they they enjoy, uh, the the our investment, uh, in the form of investing

Speaker 1:
in those infrastructure, uh, projects. So in addition to that, there is MRO where, uh, municipal funds, they collaborate, they they they sit together. They share all the concerns, especially in the municipal space. Uh, including, uh, issues about the pension fund in general,

Speaker 1:
uh, that affect municipal funds. So we do collaborate even with other industry players, as I alluded to earlier on, uh, SARS as well. We do, uh, take SARS in our, uh uh, I mean pension pensioner in in our member roadshows, we do take NCR, uh, teaching our members how to save and how to stay free of.

Speaker 1:
And we do as well take NSA with us. We know the issue of load shedding in our in our country, and we we try to to teach our our stakeholders as to how better they can just handle the issue of electricity and as well, pension fund adjudicator. Because we feel, uh, members as well. They need to understand that if they are not happy with us as the

Speaker 1:
and at least there is a body they can utilise to report us in if they feel not protected by us. But we always strive to to ensure that our members are protected all the time.

Speaker 0:
It seems as the NJ MP F is a critical player to the dynamic and changing pension fund landscape in South Africa. Bon. I wanna thank you very much for your time. We appreciate your insights.

Speaker 1:
Thank you very much. Chloe, It was a pleasure talking to you. And even in future, if there are opportunities to engage with you, I will welcome that. Thank you so much.