What’s the best approach to managing pension funds? Sam Camilleri, CEO and Principal Officer at the Natal Joint Municipal Pension/Provident Funds (NJMPF), talks about innovation and education.

A United Nations report noted that in 2017 there were 962 million people over the age of 60 in the world – 13% of the global population. The World Health Organisation estimated that 80% of older people in developing countries have no regular income and only one in four people in lower and middle-income countries receive a pension.

With the number of people over 60 in the world projected to double by 2050, funding for retirement and the critical role of pension funds should be at the cutting edge of global developments. So how funds operate, innovate and lead matters to the world.

“Innovation can’t be enjoyed if operational soundness is not mastered,” says Sam, whose NJMPF Funds cater to municipal workers in the KwaZulu-Natal Province of South Africa.

Over the years, NJMPF has evolved and developed to keep up with changing times and new technologies available in the financial sector. The NJMPF has received numerous accolades and recognition in recent years in various areas pertaining to the operations of the Fund.

“In my view,” Sam argues, “the objective of most companies is to improve shareholders value for its clients. In the context of a retirement funding arrangement, the goal is similar. Our focus is about enhancing benefits for members while improving our member’s overall retirement outcomes.

“What does that mean for leadership? The basic principles of leadership should be associated with a culture of creativity, strong communication and persuasion skills, an innovative outlook, ethical conduct, a strategic approach, emotional intelligence and teamwork.”

Sam strongly believes in the ‘participative leadership’ style which best facilitates a culture of innovation, which in turn delivers the best for fund members.

Artificial intelligence

Artificial intelligence (AI) is the new hot topic, not just in pension funds but in every industry sector.

According to Sam, “the fast pace of technological advances over the last couple of years is only an indicator of what is to come. If you want to stay on top, it is essential to move with the times.

“AI creates new possibilities for our members and pensioners regarding their retirement planning. People need a holistic and broader understanding about life after retirement and surviving financially.”

NJMPF educates members about the value of financial literacy and establishes practical solutions for saving and earning money. Retirement savings are not the only sources of income which build wealth.

It is through the financial literacy programme that NJMPF can reduce uncertainty about the future of its stakeholders when it comes to their financial affairs.  Financial literacy drives NJMPF’s vision to improve members retirement outcomes by building the capacity of the members to think beyond retirement funding, to think about how to preserve, grow and protect their capital.

NJMPF uses a ‘think global, act local motto’ in commanding attention on a global scale. Successful leaders like Sam are the power and intellect behind their organisations. They are the visionaries charged with steering the wheels of implementation of a strategy in compliance with the laws and regulations. As technology breaks down physical barriers, retirement organisations like NJMPF can play the role of local and global activist. Innovative systems, tools and thinking are essential for organisational health and future viability. Digitisation shifts our ways of communicating and analysing financial information. So NJMPF uses technology and innovation to transform the way the fund operates.

There is a global rise in smartphone usage, and Africa has not missed the incline. South Africa has been well-positioned in the continent for producing technology solutions. In 2017, NJMPF launched a mobile application (app) which has enabled instant fund access. The NJMPF mobile app sends notifications and news items weekly while also capacitating stakeholders to become more financially literate.

The app further motivates members, pensioners and beneficiaries to improve their financial provision for retirement and encourages them to think about retirement planning daily.

NJMPF has introduced an electronic barcoding ballot system to enhance inclusion in the democratic operation of the fund.

And it is introducing the EPIC system, which is an online contribution submission system. It will allow the employer to submit contributions and member information online.

An automated SMS notification system has been introduced to improve efficiencies with the Declaration Form (Proof of Life) for pensioners process. Notifications include reactivation, reminders and notices to contact the client services centre. This system notifies pensioners when to submit their declaration forms and acknowledgement of receipt.

Financial literacy

Low financial literacy levels is a global challenge and more prevalent in developing nations like South Africa. Coupled with this are surging debt levels, low disposable income and negative household savings ratio. NJMPF is advancing financial literacy education in debt management and savings, which is practical and addresses the specific challenges of the NJMPF membership.

The financial literacy programme develops the capacity of communities and its citizens by engaging them through education, training and developmental programmes which help them improve their lives.

The NJMPF runs financial literacy modules at low cost to the business which focuses on developing and educating members and pensioners about financial planning, financial control, financial products and financial knowledge.

The spinoff is that members and pensioners, once educated about financial systems, can transfer their knowledge to their immediate families and communities. This process leads to citizens implementing sound financial decisions which helps improve standards of living and the economy at large.

Knowledge is power, and the teachers are the most important agent of change. In this instance, the NJMPF is a teacher in that it uses financial literacy to drive change in members behaviours.

Innovative leadership

Sam connects the power of innovation to multiple and varied concerns such as team effectiveness, decision making, managing multiple stakeholders and adapting to change, to provide better investment outcomes for members.

He firmly believes in the TEAM (Together Everybody Achieves More) approach – collective wisdom is preferable to a single viewpoint.

The objective of all retirement funding arrangements is to progress positive outcomes for their members during, at and after retirement, through good governance, ethical conduct and sustainable investments practices.

As a multi-award-winning retirement fund, the NJMPF is continually looking for ways to better the lives of their stakeholders through improved communications methods using new technologies, providing top quartile investment returns and awarding inflation beating pensioner increases and bonuses. Working within the parameters of best practice, this is being achieved – but it is innovation that will take us into the future where we will continue to thrive.

NJMPF has, through research, insight, foresight and hindsight, been able to identify gaps, build systems, innovation and leadership, to navigate the complexities of retirement funding administration more effectively and succeed in shaping better retirement outcomes for members and pensioners.