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COFI is not just about proving that governance processes are in place, Old Mutual Corporate states. It is about proving that board decisions are working for members. For South African retirement fund trustees, the bigger test will be whether their funds can show that governance is improving the way members experience and benefit from the fund.
“Documented processes are a given,” said Monique Cloete, Head of Group Retirement Solutions at Old Mutual Corporate. “The real shift COFI requires is cultural. Funds need to start every governance conversation with the member outcome. When we start talking about members first, that is when the culture has moved.”
Cloete was speaking during an EBnet discussion on COFI and retirement fund governance. She said that COFI’s underlying philosophy is that governance cannot stop at process. A board may have policies, minutes, service-level agreements, and communication plans in place, but those documents do not automatically prove that the fund is helping members build the income security they will need in retirement.
The conduct era asks a different kind of question. “It is less interested in whether an activity happened and more interested in whether that activity helped trustees identify risks, respond to poor outcomes, and improve the member experience,” she said.
This marks a clear shift from process-led governance to outcome-led governance. Trustees will still need strong policies and documented decisions, but those decisions will increasingly need to connect back to the member: what outcome was expected, what action was taken, and what changed as a result.
It also requires a more granular view of members themselves. Historically, many retirement fund decisions have been tested against the needs of an average member. Under COFI, that will no longer be enough. Trustees will increasingly need to understand how different members are experiencing the fund, because contribution levels, withdrawal behaviour, benefit choices, financial stress, and proximity to retirement can lead to very different outcomes within the same fund.
The question is no longer only whether the fund works for the average member, but whether it is identifying where individual members or member groups may be at risk of poor outcomes.
Governance must be clear enough to defend
This was the mindset Cloete pointed to when she said the real shift is cultural. It requires boards to stop treating member outcomes as the downstream result of administration, investment design, or communication, and to start treating them as the starting point for governance, with enough evidence to understand where different members may need different forms of support.
“We should be starting with the outcome,” she said. “That is the biggest change we need to see.”
The test would no longer be whether Treating Customers Fairly principles were acknowledged in policy, but whether trustees could trace those principles through the decisions that shape the fund.
That cultural shift will have practical consequences. Trustees will need to show how conduct principles influenced the decisions they approved, the risks they accepted, and the oversight they exercised.
“Boards will need to prove that they have taken account of Treating Customers Fairly principles when making material decisions for the fund,” she said. “That includes changes to products and the introduction of advice frameworks.”
Trustees should be able to explain how the board received information, applied its mind, oversaw service providers, and recorded decisions. That discipline depends on better reporting. Trustees need board packs that do more than confirm activity. They need to show where members may be at risk.
“Under COFI, funds will need regular, meaningful reporting to the governing body,” Cloete said. “It is about identifying poor outcomes and showing what has been done about those specific areas.”
In practice, this means reporting should help trustees spot where member harm may be emerging. Late or unpaid employer contributions, delayed benefit payments, poor data, repeated complaints, low engagement with support services, or rising two-pot withdrawals may all point to deeper issues that need board attention.
These signals should not be treated as separate operational matters. They are conduct evidence. They help trustees understand whether members are receiving the support they need, whether the fund’s design is working as intended, and whether action is required before poor outcomes become entrenched.
Member evidence must move closer to the board agenda
Cloete said the full member journey should become part of how trustees assess whether the fund is working as intended.
That journey cannot be understood only through averages. A fund may appear to be performing adequately at the aggregate level, while specific groups of members are falling behind because of contribution levels, repeated withdrawals, poor preservation decisions, lack of beneficiary nominations, debt pressure, or limited use of available support.
This is where member engagement, complaints, counselling uptake, repeated questions, and withdrawal behaviour become more than communication metrics. They become early warning signals. They can show where members are confused, where support is not landing, where financial pressure is influencing decisions, and where the fund may need to respond differently.
For trustees, the issue is not whether every member reads every communication or uses every tool. The issue is whether the board has enough evidence to know where poor outcomes may be emerging and whether it acted on that evidence.
This is especially important in a two-pot environment. While the system improves long-term preservation by limiting the amount members can access when they change jobs, it also introduces new behaviour patterns that trustees will need to monitor. While some members may choose to preserve their savings component and access it only in limited or unforeseen circumstances such as emergencies, others may elect to make repeated withdrawals whenever eligible to do so. Given that members are permitted to access the savings component at their discretion, subject to the applicable minimum withdrawal threshold, these differing behavioural patterns may ultimately result in materially different retirement outcomes for members who may otherwise appear similar in the fund’s aggregate reporting.
That is why the conduct lens must move beyond the average member. Trustees need to understand whether the fund is doing what it is designed to do, while also identifying where member behaviour, affordability, or life stage is changing the likely outcome.
The point is not to add more items to the board agenda. It is to change the quality of the questions being asked. Trustees need to know whether the fund is identifying poor outcomes early enough, responding decisively, and learning from what the evidence shows.
For trustees, the principle is familiar. What will change under COFI is the evidentiary discipline around it. Boards will need to show not only that they had followed a process, but that they had used the evidence before them to understand what members were experiencing and where the fund needed to respond.
“Funds should be measuring the full chain all the way to the end, because that is the outcome,” concluded Cloete.
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