Super funds seek feedback on superannuation benefits and contributions

The Cook Islands National Superannuation Fund (CINSF) is seeking public input to review its bill after two independent reviews highlighted significant risks due to imbalances in decision-making power and the need for stronger checks and balances.

Talaya Mika reports.

The review showed that the current structure gave too much decision-making power to one role, increasing risks for the Fund.

To mitigate these risks, the review recommends reallocating responsibilities to strengthen oversight and accountability.

The first consultation took place last Wednesday in the Sinai Room and attracted fewer than 10 participants, who despite the small turnout expressed support for the ongoing review.

They also asked questions which were answered by CINSF speakers, including CEO Damien Beddoes.

The main focus of the consultation was to gather feedback on key governance areas, in particular the roles and responsibilities between the Board and Trustees and the Board appointment process.

Key issues highlighted in the review include:

• rebalancing roles and responsibilities between the CINSF Board and Trustees;
• Strengthening governance at the board level;
• Clarifying the tax and VAT status of funds
• and membership benefits.

The CINSF Board proposed changes to the board appointment process, advocating a “fit and proper person test”, as well as qualification, skills and experience requirements.

In addition, they recommend changes to the representation model to incorporate industry specific expertise and longer appointment periods. However, the existing Cook Islands National Superannuation Act 2000 lacks provisions to implement these governance improvements.

In addition to governance, the Board also aims to clarify the Fund’s taxation and VAT position, protect members’ interests and make minor corrections and clarifications to the CINS Act 2000.

They are also seeking views on proposed changes to pension benefits, particularly for single pensioners, and are surveying stakeholders on current contribution rates and potential adjustments.

At the same time, given the history of the Fund, the Board is keen to strengthen management, increase value for members, and enhance Board governance as the Board’s responsibilities increase as the Fund grows to over $260 million.

However, the CINS Act 2000 limits the board’s ability to make necessary improvements, such as responding to changes in tax and VAT laws or establishing a rigorous selection process for board appointments.

According to a spokesperson, the Crown Law Office has confirmed that the proposed governance improvements cannot be incorporated into the current Act.

The current Act allows for four representative board members and additional appointments, but does not require a fit and proper person test or specific skills and experience.

The gap puts the fund at risk of unqualified board members managing large amounts of members’ money, consultants were told.

The board is also seeking views on the inclusion of member benefits in regulations, with amendments requiring cabinet approval. They are also proposing changes to pension benefits to provide options to suit individual circumstances and seeking views on current contribution rates.

Regarding “Changes and Rates” the Fund has maintained a 5% contribution rate for both employees and employers since its inception.

The board is considering increasing these rates in line with international recommendations for pension schemes of 10% to 15% to ensure long-term financial stability for retired members. Options include keeping them unchanged, increasing them gradually to 6% in 2025 or increasing them to 7.5% over five years.

Meanwhile, other consultations will be held in Pa Enua, Aitutaki from 12 August.