Die Beeld, Volksblad en Burger. 19 Desember 2012.

A number of blunders in the financial services industry over the past couple of weeks have opened a new debate on the issue of conflict of interest in the retirement fund industry, and particularly how trustees should deal with this thorny issue.

In the world of defined contribution funds, retirement fund members are predominantly responsible for ensuring that they have enough savings for retirement. Most members don't realize this and are quite apathetic in this regard. Employers and retirement fund trustees must take a more active role in assisting members to find the best possible solution for retirement.

The age old debate of passive versus active management has been getting more interesting recently with the advent of smart beta. Investment portfolio returns can be split into two broad components, a beta component or passive component, which represents the return of the asset class as a whole, and an alpha component, which is the excess return over and above beta, achieved through active management. There are however different ways of determining what the overall market return, or beta, is.

The article explores the impact that investment fees can have over extended periods of time for a retirement fund member and also looks at how the relative importance of fees increase when returns are lower than what has been achieved over the past ten years.