Trustee remuneration

The world of business has had some new complexities and challenges in recent years, resulting in increased pressure on organisations in terms of governance and compliance. For a trustee, not only has an increased workload resulted, but also the level of responsibility, risk and complexity. Remuneration for trustees has not been formalised, and a range of practices exist in South Africa.

This article addresses the question of how one should set trustee remuneration – what factors should we consider?

Duties of a Trustee

The role of a trustee can exist in various entities – a medical aid, a retirement fund, a share scheme trust and a trust.

A trustee can be considered to be any of a group or board of persons appointed to manage the affairs of an institution or organisation; this would include directing the funds and policy of an organisation.

A trust can be set up either to benefit particular persons, or for any charitable purposes (but not generally for non-charitable purposes): typical examples are a will trust for the testator’s children and family, a pension trust (to confer benefits on employees and their families), and a charitable trust. In all cases, the trustee may be a person or company, whether or not they are a prospective beneficiary. The term “trustee” is also applied to someone held to a fiduciary duty similar in some respects to that of a trustee proper.

Trustees have certain duties (some of which are fiduciary). These include the duty to:

  • Carry out the expressed terms of the trust instrument.
  • Defend the trust.
  • Prudently invest trust assets.
  • Be impartial among beneficiaries.
  • Account for actions and keep beneficiaries informed.
  • Be loyal.
  • Not delegate.
  • Not profit.
  • Not be in a conflict of interest position.
  • Administer in the best interest of the beneficiaries.

The terms of the instrument that create the trust may narrow or expand these duties— but in most instances they cannot be eliminated completely. A trustee carries the fiduciary responsibility and liability to use the trust assets according to the provisions of the trust instrument (and often regardless of their own or the beneficiaries’ wishes). The trustee may find himself liable to claimants, prospective beneficiaries, or third parties. In the event that a trustee incurs a liability (for example, in litigation, or for taxes, or under the terms of a lease) in excess of the trust assets they hold, they may find themselves personally liable for the excess.


Trustees are generally held to a “prudent person” standard in regard to meeting their fiduciary responsibilities, though investment, legal, financial and other professionals can be held to a higher standard commensurate with their higher expertise. Trustees can be paid for their time and trouble in performing their duties only if the trust specifically provides for payment. However, not all trustees are remunerated for their role. As an example, where an employee is acting as a trustee as part of their broader business role, their contribution is seen to be part of their role and therefore already remunerated.


If one is to consider the value in the contribution that one is looking for in a trustee, there must surely be a question of how one would differentiate remuneration based on this contribution. As time goes on and as requirements increase, we see a closer alignment between the remuneration of a Non-Executive and a trustee.

The remuneration principles for a Large Fund Trustee and a Company Non-Executive Director are similar, in that both are independent, are responsible for the direction and strategy of the organisation, ensuring that fund members/shareholders interests are best served and ensuring good corporate governance. However the role of a Large Fund Trustee is different to that of a Company Non-Executive, in that the breadth of the function of a Trustee is narrower, but at the same time deeper from a technical perspective.

Role Factors

As in the case with a non-Executive Director, the remuneration is influenced by the specific individual, as well as the organisation in which they serve in this role. The following factors could guide the remuneration decision when considering:


  • Reputation.
  • Track record.
  • Experience.
  • Specific knowledge and skill.
  • Industry understanding.
  • Network reach.
  • Value add.
  • Qualifications.

B. The ROLE played:

  • Chairperson or committee member.
  • Independence of the individual.


  • Organisation size – assets, turnover/sales, number of employees, market capitalisation.
  • Complexity of work/industry – number of core products / services; structure of the organisation.
  • Impact on sector, industry, national economy or international impact.

When setting trustee pay, one has to consider the individual, the role and the type of organisation. The organisation could choose to pay at a higher percentile for an individual who exceeds expectations in terms of the above. The decision would be taken in the context of sound governance principles and affordability.

Ideally, a general agreement should be reached regarding the organisation’s market position related to pay. More specifically, the organisation would need to agree and confirm the percentile at which to pay. As we see more formality in this area of business into the future, it means that a market will automatically be created, and a new benchmark will be set for trustee remuneration. In other words, as more individuals receive payment, more data will be available, and will start to influence pay for this role.


One would consider good corporate governance and best practice principles in order to ensure that the remuneration of the Trustees is transparent, fair, reasonable, and satisfactory. Consideration should be given to the following:

  • Trustee Level: All Trustees have the same level of responsibility, regardless of experience and expertise, as the risks, accountability, potential liability and responsibilities are the same;
  • Employee Trustees: Trustees who are full-time employees are generally elected/appointed and are paid by their employers. The principle behind remunerating them is primarily in order to reimburse their employer for their time away from their official duties on Fund business. To this end as a general rule, Employee Trustee Remuneration is paid to the employer. This means that as far as the individual Employee Trustee is concerned, they are not paid for being a Trustee, as they are already paid by their employer;
  • Independent Trustees: Independent Trustees are generally fee-earning professionals in the Private Sector. The principle behind remunerating them is primarily in order to ensure that expert skills and knowledge are brought into the Fund, ensuring the highest level of industry related expertise in making strategic fund decisions;
  • Meeting attendance: Meeting attendance is managed through evaluating theTrustee’s performance;
  • Time and involvement: Whilst the level of remuneration should be at the same level amongst the Trustees of the same fund, remuneration actually paid is proportional to the time involvement and responsibility of each Trustee such that a Trustee with a greater time involvement is paid more than a Trustee with a lesser time involvement;
  • Additional work: Trustees undertaking additional work officially commissioned are remunerated at the approved Fund Trustee hourly rate (payable to all Trustees), which is reviewed by the Board from time to time;
  • Travel, accommodation and other agreed reasonable expenses incurred by Trustees: These should be governed by policy, proof of expenditure and subject to maximum amounts;
  • Disclosure: The annual amount of remuneration paid to each trustee, and to whom the remuneration was paid should be disclosed in the annual report.

Whilst setting Trustee pay follows the non-executive director principles, there is another method that is commonly used. For example, using the hourly rate as set out in the guidelines by the professional body that the trustee may belong to. These rates vary between R1000 and R3000 per hour, with an average of R2000 per hour. Alternatively, one would set a combination of retainer and attendance fees paid monthly and on attendance respectively.

Looking forward, we would expect that the role of a trustee becomes more independent in the future, as governance requirements strengthen. Coupled with this is the increased skill requirement as the role becomes more onerous and complex. This will have an effect on the practice of paying a trustee, and we expect it would increase both the number of individuals receiving a payment, along with an increase in the quantum of the payment.

The real question would be whether there would be any change in behaviour of the person receiving the payment – the consequence may well be that where an organisation is investing in an individual, they expect to receive value for the investment. Thus, not only would remuneration become more prevalent, but firmer initial competence assessment, performance management and consequence would result. With this in mind, the overall benefit to the funds would be a more valuable contribution by each individual trustee and a more business-like approach to the management of the entity.


Ultimately, it doesn’t matter which approach is adopted in setting trustee fees as long as it is robust, defensible and supported by market research.

Written by:

Morag Phillips
Executive Director
[email protected]



Dr. Mark Bussin
[email protected]

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