Author: MBJ Butler, TL Reddy and R da Silva

Abstract: As the principal decision-makers in retirement funds, trustees have a number of duties placed upon
them including a duty of care, a duty of impartiality, a duty to avoid and manage conflicts of interest,
a duty to act in accordance with the purpose of the fund and a duty of accountability. Decision-making
by trustees and the actuaries that assist them can be informed by considering various ethical theories.
This paper reviews the theory of right action, virtue theory and the ethics of care, together with the
theory of justice, and interprets the duties of trustees and actuaries in terms of these theories. After
consideration of other frameworks for ethical decision-making, a six-step decision-making framework
based on the actuarial control cycle is developed to provide an initial attempt to formalise the process
of ethical decision-making in South African retirement funds. This framework is applied to case studies
involving the review of surplus apportionment, an investment policy statement, the distribution of death
benefits, and annuitisation options. The case studies illustrate that, although the framework itself does
not provide ethical solutions, it assists trustees, and the actuaries who advise them, with the process of
making an ethical decision.
Keywords: Ethics; ethical framework; retirement fund; trustees; actuaries; fiduciary duties; regulation; theory of
right action; utilitarianism; virtue ethics; ethics of care; theory of common good; theory of justice