FUND

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funds.

Rose­mary Hunter was ap­pointed to the FSB by Fi­nance Min­is­ter Pravin Gord­han in 2013 to over­see pen­sion funds.

As deputy reg­is­trar of pen­sion funds and deputy ex­ec­u­tive of­fi­cer: re­tire­ment funds and friendly so­ci­eties, she is one of the FSB’s most se­nior em­ploy­ees.

Af­ter a two-and-a-half-year bat­tle in­side the reg­u­la­tor, she has de­cided to make her con­cerns pub­lic.

On Tues­day, she filed a no­tice with the North Gaut­eng High Court to force her em­ployer to make pub­lic two po­ten­tially damn­ing re­ports on the way in which it re­lied on ma­jor pen­sion fund ad­min­is­tra­tors to ex­pe­dite the clo­sure of so­called or­phaned funds – one by for­mer Con­sti­tu­tional Court Jus­tice Kate O’Re­gan, and a foren­sic in­ves­ti­ga­tion by au­di­tors KPMG.

Be­tween 2007 and 2013, the FSB closed roughly 9 000 pen­sion funds. Hunter al­leges that in­stead of dili­gently fol­low­ing le­gal process, the reg­u­la­tor cut cor­ners by hand­ing con­trol to ma­jor pen­sion ad­min­is­tra­tors, who closed pen­sion funds en masse.

In one ex­am­ple Hunter refers to in court pa­pers, 923 pen­sion funds were closed at the dis­cre­tion of a sin­gle em­ployee of a ma­jor pen­sion fund ad­min­is­tra­tor. In an­other ex­am­ple, on a sin­gle day in Au­gust 2012, a re­quest was made to can­cel 668 pen­sions funds. Records show the FSB waited on av­er­age just three days be­fore ap­prov­ing re­quests.

“Un­der the cir­cum­stances, it would have been im­pos­si­ble for FSB staff to have con­ducted in­ves­ti­ga­tions,” states Hunter.

Hunter al­leges that in many in­stances, it was un­likely that any real ef­fort was made to trace the ben­e­fi­cia­ries of th­ese pen­sion funds.

“I fear that it is prob­a­ble that the mem­bers and ben­e­fi­cia­ries of a sig­nif­i­cant num­ber of funds ... may have been un­law­fully de­prived of re­tire­ment fund ben­e­fits,” she states in her af­fi­davit.

In­stead, Hunter al­leges the FSB’s ac­tions favoured the ma­jor pen­sion fund ad­min­is­tra­tors who could charge ad­di­tional fees to th­ese new funds, say­ing: “This has re­sulted in con­sid­er­able ben­e­fit to the fund ad­min­is­tra­tors and re­lated ser­vice providers of fi­nan­cial prod­ucts and ser­vices.”

South Africa has a vast prob­lem with un­claimed pen­sion money.

This only be­came ap­par­ent af­ter the FSB em­barked on a mass can­cel­la­tion of de­funct pen­sion funds – caus­ing un­claimed as­sets to pool into spe­cially des­ig­nated funds.

In 2008, shortly af­ter the can­cel­la­tion pro­ject be­gan, there was R6.2 bil­lion in var­i­ous un­claimed ben­e­fit funds. By the time Hunter joined the FSB in 2013, the fig­ure had risen to R15.8 bil­lion. On Fri­day, the FSB con­firmed that the cur­rent fig­ure was about R20 bil­lion.

The FSB points out that ben­e­fi­cia­ries can still claim from th­ese funds.

“All as­sets found in the funds were trans­ferred to un­claimed ben­e­fit funds, where they can still be claimed by their right­ful own­ers,” said spokesper­son Tem­bisa Marele on Fri­day.

How­ever, the re­spon­si­bil­ity of track­ing down the fund and sub­mit­ting a claim now rests with the ben­e­fi­cia­ries, many of whom may be com­pletely un­aware they are owed money.

The FSB main­tains that no prej­u­dice was caused by the way in which they closed the or­phaned funds.

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