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Johannesburg - If your pension fund has not been managed with expertise and caution, years of contributions could still leave you penniless - just when you need your hard-earned cash.
What's more, the only remedy the Financial Services Board (FSB) can offer is to place the fund under a curator's supervision.
"One of the possible negatives of a retirement fund is that many decisions are made on your behalf by the trustees," said Kobus Hanekom, head of general consulting at Simeka Consultants and Actuaries.
The remedies afforded by the FSB allow "no revocation or suspension of a pension fund licence", said Jurgen Boyd, registrar of pension funds at the FSB. "The remedy in extreme circumstances could result in curatorship."
The only upside, said Pension Lawyers Association president Nancy Andrews, is that a pension fund "can never not pay a member", although there might be a delay in payment.
If a curator is appointed to manage a fund and finds it is being mismanaged, the fund can be liquidated, said Andrews. This could eventually lead to a loss of the fund's FSB registration.
She said even when a fund is liquidated, members are entitled to all the contributions they made towards a defined contribution fund. However, in the case of a defined benefit fund, it may become exhausted.
If all else fails, Andrews said a pension fund member can sue either the fund or its trustees in their personal capacity, but this option comes with the added cost of legal fees.
Outgoing pension fund adjudicator Mamodupi Mohlala said the Office of Pension Funds Adjudicators (OPFA) has introduced a pension fund scorecard. This is part of a strategy to have a preventative rather than a reactive approach towards proper pension fund governance.
Launched last week, the OPFA scorecard is an assessment of pension funds based on the type of complaint, number of complaints, quality of response, time taken to respond and outcome of the complaint.
The first results of the OPFA scorecard test showed that for the year to September 2009, the average rating of the 290 funds accessed was a "low" 4.6 (out of 10).
Mohlahla said: "There's a clear need for the funds to improve their corporate governance." She said the OPFA intended to hand scorecard results to the FSB, so that it could decide whether the transgressions warranted possible reconsideration of continued licensing.
The twenty worst performers
- Numsa Staff Provident Fund (0.0)
- Toyota SA Pension Fund (0.0)
- Premier Food Pension Fund (0.0)
- NewTyre Manufacturing Industry Provident Fund (0.0)
- Firestone/Bridgestone Provident Fund (0.0)
- Impala Platinum Pension Fund (0.2)
- TOP Provident Fund (0.5)
- Crystal Retirement Fund (0.8)
- Sanlam Retirement Fund (1.0)
- Profusion Umbrella Retirement Fund (1.0)
- Investec Investment Linked Retirement Annuity Fund (1.0)
- Capela Umbrella Fund (1.0)
- Contract Cleaning National Provident Fund (1.13)
- Private Security Sector Provident Fund (1.26)
- Smollan Group Pension Fund (1.5)
- Reckitt Benkiser Retirement Fund (1.5)
- Denel Retirement Fund (1.5)
- Security Employees National Provident Fund (1.55)
- Motor Industry Provident Fund (1.7)
- Motor Industry Pension Fund (1.7).
- Fussel Umbrella Pension Fund (9.4)
- Old Mutual Superfund Provident Fund (8.0)
- Primovie Pension Fund (8.0)
- Retail Retirement Fund (8.0)
- Plutos Provident Fund (7.9)
- Distillers Corporation Provident Fund (7.7)
- Harmony Retirement Annuity Fund (7.7)
- Master Adaptor Retirement Annuity Fund (7.7)
- Metropolitan Staff Retirement Fund (7.7)
- Museums Retirement Fund (7.7).
- Fin24.com
