HOW CAN YOU KEEP YOUR PENSION SAFE

Oh what a lot of absolute BS! All of them are as guilty as the next. The FSB did not do their jobs properly, the Trustees did not do their job properly, The Asset Managers did their jobs a little too properly and for their own gains and finally where were the FAIS compliance officers? Why didn't they do their jobs properly?

I have recently had first hand experience of what happens when people working in this industry have no idea about what it is that they do. It's not a tiny brokers office either, it is one of the largest Insurance Groups in South Africa and the reason that I am not naming them at this time, is because everything is now under investigation ( or that is how they are handling it at the moment). The money started off as an ABC type investment, which at some point between the 1990's and now has turned into an XYZ investment - which of course has a whole host of different implications!

Then when it came time to cash the policy in, I have been stalled, insulted, shouted at, investigated and just tied up in internal policies and procedures for the last 5 months. The worms have finally crawled or rather slithered out of the woodwork and it is time to put all the cards on the table. This is going to be a very interesting excercise, to see how they intend to wiggle out of this one.

Rest assured though, I will be taking this further, it will be reported to the FBS and I want big answers - not the usual ones that go "well the computer . . . .". I want someone's head on a block. I want "unjust interest" for money that they have wrongfully withheld to the tune of almost R900 000 and I want them to understand that the misplaced "power" that their insignificant mindless staff members thought they had will wilt in the presence of the type of power that I can weild when the chips are down on the table.

So much for all the checks and balances that these companies like to tell us are in place - they still do what the hell they like with money that does not belong to them. It is time for them to answer!

How can you keep your pension safe?
Maya Fisher-French
14 February 2007 11:59

If an asset manager can defraud a large pension fund such as the Mineworkers Provident Fund (MPF), we have to question the relative safety of our pension fund assets. What safeguards are in place and what exactly is the role of trustees and watchdogs? Fidentia Asset Management, along with two other sister companies, was placed under curatorship recently. This after the Financial Services Board (FSB) submitted affidavits to the Cape High Court in which it alleged about R689-million of assets could not be accounted for. The FSB has subsequently revised that figure to R406-million.

It appears that a portion of the missing funds was used to grow the company through various acquisitions. According to the deputy Pension Fund Adjudicator (PFA), Naleen Jeram, the first line of defence is the trustees. “Trustees of funds have a fiduciary duty to act in the best interests of the fund and its members and must avoid a conflict of interest at all times,” says Jeram. However, in this particular case, it would appear that the trustees failed in their duties. Firstly, questions will be asked of the Living Hands Trust, which was set up by the MPF to pay money to families of members killed in mining accidents. Despite receiving advice to terminate their investment with Fidentia, they failed to do so. Ultimately the trustees of the MPF are also accountable for not keeping a closer eye on the actions of the trustees they had appointed to the Living Hands Trust.

At best, it was a case of not being vigilant enough, at worst, that some trustees possibly had a vested interest in Fidentia, considering reports that Frans Mahlangu, the principal officer for the fund, was suspended for raising concerns around Fidentia.According to one industry expert, who asked not to be named, the fund trustees should have run a health check on the service providers selected by Living Hands as a matter of course. Especially when the trust changed asset managers in 2005 from Old Mutual to the relatively unknown Fidentia. While the PFA has made several rulings that set the precedent of holding trustees personally responsible for unsavoury practices in a pension fund, commentators argue that many trustees are not competent or trained sufficiently to carry out their fiduciary responsibility.

Trustees have to be aware that people presenting to them may have vested interests and need to be clued up enough to know when to dig a little deeper. As members are able to elect 50% of the trustees of their pension fund, it becomes imperative that they select people capable of fulfilling the task of protecting their retirement fund. The role of members being actively involved in safeguarding their money is also highlighted by the statement from Jeram that any investigations into Fidentia by the PFA will only occur if there are complaints from members.If, however, the safeguard of the trustees is broken, as was the case with Living Hands, and considering the relatively low training of trustees, what exactly is the role of the FSB? In this particular case, the FSB only became aware of the problem when approached by a former employee of Fidentia in February last year.

Fidentia had failed to submit its December audited financials. According to the report submitted to the courts by the FSB, it would appear that by July last year they had enough evidence, including testimonies and documents supplied by three employees, to begin an investigation. But, according to Gerry Anderson, the FSB’s deputy executive officer, it was only in December that Fidentia was told to cease taking further investments. According to FSB spokesperson Russel Michaels: “In terms of the Financial Services Board Act 97 of 1990, we are precluded from telling anyone whether or not an entity is being investigated.”A question needs to be raised about the balance between following due process, which is time consuming, and acting quickly to protect public interests.