The Financial Services Board says it will take action against 'apathetic' retirement funds that fail to submit proposals on how they intend distributing pension surpluses to their members.
The Financial Services Board (FSB) has imposed surplus distribution tribunals on six retirement funds that tried to hide their pension surpluses from fund members.
The move shows that the FSB has finally lost patience with retirement funds that have failed to submit
surplus apportionment schemes or that are trying to hide surpluses from their members.
The FSB gave all retirement funds in surplus until April 1 this year to submit their proposals for distributing the surplus. This deadline also applied to funds that have no surplus - these funds had to submit a "nil surplus" statement.
The deadline came and went without most funds submitting their surplus apportionment schemes to the FSB.
Mike Codron, the chief actuary at the FSB, says funds were told they had to provide the FSB with the dates before the end of this year by which they would complete their surplus apportionment schemes.
"Some fund administrators came back saying December 31 for all the funds they administer. They were told this was not acceptable, and dates must be spread out up to the end of the year," Codron says.
"We will now hold the funds to those submission dates. If they do not meet those dates, with reasonable flexibility, tribunals will be appointed by the FSB in terms of the Pension Funds Act to take over the functions of trustees in any surplus apportionment exercise."
Codron says appointing distribution tribunals is "not a satisfactory solution, but it is the only one we have. Clearly, it will be an expensive option and in many cases can be avoided if the trustees and their service providers act timeously".
He says if a fund is tardy and a tribunal is appointed, you, as a member of such a fund, "should then consider if the trustees and/or their service providers have wasted the fund's money and should then take appropriate action (against them)".
The appointment of tribunals so far has been a result of the FSB suspecting that funds that submitted "nil
surplus" declarations were, in fact, hiding surpluses that should have been distributed, Codron says.
The situation can often be blamed on the "plain apathy" of fund trustees and administrators, he says.
Codron says the issue is "not whether the FSB is getting annoyed or not. The issue is that there are thousands of people out there who are due money and are not getting it. Some of these people are pensioners, and, of course, many will die before the money will be paid".
In recent weeks, Personal Finance has received an increasing number of complaints from readers who seem unable to elicit information from their retirement fund or their fund's service providers. Codron says it is unacceptable for retirement funds to brush off members.
Your fund's principal officer is obliged to answer your questions and provide you with information, he says. You should be told if the process of distributing the surplus is under way. You should also be told the date by which the process will be completed, without necessarily being given the full details of the apportionment exercise while it is under way.
Fund administrators are also obliged to provide you with the contact details of the principal officer.
If the principal officer refuses to provide you with the required information, you should complain to the Pension Funds Adjudicator.
So far, 240 retirement funds have submitted surplus apportionment schemes to the FSB.
Codron says the FSB estimates that of the 13 000 registered retirement funds in South Africa, less than 2 000 will have a surplus.
You can object to the FSB if your fund has declared a "nil surplus" or if you believe that your fund has failed to declare a surplus.
However, Codron says, your complaint must be based on a sound argument. You cannot allege that something has happened to the surplus simply because you do not like your employer or former employer.
Codron says the task of the FSB is to check whether a fund's claim of a "nil surplus" is correct and also whether a fund has apportioned a pension surplus properly.
Who can help
The Pension Funds Adjudicator is Vuyani Ngalwana.
Website: www.pfa.org.za
The adjudicator has offices in Cape Town and Johannesburg. If you live in the Eastern Cape, Free State, KwaZulu-Natal, Northern Cape or Western Cape, you should submit your complaint to the Cape Town office. If you live in any other province, you should direct your complaint to the Johannesburg office.
To contact the Cape Town office: Telephone: (021) 674 0209. Email: enquiries@pfa.org.za Fax: (021) 674 0185. Post: PO Box 23005, Claremont, 7735.
To contact the Johannesburg office: Telephone: (011) 884 8454. Email: reception-jhb@pfa.org.za Fax: (011) 884 1144. Post: PO Box 651826, Benmore, 2010.
The head of the Financial Services Board is Rob Barrow.
Website: www.fsb.co.za
Toll-free: 0800 110 443 or 0800 202 087. Telephone: (012) 428 8000. Email: mailto:info@fsb.co.za Fax (012) 347 0219. Post: PO Box 35655, Menlo Park, 0102.
By Bruce Cameron
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