Sarah Smit | Mail & Guardian | 25 October 2019 |
Pension fund industry players continue to profit from the R42-billion owed to the four million South Africans still waiting to be paid their pensions.
This is according to a recently released report by non-profit organisation Open Secrets. The Bottom Line is the culmination of a year-long investigation into South Africa’s pension fund industry.
The report contends that the industry has been structured to benefit corporations, leaving pensioners — who every month of their working lives give up a portion of their earnings to secure a dignified retirement — out in the cold.
The fight over unpaid pensions was sparked when former deputy registrar of pension funds Rosemary Hunter identified significant problems and likely unlawfulness in the Financial Services Board’s mass deregistration of so-called “orphan funds”. These are shell funds left without any members or assets, or dormant funds without boards.
In July 2014, Hunter filed a whistle-blowing report to the board of the Financial Services Board, now the Financial Sector Conduct Authority (FSCA).
This alleged that there had been a mishandling of the deregistration process, which saw the cancellation of thousands of funds, without — Hunter said — proper oversight.
Last year, Hunter lost a Constitutional Court bid to compel the Financial Services Board to investigate all the funds that were deregistered in the cancellations project.
The Open Secrets investigation found that between 2007 and 2013, up to 6 757 pension funds were deregistered by the pensions’ regulator at the behest of private fund administrators such as Liberty and Alexander Forbes.
This occurred despite the fact that some of these funds still held assets and people were owed payments from them, the report claims.
“For their part, administrators like Liberty and Alexander Forbes used the project to rid themselves of responsibility for thousands of dormant funds, while sometimes holding on to their assets,” the report reads.
The assets of cancelled funds were often moved into unclaimed benefits funds held by the fund administrator. Since 2008, the assets of these funds have increased from R450-million to over R8-billion.
