Pension Funds Remain in the Spotlight
Bussiness climate for trustees hotting up
The pension fund industry, and particularly the governance thereof, has increasingly found its way into the spot light in recent years. Scandals in the local business community (Leisure Net, Regal Treasury Bank, Fidentia), and this is not to mention the debacles that have taken place in the international arena (Enron), have focused attention on corporate governance and as a result there are signs that South Africa is becoming increasingly litigious.
The pension fund industry at large has also not escaped its fair share of bad publicity with the subject of secret profits and bulking having made recent headlines, and the Pension Fund Adjudicator issuing a series of rulings in favour of fund members against administrators. Numerous press articles have emphasised the fact that trustees in general do not have adequate training to perform their duties.
This can be seen in distribution the of surplus funds not being handled with sufficient urgency, and as a direct result the FSB is now appointing, at the funds’ expense, special tribunals to expedite matters. And finally, to add to the trustee’s woes, the Pension Funds Amendment Act has now come into force with the intention of clarifying the application of surplus provisions and to remove anomalies between the existing Pension Funds Act and other legislation.
To this end, pension fund trustees can now be held personally liable for the consequences of their actions. In the increasingly complex environment in which they are required to perform their duties it is essential that funds have adequate insurance cover to protect them from possible claims from members, their beneficiaries or the authorities.
In the current climate, which without a doubt is hotting up, it seems to certainly be a good idea to keep all your bases covered. And insurance is indeed a good way to ensure you don’t get caught unaware.