wilma mokupo head: pensions, financial services board
TRANSCRIPT
Wilma Mokupo
Head: Pensions, Financial Services Board
Do’s & Don’ts
The Short-cut Umbrella Fund
• Contributions are always late• Contributions are short-paid• Contributions are not accompanied by the member schedule•The fund is generally non compliant with rules, s13A & reg33• The fund has unallocated amounts in excess of 2% FVA• Member benefits face shortfall of 20%- 30% over 15yrs• Pending enforcement action from FSB
Do’s & Don’ts
The Superman Retirement Fund
• He has very strong personality• He is a senior executive at the principal employer• Mr Mike Mabaso: do you know this man?• He is an employer appointed trustee …and • He is the Chairman of the Board of Fund… and• He is the Principal Officer of your Fund… and • He is the sole signatory to all fund documents, cheques, etc• He chairs fund meetings with an “iron fist”• The Board of fund is dysfunctional: no IPS, no MBS, no AFS• Conflict of interest is rife and has resulted in theft, misconduct and fraud • The Board of fund is held jointly & severally liable• Do you know everything that is going on in your fund as a trustee? e.g. decisions taken by the Chairman with service providers outside board meetings?
Do’s & Don’ts
The Coin-Tossing Preservation Fund
• Wrong codes are used for investments• Mismatches are rife• Switching errors occur on a weekly basis• Out-of-mandate trades happen all the time• The Board of fund has no Investment Policy Statement in place•The fund as no fidelity cover in place• The Board of fund has not reviewed the fund contracts in years• Although the fund is using the same service providers since the inception of the fund there have been no annual performance reviews or SLAs in place to measure such performance• Members are offered individual investment choice at their own peril• Members are not told they can loose all or a big chunk of their savings…• Adjudicator complaints are a-plenty….
Do’s & Don’ts
The False Teeth Provident Fund
Mr Already Tired, the CEO is going on pension in 3 months•Who should replace him on the board of Fund?•Mr Mc Fellows who agrees with everything Mr Already Tired says?•Mr Do Right who has a strong moral code?• Should both serve on the Board?• Greater continuity and transfer of skills?•Board meetings will be rife with conflict & hidden agendas• No decisions are taken as consensus is required •The fund is stuck in the dark ages – no rule amendments, no surplus apportionment, etc.•Strikes in the workplace over death benefits not paid, minimum benefits not paid•The fund is not operating ito PF Act and members are prejudiced
Do’s & Don’ts
The Incognito Retirement Annuity Fund
• This fund has gone incognito…• No information given to members when they join the fund • No annual MBS (member benefit statements)• No fund booklet explaining the fund to members• Not even trustee reports to members on fund matters such as rules etc.• As a result members do not know the name of their fund nor the PO nor trustees serving on the Board of Fund• The only proof of membership to the fund is the monthly deductions from their payslips• Members do not know their rights & responsibilities ito their fund
e.g. yellow form when joining for “sunny future”e.g. green form when leaving employment for “greener pastures”e.g. blue form when dependants & nominees are identified for “joining blue skies on death”e.g. pink form when retiring for a “rosy retirement”
Do’s & Don’ts
The Extravagant Pension Fund
• The fund has no policies in place• The fund has no IPS (Investment Policy Statement)• The service provider is the benefit administrator, also investment administrator & also consultants to the fund “one-stop shop syndrome”• The fund has no governance structure in place• Trustees expenses are out of control e.g. >1 laptop, 3G cards, travel claims are inflated, celpone costs, entertainment, accommodation, several excesses etc.• Leakages are not good for the fund • Too much cash flowing out & too little cash flowing into the fund• Members’ benefits are diluted because of fruitless & wasteful expenditure• Inadequate benefits at retirement• Low standards of living for the aged• Lack of confidence & trust in the retirement funds system
Do’s & Don’ts
The Brady Bunch Beneficiary Fund
• The fund faces a huge challenge that beneficiaries are situated across the country•The caregivers and guardians are not properly identified & monitored•There are no regular verifications to the existence of the beneficiaries and guardians• Documents have been falsified in order to gain access to funds•The caregiver/ guardians are no longer responsible for the beneficiaries but keep drawing the monthly income• Family feuds are preventing the beneficiary fund trustees from finalising payments to widows & orphans• The fit & proper assessments of caregivers are not performed •The fund has inappropriate policies and procedures in place for a beneficiary fund• The fund faces liquidity challenges• Children go hungry without food, shelter and clothes & left homeless• Some beneficiaries cannot attend school due to non payment or incorrect payment of essential services• Pay the right person at the right time and the right amounts… • Data mnt is key!
Do’s & Don’ts
The Myopia Provident Fund
• All fund’s services, admin, administration etc. is outsourced•The Board of fund rely solely on the judgment of the Consultant because they “trust” him• The fund records are run off spreadsheets• The administrator has no disaster recovery or back ups in place or its dodgy• The same system has been used since the inception of the fund•The Board of fund has not considered better alternatives for the fund in terms of services & resources• Fund’s philosophy is “if ain’t broke don’t fix it”• Problem is as more members join it puts a strain on the fund’s resources and its ability to stay abreast of changes • Members suffer or may suffer financial loss•Trust the systems and procedures and internal controls• Put a risk management & monitoring mechanism in place•Review regularly
Do’s & Don’ts
Lessons learnt….
• Don’t steal, you might be the only one who gets caught!• Know what is happening in & outside board meetings or might become the scape goat!• Put sound fund policies in place with sanctions for transgressions• Keep your fund up to date with rule amendments, contributions, transfers, surplus scheme, financials, valuations & all other statutory submissions• Communicate effectively with your members (listen to their needs)• Cooperate with the employers participating in your fund (through education and negotiation)• Upskill yourselves as a Board of fund for continuous development• Ask for help when unsure… or get a second opinion when warranted….•Don’t keep all your eggs in one basket … diversify your risks•Grow the GDP of our country C+I+G+(X-Y) where I = i + s•Increase the wealth of our nation & investor confidence !• History will judge us all….
Above all…..Be BRAVE!!!!
Do the Right Thing…and Speak out
if something wrong is going on…
Remember Silence is just as bad as a lie when something important
is going on!
THANK YOUfor your kind attention
www.fsb.co.za