Finance Minister Trevor Manuel and Pension Funds Adjudicator Vuyani Ngalwana in recent years have made much about the pivotal role retirement fund trustees play in ensuring that fund members enter retirement with at least some financial security.
In order to fulfil this role, trustees must act with due diligence and fairness and according to high ethical standards and often with a great deal of bravery.
They need to be brave and have high ethical standards because trustees are often bullied, cajoled and lured by those who wish to take unfair - and sometimes illegal - advantage of the retirement savings of ordinary people.
As it is, even when trustees do set themselves high standards, they are suckered by the nefarious actions of others. We have only to look at the many funds that lost money because of the unlawful secret profits made by Alexander Forbes and other retirement fund administrators.
Against this background, I become perturbed when I see what is happening at some of the country's larger retirement funds. And I would suggest that the members, too, should be perturbed.
For example, strange things are happening at the Mineworkers' Provident Fund (MPF). The sponsor of the fund is the National Union of Mineworkers (NUM), and its trustees are nominated by the union and the mining industry.
The problems at the fund came to my attention after NUM told Collyn Manzana that she was being removed as one of the union's nominated trustees and would be "redeployed" to the NUM-owned Mineworkers' Investment Company (MIC).
This seemed rather a strange move. Manzana, in my view, is one of the more outstanding trustees whom I have met.
I first encountered Manzana at an Institute of Retirement Funds convention, when Peter Moyo, the current chief executive of Alexander Forbes, was the head of employee benefits at Old Mutual. Moyo attempted to give the trustees attending the convention a patronising lecture and place all responsibility on them for what went wrong in their funds.
The feisty Manzana got stuck into Moyo. She is a woman of very strong principles and is not scared to speak out when she does not agree. I would suggest Manzana added great value to the MPF and, ultimately, to its members.
After NUM removed Manzana as a trustee, the Financial Services Board (FSB) reinstated her, but the FSB subsequently changed its mind and the whole issue is now due to go to court.
Even the chairman of the MPF, William Leshilo, a senior executive at Anglo Coal and an employers' representative on the fund, says all the trustees agree that Manzana made a significant contribution to the fund.
And then, from out of nowhere, Frans Mahlangu, the principal officer of the fund - whom I have also come to admire after witnessing his participation at various retirement conferences - was suspended a little over a week ago.
Mahlangu was told that he was being suspended because he has failed to carry out the trustees' orders and has withheld information from them. He is to face a disciplinary hearing. My information is that Mahlangu's suspension came at the behest of NUM executives, who simply should not be interfering in the affairs of the fund.
According to various sources, one of the reasons why Manzana and Mahlangu are under attack is because they are not easily intimidated by the fund's service providers. And this is where the problems come in.
The main service providers to the MPF include Lekana, Old Mutual and Living Hands.
Lekana
This retirement fund administration company is owned by financial services company Momentum. But the MIC has a 30-percent stake in Lekana and NUM members sit on Lekana's board.
Mahlangu and Manzana had become increasingly critical of the level of service provided by Lekana.
The relationship between the MIC and Lekana gives rise to a considerable conflict of interest, with the MIC looking to maximise the returns from its investments in Lekana, but these profits will come at the expense of the roughly 130 000 members of the provident fund.
The MPF is Lekana's largest single client, so any change in administrator would severely affect the fortunes of Lekana.
Fund trustees should always have a free hand to criticise and change administrators.
And to make the situation worse, now that Mahlangu has been suspended, his temporary replacement, Sandile Mbili, is an employee of Lekana. Now if ever there was a conflict of interest, this is it. I have no reason to doubt the abilities of Mbili, but his appointment places him in an invidious position. Whom is he perceived to serve?
Leshilo says the FSB indicated to him that it did not regard Mbili's temporary appointment as a conflict of interest.
I question the wisdom of this, particularly when it is clear that there is already disquiet about the MPF's administrator.
Old Mutual
Old Mutual manages about R6 billion on the MPF's behalf.
The company also used to provide the life and disability assurance benefits for the fund's members. Two years ago, Old Mutual tried to hike the premiums by 15 percent. The fund went shopping elsewhere, obtaining a quotation from Metropolitan Life that was less than Old Mutual's pre-hike rate.
Old Mutual has been trying to get back the fund's assurance business. But the view of some of the trustees is that Old Mutual tried to take unfair advantage of the fund over the assurance contract and that, in any event, it receives enough business from the fund by way of managing its assets.
Old Mutual has been vigorously attempting to influence the trustees by one means or another.
When Mahlangu was suspended, the senior Old Mutual employee responsible for the MPF sent an SMS to others that read: "FM suspended successfully. Will get more later." Quite clearly, the employee was celebrating.
Personal Finance took up the SMS with Old Mutual. In response, it says the employee concerned had already been removed from the MPF account by the time it had received Personal Finance's query. He faces a disciplinary hearing.
Old Mutual says the reason for taking this action is that company policy "is not to be involved in the internal processes of a fund, including decisions regarding the membership of the trustee body, and the management of the fund".
In a statement, the company says: "Old Mutual's role as supplier is to remain impartial at all times, seeking to find the most appropriate solution for the benefit of the end-clients, and recommending this solution to the board of trustees."
But Old Mutual is not off the hook. A few weeks ago, it flew the MPF's trustees and Frans Baleni, the general secretary of NUM, to Cape Town.
Old Mutual's senior executives briefed the fund's members.
In the evening, Baleni and the trustees were taken on a two-hour, R550-a-head dinner cruise around the harbour.
Manzana was the only person to decline the dinner-cruise invitation.
Old Mutual has tried to argue that the cruise was no great shakes and that other companies go to far greater lengths to entertain trustees.
It is about time that senior executives stopped using this "common industry practice" argument to justify the unjustifiable. Alexander Forbes also attempted to use this argument when Personal Finance exposed its secret profits.
Old Mutual also argues: "They feel better informed and empowered by having the opportunity to interrogate Old Mutual and raise any concerns at a high level."
Again, this is an unacceptable argument. Companies should not offer any inducements to retirement fund trustees; and it is equally unacceptable for trustees to accept or request anything from service providers, apart from service in terms of a service level agreement.
Old Mutual should have put its executives on a plane and flown them to Johannesburg to brief the MPF's trustees. As one of the bigger players in the field, Old Mutual should set standards of excellence and not play follow-my-leader with poor practices.
Finally on this point, every retirement fund should have a trustee code of conduct, and every code of conduct should ban the acceptance of any inducements.
Living Hands
This umbrella trust administration company (formerly called Mercantile Trust company and then Mantadia) was bought by beleaguered Cape Town-based financial services company Fidentia.
Fidentia's asset management subsidiary is currently the subject of an FSB investigation.
Mashudu Munyai, the deputy registrar of insurance at the FSB, confirmed this week that the FSB has declined Fidentia's application for a life assurance licence to take over mCubed Life. He did not give a reason for the FSB's decision.
Living Hands administers trusts on behalf of the widows and orphans of the MPF's deceased members. In all, it controls about R800 million of MPF money.
Manzana, who was chairperson of the MPF's death benefits sub-committee, had become increasingly concerned about the capabilities of Living Hands, because of complaints from widows and orphans. As a result, in November last year, the MPF stopped putting new funds under the control of Living Hands.
Living Hands has been lobbying hard to get back all the trust administration business - particularly through one of its empowerment partners, the high-powered and influential Danisa Baloyi. Baloyi was a director of Mantadia and a trustee of the umbrella trust. She remains a trustee of the trust.
When Personal Finance asked Fidentia about the Living Hands issue, Fidentia chief executive and a trustee of the umbrella trust, Hjalmar Mulder, said that Mbili had contacted him after his appointment as the MPF's principal officer. As a result, Mulder says, he is confident new funds will again be put under Living Hands' control.
Personal Finance has since learnt that Living Hands pays Lekana a commission for all business directed to the umbrella trust. The amount is apparently 0.35 percent of the benefits due to widows and orphans. This is clearly a conflict of interest.
Another problem is that the MPF's trustees did not conduct a due diligence investigation into Living Hands when it was taken over by Fidentia. Fidentia at the time was a new company with no track record.
When concerns about Fidentia started to grow, the MPF instructed KPMG to conduct an investigation on its behalf. The investigation raised a number of questions that Fidentia had not answered.
Fidentia has also been rejecting the FSB's view and that of lawyers of the MPF that Living Hands must register as a financial services provider in terms of the Financial Advisory and Intermediary Services Act. Fidentia says it is only answerable to the Master of the High Court.
All the above is very disturbing. It shows that trustees, fund sponsors and service providers still have a long way to go to meet what should be generally accepted standards of managing the retirement benefits of millions of people.
It also demonstrates that you, the member, must remain ever vigilant over your fund's affairs.
Not off the hook
After Personal Finance last week reported on the investigation by the Financial Services Board (FSB) into Fidentia, the company sent a letter to its clients that, among other things, implied I am satisfied with Fidentia's response to our questions about the company.
I gave Fidentia no such indication. I have told Fidentia that Personal Finance will await the outcome of the FSB investigation (and the possible release of the investigation's report) before raising issues of concern with it.