The Financial Services Board (FSB) says it can account for 80 percent of the assets held by the retirement industry despite the fact that only 45 percent of registered funds have submitted financial statements for the year to the end of 2006.
Retirement funds are required by the Pension Funds Act to submit audited financial statements to the FSB within certain deadlines.
The FSB says the main reason funds have failed to submit financial statements is because auditors have been unable to meet the increased demand for their services. Auditing services are in demand because a number of funds no longer enjoy an exemption from being audited.
Previously, retirement funds that were underwritten by insurance policies did not have to submit audited financial statements to the FSB.
The FSB said this week it is accepting unaudited financials in the meantime. It has given fund administrators until the end of this month to submit unsigned financial statements relating to the 2006 year.
The FSB expects that within the next two months 80 percent of financial statements for 2006 will be submitted. Signed financial statements for 2006 have to be submitted by February next year.
The FSB also says large funds have been submitting their 2007 and 2008 statements on time, and most funds with more than R30 million in assets have submitted statistics.
The regulator says this is the first year in which underwritten funds have been audited and a lot of audit queries have had to be resolved, which has taken a lot of time.
Decline in assets
The FSB's annual report also reveals a decline in contributions paid to retirement funds and benefits paid out by funds.
The FSB said it could not comment on the reasons for these declines, because the number of statements that have been submitted is too low to make reliable assumptions.
Contribution income collected by retirement funds decreased by 4.2 percent, from R75.1 billion in 2005 to R72 billion in 2006.
There was a 14.4-percent decrease in the amounts contributed to state funds - Transnet, Telkom and the Post Office's funds - while amounts contributed to privately administered, underwritten and bargaining council funds decreased by 6.6 percent between 2005 and 2006.
Benefits paid by funds (as pensions or as lump sums on retirement, death or resignation) decreased by 2.2 percent, from R85.9 billion in 2005 to R84 billion in 2006.
The assets held by the retirement fund industry increased by 13.3 percent, from R1 284 billion in 2005 to R1 454 billion in 2006, the report says. There is no indication of the real (after-inflation) increase.
According to the report, there are 7.3 million active members of retirement funds. But this does not mean 7.3 million people are contributing to funds, because some people are members of more than one fund.
The report also reveals that the licence of a retirement fund administrator was suspended after it was found to be failing to conduct "proper administration business" and was not maintaining proper records.
The FSB said it would only name the administrator if it was in the public's interest to do so and urged trustees to verify the status of an administrator before appointing it.
According to the report five funds under the administration of this administrator did not have accounting records. The funds' benefits had not been calculated correctly and they did not have properly constituted boards of trustees.
In one case, the sponsoring employer had been liquidated but the fund had not, and members had not been paid out their benefits.
One of the funds had investments that contravened the regulations under the Pension Funds Act.
The annual report also notes that the FSB was inspecting 12 retirement funds and the administrator whose licence was withdrawn.