The 11 000 members of four troubled umbrella retirement funds are being cast adrift, with their employers having to find new retirement funds in which to place their savings.
But there is no clarity whether the members will recover losses incurred through administrative failures by the funds’ former administrator and sponsor, Dynam-ique Consultants & Actuaries.
The four funds, with combined assets of about R800 million, are:
* The Dynam-ique SA Umbrella Pension Fund, with 937 members and 17 participating employers;
* The Dynam-ique SA Umbrella Provident Fund, with 5 343 members and 101 employers;
* The Integrated Future (IF) Umbrella Pension Fund, with 711 members and 12 employers; and
* The Integrated Future (IF) Umbrella Provident Fund, with 4 272 members and 70 employers.
When the administrative failures came to light, the then trustees, who resigned in 2011, decided to charge the members 2.5 percent (about R20 million) of their savings to have an accounting company rebuild the records. This deduction is the subject of a number of court actions and complaints to the Pension Funds Adjudicator.
Towards the end of last year, the current administrator of the four funds, global financial services company Aon, decided it would no longer administer the funds, but the fund trustees cannot find a new administrator to take on the task.
As a consequence, the trustees have told participating employers that they will not accept any new contributions to the funds and to find new funds to which they can transfer their employees.
No new contributions will be accepted by the two Dynam-ique funds after February 28 and by the two IF funds after May 31. Risk benefits, such as life assurance cover, will not be provided by the funds after these dates.
John Rollason, the current chairman of the boards of trustees, says the trustees are seeking legal advice as to the most appropriate way in which to wind down the funds once they stop receiving contributions at the end of their current financial years.
Aon has undertaken to complete the rebuilding of each of the four funds, and the trustees will remain in office until this has been done.
The saga has been further complicated by the fact that when Aon took over the administration of the four funds in 2008, it failed to undertake a proper due diligence on them.
As a consequence, the current trustees are suing Aon for some of the losses.
The trustees have reached a settlement agreement with Tony Kamionsky, the chief executive of Dynam-ique Consultants & Actuaries that he pay the fund R1 million.
Rollason says the trustees have had settlement discussions with Aon and it tabled an offer.
The offer has since been withdrawn after one of the participating employers, Dell Computers, issued its own summons against Aon (and all former trustees). The legal adviser to the four funds is currently having discussions with the attorney acting for Dell.
In August last year, Pension Funds Adjudicator Muvhango Lukhaimane found that the ultimate responsibility for the administrative mess lay with the former trustees of the funds, who failed in their duties to:
* Exercise a rigorous oversight function over the administrators;
* Act with due care, diligence and good faith in respect of the operation and administration of the funds; and
* Ensure that the funds had adequate indemnity cover to provide for gross negligence resulting in financial loss or liability.
Lukhaimane ordered the former trustees to jointly and severally repay the R20 million it cost to rebuild the funds. She says the former trustees – Gail le Grellier, Renier Botha, David Lepar, and Carel Smith – did not manage the funds properly and, as a result, caused financial loss to the funds and ultimately to the members.
Lukhaimane says she was forced to let former trustee Kamionsky and his Dynam-ique administration company off the hook because of his R1-million settlement with the funds.
The former trustees are appealing the Lukhaimane determination.
Rosemary Hunter, Financial Services Board (FSB) deputy executive in charge of retirement funds, says the FSB was saddened to hear that the participating employers and their employees will have to find new retirement funds to provide for the employees’ retirement benefits in the future.
She says the FSB believes the decision of the trustees to ask the employers and employees to find new retirement funding vehicles is in the best interests of the members.
The FSB will continue to monitor the progress of the data rebuilding exercise, measures taken to protect the interests of the members in moving their contributions, and the litigation involving Aon.