Title: OCR Document
Author: Readiris
Last saved by: PC 10
Company: I.R.I.S.

Association for Exploited Retirement & Medical Aid Fund Members - trading as Pensiongripes

2 May 2008

GENERAL FINANCIAL SERVICES LAWS AMENDMENT BILL, 2008

We refer to Government Gazette number 30998 and thank you for the opportunity to comment on the above Bill.

We wish to confirm that we are a member of the South African Confederation of Seniors' Organisations (SACSO) with a support base of + - 400,000 individual members. I am on the Executive Committee of SACSO. As part of my responsibilities in the Protection Network of SACSO; I am also writing this letter to you.

In general we commend the National Treasury (NT) and the Financial Services Board (FSB) for the efforts to improve the legislation covered by the aforesaid Bill. In this letter we will however restrict our comments to the following legislation:

•	Pension Funds Act 24 of 1956

•	Financial Institutions (Protection of Funds) Act of 2001

Before we list the detail of our comments we would like to express our disappointment that the NT and the FSB failed to improve the following matters.

•	Annual General Meetings of Members

The rules of a pension or provident fund are the equivalent of the Memorandum and Articles of Association of a company. All companies are subject to a statutory requirement to hold a Annual General Meeting of the shareholders. Also companies are not allowed to change their Memorandum and Articles of Association without the approval of the shareholders by majority vote normally 75 % of the shareholders.

We believe that pension and provident funds should be subject to similar statutory requirements and the rules must be adapted accordingly.

For this round of amendments, we therefore request and urge you to insert an additional section into the Pension Funds Act making Annual General Meetings a statutory requirement.

•	Access to documents (Section 35 of the Pension Funds Act)

In terms of section 35 access to documents by a member is restricted to (a) the rules of the fund (b) the last revenue account and the last balance sheet in terms of subsection (1) of section 15

Section 35 is applied by funds and the Registrar of Pension Funds to mean that once a member is no longer a member of a fund, the former member is no longer entitled to the aforesaid documentation. Even if a person is a member of a fund and a request is made for historical documents, in many cases the request is declined.

For this round of amendments, we request and urge you to improve the wording of section 35 into the Pension Funds Act making the following documents available to all members and formers members on demand from a fund or from the records of the Registrar of Pension Funds.

•	Original Rules and all approved amendments by the Registrar of Pension Funds.

•	Current and historical audited Annual Financial Statements in the format as submitted to the Registrar of Pension Funds.

•	Current and historical actuarial reports prepared by the valuator of a fund as submitted to the Registrar of Pension Funds.

We believe that part of the reason of the backlog accumulated at the office of the Pension Funds Adjudicator is caused by the aforesaid documents not being made available to members and former members of pension and provident funds. In principle, this is like a company refusing to make their Memorandum and Articles of Association and Annual Report available to shareholders.

Our supporters simply cannot understand why the NT and the FSB are supporting the suppression of documents by means of outdated current legislation.

•	Right to impose penalties by the Pension Funds Adjudicator.

We request that you also amend the Pensions Funds Act giving the Pension Funds Adjudicator the right and obligation to impose onerous penalties on funds and service providers failing to provide information within prescribed deadlines.

Developing a scorecard to measure performance without financial consequences will not resolve the backlog. A similar scorecard system is operated by Hellopeter.com. As per the aforesaid system companies simply ignore the ratings on the system because there are no direct financial consequences.

With reference to the amendments in the bill, we comment as follows:

•	4 - Section 8 of the Pension Funds Act. We recommend that the wording be changed to clarify that the principal officer should be appointed, employed and be paid by the fund, i.e. must not be an employee of any of the participating employers. This is a conflict of interest. If the principal officer is an employee of a service provider it should be disclosed in writing to the members as well as in the Schedule A of the audited Annual Financial Statements.

It is not clear whether section 8 (5) applicable to the principal officer, auditor and valuator is applicable to wrongdoings that occurred prior (with the exception of convictions) to this bill becoming law. We believe that the Minister should reword the wording bearing in mind that professional indemnity insurance policies contain clauses suppressing the disclosure of compromising information.

•	42 Section 6D (2) (a) Financial Institutions (Protection of Funds Act 2001

- Penalties. We recommend that the wording be changed to insert minimum penalties. Penalties should be designed to discourage repeat offenders using untested opinions provided by lawyers and advocates. We recommend penalties something on the scale imposed by the Competition Commission. Furthermore, we recommend that offenders with professional qualifications or representatives of offenders (entities) with professional qualifications be reported as a statutory requirement to their professional bodies.

We trust that our views and recommendations will receive proper consideration.

Yours faithfully

A. BEZUIDENHOUT (MR)