The Financial Services Board and Parliament should put on hold any substantive changes to the Pension Fund Act, particularly amendments proposed by the Financial Services Board, to allow surpluses in retirement funds to be withdrawn by employers.
There are two reasons why I suggest that this step be taken.
The first is that only by the end of next year will all boards of trustees of retirement funds be required to have 50 percent of their members elected by retirement fund members.
At the moment many funds are still run by trustees appointed by employers who, in spite of injunctions in the legislation to act in the interests of members, could still favour the position of the employer.
Trustees elected by members are far more likely to ensure that members are given a fair deal in the event of the legislation concerning the withdrawal of pension fund surpluses being approved by Parliament.
The second reason for delaying legislation is the current confusion that reigns about what constitutes an unfair labour practice when it comes to retirement funds.
Since raising the issue of whether practices in the administration and rules of retirement funds can fall under the Labour Relations Act, promulgated by Parliament two years ago, Personal Finance has been inundated with complaints from readers about what they consider to be unacceptable practices and rules of pension funds.
Most of the complaints relate to withdrawal benefits received on leaving the fund. But there are also other complaints such as discrimination that has resulted in benefits based on race.
Some funds only pay resigning member contributions with insignificant interest added, while in one case a member was told that a fund was non-contributory. On leaving the company he was given no withdrawal benefits.
Initially Personal Finance quoted the Commission for Conciliation, Mediation and Arbitration (CCMA) as saying that complaints about unfair practices relating to retirement funds could be dealt with by the body under the Labour Relations Act.
However, this week the CCMA said there was a need for greater clarity on what type of unfair practices should be handled by different bodies or institutions.
Sue King of the CCMA says certain complaints needed to be referred directly to the Pension/Provident Fund Board of Trustees, others to Bargaining Councils and some to the Labour Court.
The matter has now been referred for legal opinion to resolve which of the pension or provident fund related disputes should be handled by the CCMA. This opinion is expected shortly.
However, even when this issue is resolved it will still be some time before complaints can be processed and precedents set.
Another major issue that will have to be decided is who is responsible for negotiating retirement fund rule changes, particularly as there will probably have to be rule changes to accommodate any surplus withdrawal.
There is a current debate that rule changes are not the responsibility of trustees and that they should be negotiated between employers and employees and their representative organisations.
This is particularly the case when the changes affect conditions of employment, such as retirement fund benefits and contributions.
For these reasons and with the possibility that there could be claims against funds and employers because of poor withdrawal benefits, now and in the past, it is essential that no decisions are made now that could further disadvantage present and former fund members.
Personal Finance will continue to keep readers abreast of developments.
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A brickbat for individual portfolio managers, the Appleton Group, the same group that used to imply in radio advertising that registration as a portfolio manager with the Financial Services Board was official endorsement for their activities and investment skills.
I was cold canvassed telephonically by one of their staff, Katerina. For a start I do not like being cold canvassed. It is receiving junk mail telephonically.
I asked how she had managed to get my work telephone number. From the share register, she told me. When I told her that was rubbish and pressed her further she put down the telephone.
My first question is what sort of company has to dredge through share registers to identify possible targets?
It places it in the same category as the house painting companies, encyclopedia salespeople and gutter repairers that seek custom over the telephone.
The second question is why does it allow its staff to mislead the public about how it obtains telephone numbers and then allow them to put down the telephone when they cannot answer a direct question honestly?
Appleton MD Ian Kilbride apologised later but says that other companies also make cold calls.
My response: Please take me off the list. I will not be dealing with the Appleton Group.