The massive theft of pensions should be called a crime, but because it has been perpetrated by corporate South Africa, it is put down to regulatory failure.
An investigation by Open Secrets on the pension fund industry has revealed that there is over R42-billion owed to four million people and that industry players continue to benefit from withholding these benefits. The year-long investigation by the organisation, which exposes private sector economic crimes to make the perpetrators accountable, included interviews with “with pensioners, social movements and fund administrators, digging through court records, engaging with the regulator the Financial Services Conduct Authority (FSCA), and working with whistle-blowers.”
Published in a book titled The Bottom Line, the investigations uncover that “6,757 pension funds were cancelled in reckless and often unlawful ways, leading to at least hundreds of funds (at least) being cancelled before paying out their members. Both private fund administrators and the FSCA are responsible for this.” According to Michael Marchant, a researcher at Open Secrets, both Liberty and Alexander Forbes preyed on the cancellation of funds. “The regulator approached some employees of the private funds and made them sole trustees of the funds and these employees would then without following proper procedures decide that the funds no longer have money and that the regulator should cancel them. According to the law you must be satisfied that the funds do not have money and there are no people who are claiming from the fund. The regulator just believed what the employees were telling them at face value without double-checking,” said Marchant.
Open Secrets got to know about the issue from a whistleblower who used to work for the regulator.
The book also brings to light what it calls the “unaddressed systemic failures of governance in the pension fund industry” – and the suffering of vulnerable pensioners and fund members that results.
Rosemary Hunter, the whistleblower and former deputy-registrar of pension funds and deputy executive officer of the financial sector regulator (then the FSB), remains active in the campaign to make the FSCA and private sector fund administrators accountable. “It is a national disaster that I think we deserve to have a commission for. I’m hoping that the parliamentarians would see the urgency and the need to sort this issue out,” Hunter said. Unpaid benefits is an issue that not only affects South Africans but also migrants from neighbouring states who worked in the mines of South Africa.
“We are hoping that the report is going to strengthen the work of the Unpaid Benefits Campaign that we worked closely with and allowed us to interview some of the ex-mineworkers who are still waiting for their benefits to be paid,” said Marchant.
The Unpaid Benefits Campaign was founded in early 2017 by a coalition of community groups, advice offices, NGOs and groups of former workers, together asking where their pensions and provident fund monies have gone. There are currently five branches in Gauteng and a branch in Cape Town of mostly ex-mineworkers.