Curator takes over fund

Isaac Moledi

Isaac Moledi

Certain security guards might not be aware that their employers are deducting their pension and provident fund contributions but not depositing the money into the respective funds.

This is because the funds' trustees tasked with looking after the money are clueless about their fiduciary duties.

A case in point is that of Command Provident Fund (CPF), a provident fund for security guards, which was provisionally placed under curatorship by the Pretoria high court last week.

CPF was placed under curatorship after the Financial Services Board (FSB) applied for the order.

The FSB, which is the regulator of the non-banking financial services industry, applied for the order because it said CPF contravened the Pensions Fund Act by deducting more than R2,2million from staff salaries, but failed to pay the money into the fund.

Section 13A of the Pensions Fund Act stipulates that members' contributions are to be transmitted into the fund's bank account not later than seven days after the end of the month for which the contribution is payable.

In terms of the court order curator Shantha Padayachee must take over control of the board of management of the fund.

The application by the registrar of pension funds at the FSB follows protracted attempts by the regulator to get the former and current employers of a security company to pay monies deducted from employees to the fund.

Pension funds deputy registrar Jurgen Boyd said the affairs of the fund had received periodical attention over the past two years and because no satisfactory solution could be found, FSB conducted an investigation into the affairs of the fund.

The findings of the investigation are listed below:

l The fund has not been able to achieve registration because of outstanding queries. The fund operated without a board of trustees for more than a year.

l The fund's financial statement for the 2005-06 financial year is overdue.

l Two consecutive participating owners in the fund have deducted contributions from members' salaries, but have failed to pay contributions to the fund.

l Marius Potgieter, chairman of the fund and employer-appointed trustee, was found to be in a position of conflict in representing the employer while simultaneously being a trustee of the fund. The regulator found that Potgieter influenced the decisions of the trustee.

l The trustees of the fund have not taken steps against the employer for the repayment of the misappropriated member contributions.

l The member-elected trustees were patently not conversant with the provisions of the Pensions Fund Act and did not understand what was required of them to carry out their fiduciary duties.

Apart from their inability or unwillingness to recover from the employer what is due to the fund, there are compliance issues the trustees failed to deal with.

Among these are the outstanding financial statements of the fund for two years and the provisional registration status of the fund and its rules.