On 14 February, a full bench of the South Gauteng High Court reserved judgment in what could be a landmark legal case for South Africa’s concentrated pension fund industry. A few months ahead of reporting its strongest earnings ever, Amplats approached the Court to effectively force the Board of Trustees of the Amplats Group Provident Fund to transfer the assets of the fund – a Section 14 into Old Mutual’s Superfund Umbrella Fund.
Further, all the candidates that were invited to submit proposals were forced to sign non-disclosure agreements – creating an exclusive process without fairness or transparency.
The jury is still out about umbrella funds being better for members. President of the Black Securities and Investment Association , Sibongiseni Mbatha, recently wrote an op-ed where he decried the move of standalone funds into umbrella funds. “This trend is at odds with the government’s priority of broadening access to financial services for all South Africans and raises the question of how transformed umbrella funds and the multi-managers that typically manage the allocation of those funds are, given the significant size of the market they control on behalf of members, who are largely workers.
“The locking in of such funds to services provided by or under the auspices of the sponsor. The presumption behind this is that the resultant lack of potential competition with other service providers leads to excessive costs. These in turn eat into the retirement savings of the members.” The Fund takes very seriously its mandate and responsibility to ensure that members’ rights and interests are upheld and it is incumbent on us to satisfy the Financial Sector Conduct Authority that we have complied with our duties in this matter.