The trustees of four troubled umbrella retirement funds, two IF funds and two Dynam-ique funds, have nominated a liquidator so that the funds can be voluntarily liquidated, enabling members to transfer their benefits to other funds.
The move comes after deficits were found in three of the funds and inaccuracies were identified in member records.
The appointment of the nominated liquidator, Francois Rosslee, of Argen Actuarial Solutions, still needs to be approved by the Registrar of Pensions Funds at the Financial Services Board, but Rosslee says the trustees will apply for liquidation only when other work, such as the reconstruction of member records, is complete.
The four umbrella funds at one stage served 200 employees and 11 000 members, and were originally sponsored and administered by Dynam-ique Consultants & Actuaries.
The administration of the funds was taken over by Aon South Africa in 2008. Actuarial valuations in 2011 uncovered deficits amounting to R7.4 million in the funds.
The former trustees ordered a R20 million reconstruction of members’ records and recovered R1 million in settlement agreement with Tony Kamionsky, the chief executive of Dynam-ique Consultants & Actuaries.
Aon resigned as administrator and, since last year, the funds have not been accepting new contributions, Rosslee says. Employers have set up new funds, but members’ benefits have not been transferred in full to their new funds because the benefit values have yet to be determined.
In another development, in 2013, Muvhango Lukhaimane, the Pension Funds Adjudicator, held the former trustees liable for the R20 million incurred in the rebuild, saying the trustees had a duty to oversee the administration of the fund.
The former trustees plan to appeal the adjudicator’s determination.
Rosslee says that after Aon resigned as administrator, the funds’ trustees were unable to appoint a new one.
The trustees then opted for a voluntary winding-up of the funds as they were advised to do by the deputy registrar of Pension Funds, Rosemary Hunter.
The trustees have prioritised the completion of the rebuild of member records, finalising outstanding statutory affairs and ensuring that all funds are fully funded, Rosslee says. This is likely to involve a reduction of members’ fund values.
Once the record rebuild has been completed and the fund values adjusted, the trustees will apply for voluntary liquidation in terms of the Pension Funds Act. While the funds are in liquidation it will not be possible for transfers to be made out of the funds, except in cases of extreme hardship, Rosslee says.
Voluntary liquidation does not mean the funds are in financial difficulty, as it generally would in the case when a company is placed in liquidation, Rosslee says. He says the voluntary liquidation of the funds is a regulated process to ensure equitable distribution to all stakeholders, while protecting everybody’s interests in a fund.
The nominated liquidator says he hopes the court case around the R20 million will be resolved by the time the liquidation application is made, but if not, any potential recoveries for the benefit of fund members may need to be made by way of a payment after the liquidation of the funds is finalised.