The Financial Services Board (FSB) has taken swift and decisive action in the interest of members of the Private Security Sector Provident Fund (the Fund) by appointing a new board of management for the Fund in terms of the Registrar’s powers under section 26 of the Pension Funds Act, 1956 (the Act).
The Fund is a defined contribution provident fund to which certain employers and employees in the private security sector in South Africa are compelled to belong. The Fund was established during 2002 in terms of a Sectoral Determination for the Private Security Sector. An interim board of management for the fund was appointed by the Minister of Labour whose initial term of office was 3 years. The board’s term of office was later extended by the Registrar by an additional 4 years in terms of appropriate rule amendments up to 31 August 2009. Notwithstanding these extensions afforded to the Fund to allow for the election of member trustees, the board failed to ensure that a new board of management for the Fund had been elected prior to 31 August 2009 in terms of the registered rules of the Fund.
On 1 September 2009 the Registrar engaged the Fund and required of the Fund to establish a board of management in terms of the registered rules of the Fund within 90 days as required by section 26 of the Act. The 90-day period expired on 30 November 2009. No proper and validly constituted board was appointed by the Fund during the 90 day period. As such, and in order to ensure the proper functioning of the Fund in the best interest of the members of the Fund, the Registrar is appointing a new board of management for the Fund.
An attorney, Jonathan Mort, with extensive experience in the retirement fund industry will serve as an independent trustee and chairman of the new board of management. Francisco Jabulani Khoza, also an independent trustee, will serve as vice-chairman of the board. An additional 10 trustees will be appointed from the ranks of the various stakeholders in the Fund including, among others, representatives from the different trade unions and employer associations. The board appointed by the Registrar will hold office until 30 June 2010, but their term of office may be extended by the Registrar from time to time if the need arises.
In appointing the new board, the Registrar took cognizance not only of the expiry of the term of office of the interim board appointed by the Minister of Labour during 2001, but also of the outcomes of an on-site compliance visit conducted by the FSB on the Fund earlier during 2009. The on-site compliance visit revealed a number of governance failures, weaknesses and inadequacies in the management and administration of the Fund.
The chairman and vice-chairman are required to investigate and report to the Registrar on the findings of the on-site compliance visit particularly the trustee-related expenses and remuneration as well as the alleged irregularities by the outgoing administrator of the Fund.
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