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Funds respond to FSB bulking probe

15 May 2006 Russel Michaels

The Financial Services Board (FSB) says there has been a good response by pension fund administrators volunteering information on bulking, or making secret profits to the detriment of pension funds whose money they control.

FSB retirement fund deputy executive officer Dube Tshidi issued a circular to all pension administrators to give details of which individual funds were deprived and how these funds would be compensated. They had until 30 April to come clean.

Bulking occurs where an administrator pools money it holds on behalf of pension funds to secure higher interest payments from banks, without informing or paying all the benefits to clients.

"A good number of administrators have responded. Some say they have not bulked, others say they have bulked and have paid themselves because they believe they deserved it and members were not prejudiced. That is unacceptable as the money belongs to the fund. We are going to meet all of them, said Tshidi.

There are 221 benefit administrators administering 13 307 pension funds (3452 private and 9855 underwritten).

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