Deneys Reitz: Pension Fund Boards and the Principal Officer

Owen Mokoena, Associate, Deneys Reitz Inc.

Added duties have been placed on the board of a pension fund regarding the appointment and termination of the principal officer. The board is required to review the fitness and propriety of its principal officer annually. The board will then be required to advise the Registrar of Pension Funds of its findings on the fitness and propriety of the principal officer. The Registrar will then make a decision whether to allow the principal officer to continue to hold office. If removed from office, the principal officer can challenge the removal.

When a new principal officer is appointed by the fund, the fund is required to appoint a person who is fit and proper and has the relevant qualifications and expertise for the office. This information must be submitted to the Registrar for consideration. The board and the appointee are required to furnish information that is considered to be important for the Registrar to make a decision on the appointment of the principal officer. The Registrar will then decide whether to appoint the principal officer or refuse the appointment based on fit and proper requirements and the public interest. The appointee will also be allowed to challenge any refusal of the appointment as a principal officer.

The Registrar also requires the principal officer to be informed by the board of his/her duties to comply with the Pension Funds Act, 1956 and related legislation and to prevent any mismanagement and poor running of the fund.

According to the Wall Street Journal, the total funds under management in South Africa amount to more than 3 trillion rand. This is another initiative by the Registrar to ensure proper management, accountability and transparency in the local pension funds industry.