Many of South Africa's estimated 54 000 retirement fund trustees are in urgent need of training to assist them in meeting their obligations to help stop the on-going misappropriation of money belonging to members and their beneficiaries.
Speaking on the occasion of the 21st anniversary of the South African Local Authorities (SALA) Pension Fund, chairperson Bongani Maphanga, said: "It is necessary to ensure the effective prosecution of offenders while also improving supervision, monitoring and accountability.
"Asset managers and advisers must be called to account in terms of strict rules which, if flouted, should result in the immediate termination of mandates. Transparency is the industrys buzzword and service providers reluctant to open themselves to scrutiny run the risk of losing business."
He added that legislation gives fund trustees strong powers in a number of areas, including the appointment and termination of service providers - especially when the interests of members are being compromised.
Maphanga said trustees needed to ensure that they were beyond reproach and on top of the complexities of running a fund. "Trustees need to work harder at ensuring that they deal with those to whom they have delegated responsibility from a position of strength."
He said the Pension Fund Amendment Bill, expected to go before parliament shortly, would assist in terms of strengthening the powers of regulators as it provided for immediate intervention should a problem with a retirement fund or financial services company be suspected.
"The amendments would also empower the Registrar of Pension Funds to act in replacing trustees in the event of maladministration. These proposals come in the wake of financial scandals, including the undisclosed profits made by Alexander Forbes from bulking and the financial mismanagement by asset management company Fidentia. We hope that the amendments will help prevent similar illegal activity in future."
Maphanga said that the SALA Pension Fund was supportive of the changes made to the taxation of retirement funds in this years budget.
"Far-reaching changes to the taxation of lump sum benefits from pension funds on retirement are due to come into effect from October 1 this year. The changes strongly favour low and middle-income earners, so we are supportive. Also because the complex calculations of the tax liability for lump sum benefits are to be replaced by a much simpler, quantum-based flat rate.
"The abolition of the tax on the interest and rental income of retirement funds as from March was another welcome development."
Maphanga said the success of the SALA Pension Fund, with 18 000 active members and some R5.9 billion in assets, had been based on an unequivocal commitment to a better life for its members. "This requires good governance, best practice and sound strategies."