GRAVY

Here’s the thing about pension fund costs: The more regulations there are, the more the services
required to ensure compliance; thus the less competitive the funds’ nett returns against other savings vehicles not similarly burdened. On the other hand, the fewer the regulations the greater the leeway for trustees to stuff up. Now comes the proposal that trustees pass a ‘fit and proper’ test and have minimum qualifications for appointment. Oh dear, another regulatory imposition that invites additional cost. But it must be preferable to having trustees who’re unfit, improper and unqualified. Still, it’s grist to the mill for umbrella funds. By the same token, it particularly challenges memberelected trustees (and members of management boards in umbrella
funds) to get up to speed so that they aren’t frightened at every turn to call on expensive consultants.

Also mooted is mandatory pensions preservation. It should be a no-brainer if pension fund
members are to stand a chance, without reliance on resources that the state doesn’t have, of enjoying a reasonably comfortable living standard on retirement. But a no-brainer it isn’t. Already there is union resistance. Not without reason. Longevity projections for lower-paid workers fall
short of retirement age; irregularity of employment causes a need to live off savings that have been accumulated rather than wait years before they can be withdrawn; the daily grind
to provide from sparse incomes for shelter, food and children’s education is a higher priority.
Ultimately, the decision to introduce mandatory preservation will be politically charged. It would
be helpful if the political leadership actually took a lead.

So far, according to figures produced by the National Union of Mineworkers and published
elsewhere in this edition, fees in the Fidentia curatorship are running at over R44m.
NUM has every right to be concerned. If it doesn’t have the clout to bring such fees to heel, nobody has.

Some curators aren’t paid by the hour, according to professional scales, but by a contingency fee, for going at risk to recover assets from pension funds stripped of their surpluses. The fee has been negotiated down from the 25% of recovered assets that the High Court had originally
approved. There’s a little twist. It comes to TT’s attention that, in the case of at least one fund, the fee was 16,66% for work as the curator and a further 16,66% for work undertaken by the curator’s law firm i.e. 33,32% in all. Depending on the risk, it’s rather nice work if you can get it.

Sometimes curators are described as Robin Hoods. It’s undeserved flattery. Robin didn’t received a cut on what he prised. So a modern-day Robin couldn’t have paid, as one curator has, R22m in cash for a Clifton holiday home.

Maybe it’s reading too much into the move to Discovery by Alexander Forbes Financial Services
MD Anton Ossip. But don’t put it past the ever-inventive Adrian Gore, head of Discovery, for planning to take on the immensely powerful AFFS. That sort of challenge is right up his alley.

Back to the subject of regulations. They’re only good to the extent that they can be properly supervised. Already, it’s understood, coaches and horses are being driven through
the provision in the FSB’s goodgovernance circular PF130 to regulate gifts to trustees.
Gifts to trustees have cooled down. Gifts to trustees’ wives have heated up.