Pension fraud probe on cards

A PROBE into the activities of all Namibian-based pension fund administrators may be on the cards.

Representatives of the Namibian Financial Institutions Supervising Authority (Namfisa) have left for South Africa to “acquire technology” that would enable such an investigation, The Namibian has learnt. The move comes after the chairman of a group of former Roessing Uranium employees, Winston Groenewald, asked Namfisa to investigate whether the Roessing Pension Fund, administered by Alexander Forbes Namibia, had fallen victim to illegal ‘bulking’ practices.Alexander Forbes in South Africa made headlines when it was discovered that pension fund members had been short-changed of millions of rand through ‘bulking’ – lumping together many people’s pension funds to negotiate more favourable interest rates.The question to Namfisa was part of the group’s ongoing efforts to ensure a fair distribution of the mine’s pension fund surplus – which is about N$458 million – to all its members, both former and current.During a meeting on Tuesday, Groenewald addressed about 100 Roessing pensioners on progress made so far.He said a response was still being awaited from the fund’s board of trustees after Namfisa requested them to resolve the surplus distribution by the end of October.Namfisa stated in its correspondence to the trustees that, as the regulator of pension funds and public protector, the institute is concerned that any distribution of the said surplus should be made in a “fair and equitable” manner.Groenewald said his group asked Namfisa about the findings in South Africa, where pension fund administrators made ‘secret profits’ at the expense of the shareholders.He asked whether the same could have happened in Namibia, affecting the status of the Roessing Pension Fund.He referred to reports in South Africa’s Business Report and Saturday Sun publications of March and May 2006, where a four-year investigation into the conduct of Alexander Forbes revealed that the retirement fund administrator had skimmed off millions of rands in ‘secret profits’ at the expense of funds and, ultimately, members’ benefits.According to the Business Report article, “Alexander Forbes, the country’s biggest retirement fund administrator, was to pay R380 million in compensation for the ‘not lawful’ bulking of the bank accounts of 1 700 retirement funds to make secret profits.A further R100 million was set aside to cover any other unacceptable business practices that may be revealed at the company.”Bulking is the practice of aggregating the total value of all retirement funds’ current accounts to negotiate better interest rates with banks.The Saturday Sun article said: “In terms of the Pension Funds Act (South Africa), Alexander Forbes, in administering retirement funds, must open bank accounts through which the contributions and benefits of fund members are channelled.Alexander Forbes ‘bulked’ all the credit balances of the retirement fund bank accounts and negotiated higher interest rate payments for the money.Alexander Forbes never explicitly informed the retirement fund trustees of the secret profits, nor did it ask them for their approval.”In a press statement, the Congress of South African Trade Unions condemned the findings.It said: “For most workers, retirement is already a difficult period.They have to struggle to survive on what is usually too little money, as a result of the low wages they received during their working life and also the excessive costs of running retirement funds.It is absolutely intolerable that they should have to try to survive on even less, because a few officials stole their money, so that they could live a life of luxury at the workers’ expense.”Groenewald echoed these concerns about undisclosed transactions.He said members of the Roessing Pension Fund and other funds should ask the trustees if they were aware that Alexander Forbes (SA) had made “secret profits” at their expense, resulting in the members receiving a potentially lower pension benefit, which may have also affected the fund’s surplus.”If the trustees were not aware of this, ask them what steps they will take to establish whether your fund has been affected and what they will do to recover the money.If the trustees are aware of the secret profits, ask them what steps they have taken to recover the money, and if no steps have been taken, ask them why they have not taken the necessary steps,” he advised.He said that the same questions were put to Namfisa, which sparked an investigation into the matter.The Namibian contacted the Registrar of Pension Funds at Namfisa, Rainer Ritter, who preferred not to comment.When The Namibian approached Alexander Forbes (Namibia), a source confirmed that the administrator had notified all clients of the looming investigation into its Namibian operation.According to the source, the institute was inundated with correspondence asking whether clients had been affected by bulking.Alexander Forbes was audited by an independent audit company last year, and the findings were that none of its Namibian clients had been affected – including the Roessing Pension Fund – the source said.The move comes after the chairman of a group of former Roessing Uranium employees, Winston Groenewald, asked Namfisa to investigate whether the Roessing Pension Fund, administered by Alexander Forbes Namibia, had fallen victim to illegal ‘bulking’ practices.Alexander Forbes in South Africa made headlines when it was discovered that pension fund members had been short-changed of millions of rand through ‘bulking’ – lumping together many people’s pension funds to negotiate more favourable interest rates.The question to Namfisa was part of the group’s ongoing efforts to ensure a fair distribution of the mine’s pension fund surplus – which is about N$458 million – to all its members, both former and current. During a meeting on Tuesday, Groenewald addressed about 100 Roessing pensioners on progress made so far.He said a response was still being awaited from the fund’s board of trustees after Namfisa requested them to resolve the surplus distribution by the end of October.Namfisa stated in its correspondence to the trustees that, as the regulator of pension funds and public protector, the institute is concerned that any distribution of the said surplus should be made in a “fair and equitable” manner.Groenewald said his group asked Namfisa about the findings in South Africa, where pension fund administrators made ‘secret profits’ at the expense of the shareholders.He asked whether the same could have happened in Namibia, affecting the status of the Roessing Pension Fund.He referred to reports in South Africa’s Business Report and Saturday Sun publications of March and May 2006, where a four-year investigation into the conduct of Alexander Forbes revealed that the retirement fund administrator had skimmed off millions of rands in ‘secret profits’ at the expense of funds and, ultimately, members’ benefits.According to the Business Report article, “Alexander Forbes, the country’s biggest retirement fund administrator, was to pay R380 million in compensation for the ‘not lawful’ bulking of the bank accounts of 1 700 retirement funds to make secret profits.A further R100 million was set aside to cover any other unacceptable business practices that may be revealed at the company.”Bulking is the practice of aggregating the total value of all retirement funds’ current accounts to negotiate better interest rates with banks.The Saturday Sun article said: “In terms of the Pension Funds Act (South Africa), Alexander Forbes, in administering retirement funds, must open bank accounts through which the contributions and benefits of fund members are channelled.Alexander Forbes ‘bulked’ all the credit balances of the retirement fund bank accounts and negotiated higher interest rate payments for the money.Alexander Forbes never explicitly informed the retirement fund trustees of the secret profits, nor did it ask them for their approval.”In a press statement, the Congress of South African Trade Unions condemned the findings.It said: “For most workers, r
etirement is already a difficult period.They have to struggle to survive on what is usually too little money, as a result of the low wages they received during their working life and also the excessive costs of running retirement funds.It is absolutely intolerable that they should have to try to survive on even less, because a few officials stole their money, so that they could live a life of luxury at the workers’ expense.”Groenewald echoed these concerns about undisclosed transactions.He said members of the Roessing Pension Fund and other funds should ask the trustees if they were aware that Alexander Forbes (SA) had made “secret profits” at their expense, resulting in the members receiving a potentially lower pension benefit, which may have also affected the fund’s surplus.”If the trustees were not aware of this, ask them what steps they will take to establish whether your fund has been affected and what they will do to recover the money.If the trustees are aware of the secret profits, ask them what steps they have taken to recover the money, and if no steps have been taken, ask them why they have not taken the necessary steps,” he advised.He said that the same questions were put to Namfisa, which sparked an investigation into the matter.The Namibian contacted the Registrar of Pension Funds at Namfisa, Rainer Ritter, who preferred not to comment.When The Namibian approached Alexander Forbes (Namibia), a source confirmed that the administrator had notified all clients of the looming investigation into its Namibian operation.According to the source, the institute was inundated with correspondence asking whether clients had been affected by bulking.Alexander Forbes was audited by an independent audit company last year, and the findings were that none of its Namibian clients had been affected – including the Roessing Pension Fund – the source said.