As South Africa recently struggled with a sluggish economy, the Transport Sector Retirement Fund (TSRF) experienced the effect thereof on some of their small medium enterprise (SME) employers.

The transport sector was one of the industries affected by the constricting economy which resulted in some employers in this sector experiencing a slow-down of their business operations leaving them cash strapped. On-going fuel hikes compounded the problem.

Of the Fund’s 3000 employer-members, 3% of businesses became non-compliant in terms of the stipulations of the Pension Fund Act.

At the time (2017/2018), the Office of the Pension Fund Adjudicator (OPFA) experienced the same trend, reporting that as much as 70% of all complaints received (by the adjudicator) concerned the non-payment of withdrawal benefits or dissatisfaction with benefit amounts paid out. In terms of the Fund rules, benefits can only be paid out to a member/s once a participating employer is fully complaint.  

Joe Letswalo, principal officer, of the TSRF said the Fund and its administrators, also noticed that employer-members (mostly SMEs) were buckling under financial strains and that these pressures were filtering through to the Fund. “Although 97% of members still managed to navigate the economic downturn, we realised that a small percentage of our members were finding it difficult to honour their legal obligations to pay their monthly contributions to the Fund and we, therefore, determined that pro-active steps had to be taken to address the situation,” explained Letswalo.

The Fund’s Board of Trustee are committed to serve the best interests of all their members.

“It was clear that more damage would be caused if we simply brought High Court applications to have these smaller non-compliant employers liquidated (as the Act and the Fund rules allow). Liquidating non-compliant companies would result in individual members losing their retirement benefits, and it would also affect their conditions of employment. With the unemployment rate already at 27.5%, we considered this option to be an ineffective solution,” stressed Letswalo.

The Financial Sector Regulations Act makes provision for an Ombud Council (the Office of the Pension Fund Adjudicator) which is a statutory body and which is tasked to ensure effective, independent, fair and timely dispute resolution on behalf of its customers.  In this regard, the OFPA provides a vehicle to enforce overall compliance and effectiveness.

“The TSRF is unique in that the Fund was initially established under the Bargaining Council, and thus (at the time) membership to the Fund was compulsory. This places the TSRF in a different position to other big umbrella funds. Normally, umbrella funds will just liquidate non-compliant employers because it is a voluntary association. The TSRF, on the other hand, is committed to first and foremost making every attempt to rescue non-compliant businesses before taking any further actions,” explained Letswalo.

Considering all these factors, the TSRF launched an initiative to address non-compliance on a number of levels. This included education and awareness campaigns to inform members of their rights; the responsibilities of their employers; provisions made in the various Acts; and how and where to lodge complaints.  The TSRF also started to immediately notify individual members (via sms) when any of their employers became non-compliant. By doing so, members were now in a position to take quick action; and at the same time the TSRF (together with its administrator, Salt EB) could also actively lodge applications to the OFPA to enforce compliance.”

The Transport Sector Retirement Fund’s initiative is without a doubt proving to be successful. Since embarking on this approach, 99% of the TSRF’s referrals have been approved by the OFPA and are now successfully enforced.

According to Leslie Primo, head of Salt EB’s legal, risk and compliance unit, complaints have significantly reduced from 66 complaints in 2017/2018 to the administrator dealing with an average of only eight complaints per month at the end of 2018.  

“We are confident that we have turned a corner. Employers who have found themselves in dire straits have now entered into long term agreements to settle their outstanding debts to protect their business interests and their employees’ benefits. Our collection rate is currently well more than 97% as our employer-members’ businesses are becoming viable again and their chances to full recovery continue to improve.

My outlook for the transport sector in general, and in particular for the members of our retirement fund, is optimistic. We are making good progress. Our investment strategy is proving successful and we have just received an overall Gold Standard Award from the Institute of Retirement Funds Africa (IRFA) for meeting all the criteria in the following areas of excellence: governance; transformation; stakeholder engagement and education; investment practice, trustee development; and financial management and reporting,” ended Lestwalo.

Cape Town, South Africa – 6 October 2016  

Carrick Wealth, the leading offshore investment advisory in Africa, is celebrating its second anniversary, and, in the same week, has opened an office in Gaborone that is fully compliant and regulated with the relevant authorities in Botswana.

The new Gaborone office in the Masa Centre is headed by Andrew Mhere, who is both the Managing Director of Carrick Wealth Botswana and Carrick Wealth Zimbabwe. He is supported by a team of diverse, highly qualified advisers.

With its headquarters in Cape Town and fully functioning offices in Johannesburg, Durban, Mauritius, Zimbabwe and now in Gaborone, Carrick Wealth is changing the face of the offshore financial services industry for high-net-worth clients and those starting out on their wealth journey.

[photo] Craig Featherby, Group Chief Executive Officer, says: “We’ve experienced extraordinary growth in such a short period of time and we are geared to extend the Carrick formula further into new markets in Africa.” 

In the 24 months that the Carrick Group of Companies has been in business, its growing team of specialist financial advisers is constantly kept abreast of all the changes regarding regulatory matters in the areas in which the Group operates.

A sophisticated technological platform is in place that keeps live-tracking of all activities connected with the industry, and with the business in particular, giving clients the surety that their investments are completely secure and monitored.  

As Carrick Wealth expands its footprint into Africa, it will be offering clients and advisers in each country the opportunity to experience professional, disciplined, innovative solutions and service. The Carrick team is growing, and now has 152 people working for the company – as against seven when Carrick first opened its doors exactly two years ago.

As the company celebrates its second anniversary, it can report that it has an advisory relationship with 787 clients, has over R2,2 million under management and has assisted in 443 QROPS pension transfers out of the United Kingdom into offshore structures.

Carrick Wealth offers clients in South Africa and elsewhere in Africa various financial and estate planning solutions, including the formation of offshore investment structures, portfolio management, private equity and venture capital asset allocations.        

MEDIA CONTACT:

Lynn Halliday (Group Marketing Manager)

CARRICK WEALTH
T: +27 (0)21 201 1000
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www.carrick-wealth.com