The FSCA has decided that the Private Security Sector Provident Fund (PSSPF) will be taken out of statutory management at the end of April this year.
The decision marks the end of the Authority’s four-year intervention in the administration of the fund, which says it has 330 000 active members and assets worth more than R11.5 billion.
The Authority appointed two statutory managers to the fund’s board in September 2018 following the findings of an on-site inspection in November 2017. The FSCA initially wanted to place the fund under curatorship.
The statutory managers’ mandate included investigating the allegations levelled against the fund and its officers by the FSCA and commissioning a forensic investigation.
The managers asked Ngidi Business Advisory to conduct the forensic investigation. The FSCA’s Enforcement Division also investigated the fund.
In August 2022, the FSCA said these investigations had found that:
- The board of the PSSPF, without justification, deviated from the fund’s procurement policy and processes when appointing service providers;
- Agreements in respect of the appointment of service providers were inconsistent with service providers’ tender proposals;
- Tender negotiations with service providers took place after the tender process had been concluded;
- The rates paid to board members during the 2017 financial period were higher than and inconsistent with the fund’s trustee remuneration policy;
- Board members were remunerated for attending a golf day and a conference; and
- The chairpersons of the fund’s sub-committees were paid a fixed monthly fee in addition to their fee for attending meetings, which is not standard practice in the retirement funds industry.
As a result of the findings, the FSCA imposed administrative penalties on several trustees. Those who were on the board of the PSSPF, or other funds, were asked to vacate their positions, while those who had left the board were served with fines ranging from R10 000 to R230 000, depending on their remuneration.
Read: Behind the scenes of an FSCA investigation
Enforceable undertaking
The FSCA and the fund’s trustees and principal officer signed an enforceable undertaking on 30 March that formalises what will happen once the statutory management is over.
The agreement says the Authority is satisfied with the progress the statutory manager and the fund have made and views the continuation of the statutory management beyond 30 April as no longer necessary.
“The Authority expects the board of the fund (and the principal officer) to exercise fiduciary and statutory duties responsibly and has made recommendations to the board of the fund to promote good governance in the management of the fund.”
In terms of the enforceable undertaking, the trustees and the principal officer have agreed to the following:
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- The fund will comply with the provisions of the Pension Funds Act and all applicable laws, including its own rules;
- The rules of the fund will be amended to make provision for an additional independent board member, who will form part of the quorum requirement;
- The fund will continue to ensure that its members and former members and their beneficiaries are treated fairly and lawfully in relation to their benefit claims;
- The fund will endeavour to ensure that members and former members’ complaints are attended to, and where possible, resolved to their satisfaction; and
- The fund’s chairperson will continue reporting to the Authority, on a quarterly basis, on the status of the fund, including in particular:
- Fund expenses relative to the budget;
- The number of meetings and roadshows, if any;
- The complaint management process and progress with addressing complaints; and
- The appointment of new service providers and the termination of the appointment of service providers.
