Pensioners sue Fund administrator

 

BONGIWE ZIHLANGU

MASERU – The Public Officers Defined Contributions Pensions Association (PODCPA) has gone to court to challenge yesterday’s decision by the Public Officers Defined Contribution Pension Fund (PODCPF) Board of Directors, to reappoint NBC Lesotho Insurance Company as the Fund’s administrator. PODCPA argues that NBC’s re-appointment as Fund administrator goes against the concerns they raised over time in relation to NBC’s conduct and handling of their Fund.

A nine-member PODCPF Board of Directors convened yesterday to conduct an election on the appointment of the administrator of the Fund, with their votes split between NBC Lesotho and Akani Retirement Fund Administrators, who were both shortlisted as the best two entities to run the fund on a three-year contract, following a 2019 tendering process.

Five members of the Board voted for NBC, while four backed Akani, with sources disclosing that a new member of the Board, who allegedly admitted he was unfamiliar with the background of the two companies, was introduced and instantly voted in favour of NBC, leading to PODCPA resorting to the courts of law for recourse.

The Pensions Fund Board of Directors was founded by the ministries of Finance and that of Public Service which are both its custodians, and has as its chairperson Principal Secretary for Finance, while the Public Service is represented by the Director for Remuneration and Benefits as well as representatives of different sectors that the Fund is tailored to cater for.

PODCPA spokesperson, Ithabeleng Phamotse, told Public Eye last night that the association had already instructed their lawyer to file an application to interdict NBC’s appointment, on the basis that their grievances, which they had recorded in several letters to the Board, had been ignored.

“We have instructed our lawyer to file an application to challenge the NBC’s appointment. We have asked him to file an urgent application challenging the integrity in the decision. The matter must already be registered in court,” Phamotse said last night.

According to Phamotse, it was odd that such a decision could be reached when PODCPA had written to the Board on several occasions raising concerns against NBC, but that “the Board is a habitual ignorer of our concerns”. On March 13 PODCPA penned a letter to the Board titled “Poor Service” referenced as a follow-up to their August 9, 2019, letter for which the association said they were yet to get a response.

In the letter PODCPA gave the Board an ultimatum to appoint a temporary administrator while its issues with NBC Lesotho were being addressed; the issues include high charges as well as litigation challenges which the association said had a bearing on NBC Lesotho’s operations.

“It will be recalled that in our previous correspondence, we had registered our concerns regarding pension increases which stood at three percent while service provider’s fees were adjusted for inflation,” PODCPA said.

“We are aware that the current administrator of our member’s funds is facing challenges in its head office in South Africa. While we may not be aware of the details regarding the challenges facing the administrator, we are aware that it has been embroiled in at least one court case wherein it was disqualified from administering the funds of the applicants in that case.”

PODCPA also touched on the legal shenanigans of NBC Holdings, of which NBC Lesotho is subsidiary, that had led to the major company being subjected to a forensic audit.

“Further information reveals that a fund administered by the current administrator has had to undergo a forensic audit the result of which, among others, revealed substantial irregularities in the manner that the administrator conducts its business. This is over and above an apparent malfeasance where the current administrator has been involved,” PODCPA said.

“It is therefore our ardent belief that the credibility of the administrator is highly questionable and cannot therefore be fit to continue to administer our funds. We, therefore, find it prudent to protect the funds of our members and country’s economy. We, therefore, recommend as follows:

  1. That a forensic audit on our fund be performed; and
  2. Suspend the activities of the current administrator and seek a new one until the results of the envisaged audit vindicates their company.”

The association had also demanded a response within seven days, further promising to “seek other avenues” if all else failed.

“We request a response within seven (7) days of receipt of this letter. Failure to do so will leave us with no option but to resort to other means of registering our concerns,” PODCPA.

Phamotse also referred to the letter last night.

“In our last letter, we had given the board a seven-day ultimatum to address our concerns, promising to resort to other avenues if it did not act. The vote went on despite the board not responding to out letter,” Phamotse said.

“Resorting to the courts of law means that we have exhausted all possible avenues. Perhaps they did not think that we would,” she said.   NBC has been administering the fund estimated to be worth M7 billion since its inception in 2008, the monopoly of which PODCA spokesperson, Ithabeleng Phamotse, interrogated last night, asking why NBC was preferred over other companies that were equally capable of administering the PODCPF.

Phamotse further told Public Eye that it defied logic why NBC Lesotho had been preferred to administer the pension fund from its inception to date, when there were other companies with similar or better credentials.

“NBC-Lesotho has been serving our fund since its inception. Why the monopoly? Is NBC the only company that can administer this fund? Why can’t a new company come on board?” Phamotse said. She said another company should be allowed to come on board to administer the fund and serve their interests better than NBC because “it is not about who administers the fund but good service”.

“For us it is about good service. It is not even about NBC as a company but rather about good service. We can confront anyone who administers our fund if we are not satisfied with the manner in which they are doing it,” Phamotse said.

Meanwhile, public service ministry Principal Secretary, Tšeliso Lesenya, also told this paper yesterday that he had received a letter from the Public Service Director for Remuneration and Benefits, followed by a joint letter from four Trustees of the Board as well as another from PODCPA – all requesting intervention with regards to NBC.

Lesenya said he then contacted the Principal Officer of the Board, being the Pensions Fund CEO, requesting that there be a meeting between the Minister of Finance, Minister of Public Service and the Board to discuss grievances raised against NBC, but such a meeting never materialised.

“I further wrote to the Principal Secretary for Finance requesting her to arrange for the minister to come for the meeting as I had already briefed my own minister, so that we could convene a meeting with the Board to address grievances raised in the letters I had received,” Lesenya said.

“The idea was for the custodians of the Fund, those being the Minister of Finance and his Public Service counterpart, to be put up to speed on those developments.

“The meetings would serve as a platform for issues to be ironed out so that when a new administrator was appointed, regardless of who they would be, it would not be questionable. We wanted everything to be cleared and for the complaints of trustees to be addresses.”

He added: “But there has not been a single meeting. Neither has there been any response to my letters.”

This paper has learned that apart from the aggrieved civil pensioners, the Lesotho Police Staff Association (LEPOSA) is on the verge of instituting legal proceedings against NBC – also over the administration of officers’ defined benefits.

A source within the staff association told this paper several letters have been written to the PODCPF Board seeking remedy, but that none has come forth. Amongst the issues of concern, the source said, is the past service liability money that the association says was not forwarded for members benefit when NBC took over the administration of pensions from government.

Speaking to this paper on the pensioners call for NBC disengagement and purported maladministration of members’ funds NBC Lesotho managing director, Godfrey Vatsha, said his company has neither been appointed as the asset manager of the PODCPF, its investment consultant or as an actuary of the Fund.

“As the administrator of the PODCPF, the NBC derives no benefit at all by the size of the Fund’s assets as reported by your publication as being M6 billion; and its fees as Fund administrators are determined by the number of members of the PODCPF and paid as 0.53 percent of a member’s salary,” he continued. Asked to react to a March 13 petition by the PODC Pension Association to the PODCPF chairperson, seeking NBC removal as Fund administrator for poor service – inclusive of irregular conduct, malfeasance and loss of credibility, he professed ignorance saying he was hearing for the first time that there has been petition from pensioners of the Fund complaining about “low pension increases.”

“NBC cannot comment on this complaint, but to set the record straight it must be noted clearly that the NBC has no influence or role, whatsoever, in determining the size of pensions paid or the size of pension increased.

Pension increases are determined by the trustees of the PODCPF on the advice of the Actuary of the Fund. The Fund’s Actuary is IAC and not NBC.

“The Actuary recommends pension sizes and increases based on the size of each pensioner’s Fund Credit in the PODCPF, that being how much money is held by the PODCPF for each pensioner at the time of his/her retirement and the amount of money that remains after the prior years have been paid to that pensioner. “It is from this amount that each pensioner’s pension is and continues to be paid. The employer does not underwrite or supplement these pensions,” he explained.

As the Fund’s administrator, Vatsha said, NBC’s role is limited to receipt and allocation of member contributions to a member’s record in the PODCCPF; keeping Fund member records for each active member; keeping Fund pensioner records for each active member; operating the Fund’s bank account; keeping detailed Fund accounts and producing financial statements to be audited by the Fund’s appointed independent auditors annually; producing such reports in respect of the fund as may be required by the Regulatory authority; providing the trustees of the PODCCPF with regular administration reports and such other reports as they require from time to time; as well as paying Fund creditors such as premiums to insurers for and on behalf of the PODCPF for risk benefits enjoyed by members while active members of the Fund, Fund auditors and trustee expenses.

“NBC further pays the pensions of Fund pensioners as we are directed by the trustees of the PODCPF in consultation with the Fund’s Actuary and deducts and pays all taxes necessary and due,” he added.

 

 

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