23/03/2015
Affairs of Picbel fund behind application
March 21 2015 at 06:25pm
By Bruce Cameron
PF IOL divide up shareIOL ISTOCK
Poor data provided by retirement fund administrator Sanlam and the fraudulent surplus-stripping of pension funds in the 1990s are behind an application to allow the redistribution of unclaimed benefits to active members and traceable former members of the Picbel Groepvoorsorgfonds.
Tony Mostert, first the curator and then the liquidator of the Picbel fund, wants to use benefits due to untraceable former members to correct an over-payment to some former members and to top up benefits to traceable pensioners and former members.
In 2008, Cape businessman Jan Pickard Jr received a suspended two-year sentence for the theft of a R30-million surplus in the Picbel fund. Pickard paid back R20 million.
Mostert says in the affidavit supporting his application to declare a regulation under the Pension Funds Act invalid, that the application arises from the surplus-stripping scheme known as the “Ghavalas option”, after convicted fraudster Peter Ghavalas, and the subsequent recovery of the stripped surpluses, which has created the unclaimed benefits in the Picbel fund.
Mostert says in the affidavit that the surplus-stripping was “a sham that was perpetrated to unlawfully enrich certain entities who had no rights to the assets transferred … at the expense of members”.
The fund was placed in voluntary liquidation in April 2008. It has had no active members since 1994, when the surplus-stripping took place, and had only 62 pensioners at the date of liquidation.
The root of the application lies in complications over who was and who was not a member of the fund and in calculating the individual entitlements.
When Mostert took charge of the fund, it had assets valued at less than R10 million. He has recovered R97 million, and the fund currently has assets of R76.6 million. This is apart from R6.5 million that provides pensions to 55 pensioners.
Mostert says that the remaining qualifying beneficiaries are effectively untraceable. He says attempts to establish the historical membership of the fund and to trace all members entitled to surpluses had limited success.
He places most of the blame on Sanlam, the previous administrator of the fund, saying the records provided by Sanlam were “materially incomplete, inaccurate and internally inconsistent”.
Ainsley Moos, Sanlam’s head of group communication, declined to comment, saying:”Sanlam cannot comment on any allegations in papers currently before the court in matters to which it is not a party.”
A surplus apportionment for the fund was approved in 2012 with 55 pensioners and 12 082 former members being entitled to share in the surplus. To date, R47 million has been paid to 1 449 former members – a mere 15 percent of members.
Currently, Mostert says, among other entitlements, about R41.8 million is due to former members whose benefits can be calculated, but who have remained untraceable despite many attempts to find them. This money would have to be transferred to the Guardian’s Fund or some other unclaimed benefit fund.
If the money is placed in the Guardian’s Fund, Mostert says there is no mechanism to trace the former members, with the result that the assets will remain there “in perpetuity”.
Because of the doubt over the final number of beneficiaries to the fund surplus, the initial payments were limited to 85 percent of possible payouts. But it was found that the 85-percent payment, which was based on Sanlam’s records, was too generous. The fund suffered a R17-million loss because of incorrect allocations.
In 344 cases, payments were made to former members who were not entitled to the full amount they received.
The majority of former members cannot be traced and/or their entitlements cannot be calculated because of the poor records, Mostert says.
Because of the overpayments and the problems with data, the surplus apportionment scheme for the Picbel fund has been suspended.
Mostert says his problem lies with untraceable former members whose entitlement can be calculated. The Act, he says, is not prescriptive about individual entitlements that cannot be calculated. This money can be retained by the fund.
