Transcript PENSION LAWYERS ASSOCIATION SURPLUS APPORTIONMENT MIKE CODRON CHIEF ACTUARY

PENSION LAWYERS ASSOCIATION
SURPLUS APPORTIONMENT
MIKE CODRON
CHIEF ACTUARY
FINANCIAL SERVICES BOARD
AUGUST 2006
HISTORY
►
7 December 2001
Act came into being
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June 2003
Regulations Issued
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June 2004
PF Circulars Issued
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7 December 2004
Last SAD
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7 June 2006
Last SAS submission date
INTERACTION WITH INDUSTRY
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March/April 2005
Met with largest administrators
and corresponded with balance
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September/October 2005
Repeat
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2 November 2005
In frustration issued a PF circular
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May 2006
Final Road-show
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July 2006
New letters
2 NOVEMBER 2005 - CIRCULAR
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Valuations to be received by 31 March 2006 or
else a fine R50 per day
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SAS also to be received by 31 March 2006 or
else the trustees to set up a Tribunal
MAY 2006 ROADSHOW
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Met with about 30 Administrators
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Phoned the Rest
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Advised all that there would be fines for the late
submission of Actuarial Valuations as from 1 May 2006
backdated to 1 April 2006
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SAS to be submitted over staggered dates up to 31
December 2006
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Will not accept 2007 unless a major issue such as
litigation
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Other cases e.g. terminated prior to 7 December 2001 but
not deregistered to be dealt with in a separate project.
JULY 2006 LETTERS
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Requested funds to submit revised dates for the
following cases:
●
Primarily 31 December 2006
●
2007
●
No Dates
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If not received backdated to 1 April 2006
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Reminded those who had not replied to look at
paragraph 6 of the Financial Institutions (Protection of
Funds) Act No. 28 of 2001. Point is are they fit and
proper to be licensed to be Retirement Fund Administrators
STATISTICS
STAND ALONE FUNDS
Approved
Rejected
Queries
Not Complete
With
Surplus
93
1
“Nil”
schemes
4054
17
63
83
240
536
205
4812
Total
4147
18
599
288
5052
STATISTICS
UMBRELLA FUNDS
Approved
Rejected
Queries
Not Complete
With
“Nil”
Surplus schemes
9
5822
2
7
621
3
31
19
6476
Total
5831
2
628
34
6495
WHAT ARE THE ISSUES
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Apathy
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Trustees having no idea of their
responsibilities
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Trustees not wanting to accept the rights
of former members
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Arrogance
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Greed
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Hiding surplus
EXAMPLE
Number of Members
344
Weighted Average Age
47,2 years
Average Salary
R52 645
EXAMPLE (Continued)
AGE
DEATH
DISABILITY
25
30
3,5
4,1
5,6
5,5
35
3,2
4,0
40
1,4
2,6
45
0,5
2,3
50
0,8
2,7
55
0,6
2,5
60
0,9
2,7
WHAT THIS MEANS
Average no deaths per annum
Amount
Average no disabilities per annum
Amount
Reserve as per PF 117
2
R200 000
1
R150 000
±R600 000
RISK RESERVE
R7,1 million
OTHER EXAMPLES
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Excessive Solvency Reserves – in one case 51%
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Excessive costs of exercise – one party was
assuming 50% of members and former members
will complain
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Hiding employer misuses
OTHER EXAMPLES
CONTINUED
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High risk reserve because of some highly paid
executives
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Post SAD events
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Refusing to add fund return to employer misuses
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Refusing to add fund return from SAD to date of
payment to former members
15F
EMPLOYER SURPLUS RESERVES
Approved
Rejected
Queries
Not Complete
25
41
1
4
71
TRIBUNALS
To date:
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Tribunals
8
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Appeal Board
1
OTHER COMMENTS
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Deregistered Funds
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Frivolous complaints
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Lack of Communication – especially Nil
Schemes
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The Actuarial valuation is part of the SAS
CONCLUSION
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We will name and shame where
necessary
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The Trustees are responsible for the
SAS
THANK YOU
QUESTIONS ?