Mon, 14 Aug 2017 13:21:51 +0000
By Nation Reporter
Serious failure by the Pensions and Insurance Authority (PIA) to address governance issues including conflict of interest within Zambia’s largest pension fund, Saturnia Pension Fund, have been blamed for the impasses in the organization.
According to information and documentation availed to the Daily Nation, the crux of the argument is the contentious and overbearing control of fund managers, Benefits Consulting Services Limited (Bencon) and fund administrators Africa Life Financial Services (Aflife), both of which were under the common ownership of Menel managements Services Limited whose shareholders are Munankupya Hantuba, Hakainde Hichilema, and Valentine Chitalu partnered by Botswana Insurance Fund Managers.
Trustees who should be custodians of the fund have, apparently been relegated to the extent that they have not been accorded access to vital information including fund performance.
The trustees are also concerned that Benefits Consulting Services Limited (Bencon) the current administrator made Saturnia Regna Pension Fund commit irregularities by overstretching its operations beyond the dictates of the law to an extent of interfering with the responsibilities of trustees.
Bencon have allegedly misconstrued their historical role in the set-up of the fund by usurping the role of the trustees to an extent of undermining their (trustees’) authority.
In their complaint copied to PIA the trustees noted that, Bencon had failed to monitor the performance of Aflife despite constant reminders to the extent of not providing information that negatively impacted the perception of Aflife’s
performance and therefore the
interest of the members.
Fund Administrators African Life Financial Services both of which are under the common ownership of Menel Management Services Limited whose shareholders are Munankupya Hantuba, Hakainde Hichilema and Valentine Chitalu partnered by Botswana Insurance Fund Managers.
The Trustees proposed as early as October 2016 to undertake remedial measures to correct the irregular practices which were revealed in the Pension and Insurance Authority Inspection Report of April 2016 as follows:
- To constitute active Board Committees for Audit, Risk, Compliance and Investment
- Appoint an Investment Consultant to review the strategic asset allocation and review the performance of the Fund Manager
- Appoint an independent Legal Adviser separate from the advisers of the Fund Manager and Administrator
- Change the custodial arrangements after the discovery of misapplication of K2 million of pension funds to settle a significant legal judgment made against the Fund Manager
- Tender the Property Management Contract in an attempt to create diversity in the provision of services as well as objectively test the market on fees charged by others
- Establishment of a full time Secretariat for the Saturnia Pension Fund Board of Trustees
The Trustees also complained about the high fees that the Fund Manager and Administrator were charging. Saturnia which accounts for only 32 per cent of the pension industry net assets was paying Aflife investment management fees equivalent to 45 per cent of the industry total and 40 per cent of the industry administration fees. The other serious anomaly complained of was the existence of a private limited company bearing a similar name and address as the Saturnia Regna Pension Fund not controlled by the Trustees but to which some assets of the Fund had been transferred.
The Trustees, in what they called a formal complaint against Benefits Consulting Services Limited, highlighted several areas of misconduct by the Fund Managers which included:
- Failure to provide requested information to the Board of Trustees
- Spreading falsehoods and casting aspersions on the Trustees
- Actions bordering on incompetence and non-compliance
- Unsafe and unusual practices and
- Misunderstanding of the role of the Bencon and Aflife in the management and administration of Saturnia Regna Pension Trust Fund.
Meanwhile, Bencon is reported to have warned sponsoring employers that the contemplated action by the Trustees to create a secretariat was not driven by adverse performance by the administrators as service providers and even if that were the case, the service level agreements allowed for remedy of breach before such a far reaching action was taken.
Bencon in expression of a very strong sense of ownership further stated that “the Saturnia Regna Pension Trust Fund, a multi-employer scheme was created by the administrators in 1992 and its operating Licence was a specific service offering under the sponsorship of Benefits Consulting Services Limited and if the Board of Trustees wished to create a new structure, it would have to be independent of Saturnia Regna Pension Trust Fund. Benefits Consulting Services Limited was only registered in 2008.
