SA Open Pension Fund & SA Open Provident Fund 29 July 2008 14 March 2008

SA Open Pension Fund & SA Open Provident Fund 29 July 2008 14 March 2008

PRESENT:

Mr. AT Elliot Trustee

Mr. RJ Gagel Trustee

Mr. SB Truter Trustee

Mr. AS Crawford Principal Officer

BY INVITATION:

Mr. M Olivier Seshego Benefit Consulting

(Proxy for WHP Nash)

Ms. L Latha Seshego Benefit Consulting

Mr. J Mostert Alexander Forbes

(items 3.1.2.2 & 4.2 only)

Ms. M Botha Alexander Forbes

(items 3.1.2.2, 3.1.2.3 & 4.2 only)

Ms. P Wolmarans AON

(items 3.1.2.2, 3.1.2.3 & 4.2 only)

Mr. M van Rensburg Lifesense Financial Services

(item 3.1.2.5 & 3.2.2.2 only)

Mr. S Hurd ABSA Consultants & Actuaries

(item 4.6 only)

APOLOGIES:

Mr. WHP Nash Trustee

ACTION

1. / OPEN MEETING
1.1 / Welcome
Mr. Crawford welcomed all parties present.
1.2 / Election of Chairman
The Council for Medical Schemes had advised in a press release dated 27 June 2008 of the removal of Mr. JDT de Almeida and Mr. HCH du Plessis as trustees from the Medshield Medical Aid Fund. Their removal as trustees had been confirmed to the Principal Officer in the week of 11 July 2008.
MessrsdeAlmeida and du Plessis respectively served as trustee and Chairman of the funds.
The trustees noted that the Principal Officer had written to both Messrs de Almeida and du Plessis stating that he was obliged to ensure compliance with the funds’ rules, and that their trusteeship of the funds were considered terminated from 28 June 2008. Messrs de Almeida and du Plessis had confirmed to the Principal Officer their resignations as trustees of the SA Open funds during a meeting the previous day.
Mr. Crawford advised that the board had to appoint a new chairman. Mr.RJGagel and Mr. SB Truter were nominated. Mr.Gagel declined the nomination. Mr. Truter accepted his nomination and was duly elected as Chairman of the funds.
1.3 / Disclosure of interests and potential conflicts of interest
Mr. Crawford reminded the trustees that he provided consulting services to Belgotex Floorcoverings (Pty) Ltd.
Mr. Crawford advised that Mr. Nash had given his proxy to Mr. Olivier who was also the Investment Consultant to the funds and an employee of Seshego Benefit Consulting. Mr.Oliver would recuse himself from any discussions where a potential conflict of interest could arise.
2. / MINUTES OF THE PREVIOUS TRUSTEE MEETINGS
2.1 / Minutes of the SA Open Pension Fund and SA Open Provident Fund held on 14 March 2008
The minutes of the SA Open Pension Fund and SA Open Provident Fund trustee meeting held on 14 March 2008, having previously been distributed and read, were approved by the trustees subject to a minor change. The trustees authorised Mr. Truter to initial the change and sign the minutes as a true record of the proceedings.
3. / SUB COMMITTEES
3.1 / AUDIT SUB COMMITTEE
3.1.1 / Minutes of the Audit Sub Committee held on 18 June 2008
The trustees noted the minutes of the Audit sub committee held on 18June 2008 which were attached to the agenda.
3.1.2 / Matters Arising from the Audit Sub Committee Meeting
3.1.2.1 / Adoption of Mandate
The trustees adopted the mandate of the Audit sub committee which incorporated the changes requested at the sub committee meeting.
3.1.2.2 / Updated Pension Fund management letter
The Pension Fund management letter had been reviewed by the sub committee and was attached to the agenda for noting by the trustees.
3.1.2.3 / Adoption of Pension Fund financial statements
The Pension Fund financial statements as at 31 December 2007 had been reviewed by the sub committee and were attached to the agenda for approval by the trustees. The trustees approved and signed off the financial statements, which would be submitted to the Financial Services Board. / AF
3.1.2.4 / Pension Fund SARS debtor
The trustees noted the correspondence from Alexander Forbes as to why they felt they were not responsible for the overpayment of Retirement Fund Tax, which the trustees accepted. The trustees also noted a letter dated 24 May 2007 to SARS requesting a refund. .Alexander Forbes undertook to follow up with the SARS regarding the refund. / AF
3.1.2.5 / Review of Provident Fund financial statements
Mr. Monty van Rensburg, the Provident Fund accountant, presented the Provident Fund financial statements to the trustees.
The following points needed to be addressed.
Schedule A
The trustee details were to be updated i.e. in terms of date of resignations, new trustees and date of appointments.
Schedule F
i) The amount of R502,033 was to remain in the Accounts Receivable.
ii) Unclaimed benefits amount to be investigated as Ms.Madalene Brown of Team@Westwing had confirmed that the majority of members who were listed as unclaimed benefits had been paid. Mr.van Rensburg undertook to investigate and amend the amount accordingly.
iii) Mr. van Rensburg undertook to recover the Retirement Fund Tax amount listed under current liabilities.
Page 16: Item 10 – Accounts Payable
i) The Risk Benefits creditor in respect of premiums due to insurers that were raised by the previous administrators (i.e. prior to 1 January 2006) was to be kept for another year. The trustees questioned whether any amounts were due, since no claim for premiums had been received. This creditor would prescribe the following year.
ii) RSC Levies of R6,00 was to be written off.
iii) Mr. van Rensburg was tasked with following up on whether KPMG’s audit fees had been paid as well as to obtain a signed copy of the 31 December 2005 financial statements audited by them.
Page17: Item 14 – Administration Cost
The costs for Lifesense and Seshego were to be listed separately, and needed to be reflected as such going forward.
Mr. Crawford reiterated to Mr. van Rensburg that the financial statements needed to be submitted by 31 August 2008.
The trustees confirmed that VVR should be appointed auditors to the Provident Fund for the 2008 audit. / MvanR
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MvanR
MvanR
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3.1.2.6 / SARB Reports
The trustees noted the correspondence from Alexander Forbes regarding the error Momentum had made on their Capital Plus portfolio. The SARB report had been updated, signed and submitted and the trustees noted that the fund was compliant.
Mr. Crawford undertook to follow up with Lifesense as they had not sent an updated SARB report in respect of the Provident Fund to be re-signed. / AC
3.2 / RISK & BENEFITS SUB COMMITTEE
3.2.1 / Minutes of the Risk & Benefits Sub Committee meeting held on 18June 2008
The trustees noted the minutes of the Risk & Benefits sub committee held on 18June 2008 which was attached to the agenda.
3.2.2 / Matters Arising from the Risk & Benefits Sub Committee Meeting
3.2.2.1 / Adoption of Mandate
The trustees adopted the mandate of the Risk & Benefits sub committee which incorporated the changes requested at the sub committee meeting.
3.2.2.2 / Administration Reports
Mr. Elliott undertook to follow up with Mr. Sundres Govindasamy regarding the distribution of the death benefit for MD Ncalane of Belgotex Floorcoverings.
The financial review was discussed under item 4.2. After the discussion the trustees resolved to retain the practice of paying 80% of withdrawal benefit payments by the Pension Fund until the issues had been finalised.
The response from Mr. Kevin Anthony as to why there had been no investment into the Momentum Capital Plus portfolio during the month of April 2008 from the Pension Fund was considered inadequate. Seshego undertook to follow up with Mr. Anthony as to why the cashflow report had not reflected an investment amount for that month.
The trustees requested that the cashflow statements be sent to them on a monthly basis for both funds.
The trustees agreed that quotes be obtained from alternate administration service providers. Lifesense would remain the administrator of the Provident Fund until the end of 2008, and Seshego was tasked with obtaining the quotes in the interim.
The trustees noted that the over payment of the Fidelity Guarantee premium for the Provident Fund had been rectified.
The trustees noted that only Alexander Forbes would pay Messrs Gagel and Truter’s trustee fees for the 29 July 2008 meeting as Lifesense had overpaid them for the last trustee meeting. The trustees discussed the overpayment to Mr. J de Almeida, and it was resolved that the Principal Officer would send an e-mail to Messrs Nash and de Almeida simultaneously regarding the repayment of R1,500.
The Principal Officer expressed his concern regarding the administration service that was being received from Lifesense and raised the death claim of L Matabola as an example. The member had left a suicide note in July 2007 and had not been seen since. Ms.Brown had written to Lifesense regarding the possible death claim. Lifesense had received a withdrawal form in December 2007 from an alleged Mr. Matabola and had paid the benefit on 7December 2007. This demonstrated that certain processes had not been followed. Ms. van Greunen and Ms. Brown were scheduled to meet the following day. The Principal Officer undertook to also ask the auditor to investigate the payment of the Matabola claim and revert back to the trustees. The trustees would reserve their rights against Lifesense in this regard subject to the outcome of the investigation.
The trustees noted that Lifesense reinvested unclaimed benefits into the Provident Fund’s growth portfolio. The trustees had agreed that once benefits had been disinvested into the bank account and the benefit was still unclaimed after 6 months, the administrator would pay the 40% GN35 tax, but the net benefit due would be invested in the Momentum Capital Plus portfolio.
Mr. Crawford advised the trustees that he and Mr. van Rensburg had met with SARS prior to the meeting. It had been agreed with SARS that there were two issues to be resolved.
In the 2005 financial statements there had been an amount of approximatelyR119,000 PAYE outstanding to SARS. In addition, there was an amount of approximately R32,000 outstanding in respect of late payment penalties and interest.
Outstanding EMP 501 submissions were awaited by SARS to resolve the issue. Lifesense failed to submit the EMP 501 returns for the period under their administration. Lifesense undertook to update the submissions. / AE
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3.2.2.3 / Standard Communication
The trustees noted that Lifesense and Alexander Forbes had confirmed the standard communication that was distributed to the fund membership.
The trustees noted that the funds’ communication strategy would be progressed by the Communication sub committee.
3.2.2.4 / Risk Management
This issue was addressed under item 7 of the agenda.
3.3 / COMMUNICATIONS SUB COMMITTEE
3.3.1 / Minutes of the Communication Sub Committee held on 27June2008
The trustees noted the minutes of the Communication sub committee held on 27June 2008 which was attached to the agenda.
3.3.2 / Matters Arising from the Communication Sub Committee Meeting
3.3.2.1 / Discussion with Mr. Dave Crawford
Mr. Dave Crawford had highlighted the need for training and education forums.
The Principal Officer advised the trustees that the implementation of Mancos was being progressed, and an initial training session would be scheduled. The Principal Officer suggested that the trustees look at engaging the services of Ms. Robyn Hodges, and undertook to progress discussions with her in this regard. / AC
3.3.2.2 / Mandate of Communication Sub Committee
The trustees adopted the mandate of the Risk & Benefits sub committee which had incorporated the changes requested at the sub committee meeting.
3.3.2.3 / Review of current communication
The trustees noted that the funds were compliant with PF86 and 90 in terms of communication requirements to members.
The administrators had confirmed that the following communication was distributed to members.
·  Benefit statements.
·  A membership certificate.
·  A letter to members that are over normal retirement age advising them of the restrictions to their insurance benefits.
·  A letter to members on application for a disability benefit.
·  A letter to recipients of death benefit proceeds.
·  A letter to a member in receipt of their withdrawal benefit.
The trustees noted that further communication would need to be developed if the trustees adopted a housing loan arrangement.
3.3.2.4 / Communication objectives
The need for the establishment of Management Committees at employer level had been agreed at the previous meeting. Employer groups would be requested to constitute the Manco. However, it was suggested that the Manco would consist of at least a HR/Payroll representative and a Director of the business. The number of representatives would be determined by the employer.
The following stakeholder groups had been identified.
·  Members
·  Employers
·  New employers
·  Members nearing retirement
·  Mancos
·  Advisors
It was felt that the training costs of the Mancos should be carried by the employers.
3.3.2.5 / Communication Policy
The trustees noted the revised Communication Policy which had been attached to the agenda. Mr. Crawford explained that the policy had been amended to suit the funds’ objectives. The trustees adopted the Communication Policy at the meeting.
3.3.2.6 / Team@Westwing administration problems
Mr. Crawford had met with Ms. Madalene Brown regarding the fund administration problems experienced by Team@Westwing. The main concern being the administration service received from Lifesense. An example would be the schedule for unclaimed benefits, which did not tie up, and Ms. Brown had advised Lifesense that most of these were paid withdrawal benefits. It was resolved that the issues would be monitored by the Risk & Benefits sub committee. / Risk &
Benefits
Sub Comm
4. / OTHER MATTERS
4.1 / Appointment of Valuators
The trustees noted AON’s letter regarding Mr. Krishen Sukdev’s resignation. AON had given assurances that Mr. Sukdev would still be available to finalise all the actuarial reviews of the funds he had been appointed Valuator to. AON proposed that the funds consider appointing Ms. Giulia Tognon, whose CV had been attached to the agenda.
The trustees accepted AON’s proposal, specifically citing Ms.PWolmarans’ continued involvement in the funds.
4.2 / Actuarial Review – 31 December 2006
Ms. Wolmarans presented the actuarial review as at 31December2006 for the Pension Fund to the trustees. The fund was financially sound at 31 December 2005 as per the data she had received from Glenrand MIB. The fund was however only 92.5% funded at 31 December 2006. There had been no contributions to the fund from 1 March 2005 to 1 October 2006. Contributions during this period had been redirected to the Millennium umbrella fund.