BusinessLive reports that most service providers, including lawyers and administrators, are overcharging retirement funds, endangering the ability of employees to retire with dignity, according to the industry regulator.
Naheem Essop, a specialist analyst in the retirement funds supervision division at the Financial Sector Conduct Authority, said despite their size, retirement funds were not using their economies of scale to bargain for better services at reasonable prices for their members. Speaking at the annual conference for Pension Lawyers Association of SA on Monday, Essop said the exploitation spanned the spectrum of providers, from external legal advisers to administrators and investment advisers. “All too often we pick up that retirement funds are paying service providers well in excess of reasonable market rates. A prime example is the appointment of external legal advisers to the funds. It is cheaper for retirement funds to be sued in a high court than it is to get advice from a pension fund lawyer,” Essop pointed out. He urged pension fund trustees to shop around and negotiate hourly rates with lawyers and he went on to indicate: “We do have regulatory tools at our disposal. But we’ll have to consider whether we want to go that route. At this point we hope and expect trustees to take what we are saying and apply their minds.”
- Read the full original of Londiwe Buthelezi’s report on the above at BusinessLive
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