February 13, 2004

By Ann Crotty

Johannesburg - The union movement needed to look closely at the possible repatriation to London of profit made on money that unions had invested with Old Mutual, a Cosatu official said at this week's conference on governance in the retirement fund industry.

Jan Mahlangu, the co-ordinator of retirement funds at Cosatu, said there was a general concern about the listing of South African companies on offshore stock exchanges, and Old Mutual's London listing in particular.

"If this means they are repatriating profits on our monies, it would be very worrying and ... it would be something we would need to discuss."

Other speakers raised concerns about institutional investors not investing money into the communities from which they received it. Herbert Mkhize, the executive director of Nedlac, told the conference: "We must look at where fund managers are putting their money; often there is nothing going into the townships."

A number of delegates raised the issue of training for pension and provident fund trustees so that they would be sufficiently competent to act independently of fund managers and consultants. 

"Some trustees outsource all of their power to fund managers, consultants and administrators in an attempt to insulate themselves from decision-making," Mkhize said.

Trustees needed to be trained so that they could take back some of the decision-making from consultants who wielded too much power.

Mahlangu said there was a need to establish an independent body to teach trustees. At present trustees were being trained by the major industry players, and this situation raised questions about their independence.

Questions were also raised about the destruction of the retirement safety net that took place when defined benefit funds were converted into defined contribution funds.

Mahlangu challenged the view that the union movement had played a formal role in this process.