In terms of section 7D(1)(a) of the Pension Funds Act (“the Act”) one of the duties of the board of trustees of a retirement fund is “to ensure that proper registers, books and records of the operations of the fund are kept”. Although the record keeping function is in practice usually outsourced to a retirement fund administrator, the Office of the Pension Funds Adjudicator (“the Adjudicator”) has in its quarterly newsletter stressed that such outsourcing does not mean that the board is absolved from its duty in this regard. The Adjudicator in this regard said the following:
“A board should be wary of an over-reliance on the administrator or any other service providers to the fund. Funds should regularly assess the record keeping capabilities of their appointed administrator to ensure that members’ records are complete and up to date. A board should maintain an oversight function of the administrator and any other service provider to whom it has outsourced its functions. The administrator should also act in accordance with its record keeping duties failing which it could be subject to regulatory action and potentially have implications on its license issued in terms of section 13B of the Act. Thus, the board and administrator each have unique roles and functions insofar as they relate to record retention and both parties are responsible for record keeping albeit in different capacities.”
The Adjudicator also referred to three recent cases in which funds were, due to problems on the side of the administrator, unable to provide members with a breakdown of their contributions. As the board is ultimately responsible for ensuring that proper record keeping is maintained in terms of section 7D(1)(a) of the Act, the fund was in all these cases found to be non-compliant with section 7D(1)(a).