This news is important for EMPLOYERS and EMPLOYEES!


Many companies offer the benefit of a Provident Fund or Pension Fund to their qualifying employees.  The Rules of the Fund will determine who is able to join, but mostly it’s people over 18 and under 55 years of age when they join.


Anyway, lots of employers are opting to join “Umbrella” type funds.  These are funds which operate special rules for participating employers.  Other employers also participate in the same Umbrella Fund, but each employer has a set of rules that is registered in the fund.  This is a far more cost-effective solution than running a private, stand-alone fund.  There are many different Umbrella Funds and employers should make their choices after consultation with their employees who will be members.


But there is the possibility that employers think this is the easy way out, they don’t have the laborious duties that one would have in a stand-alone fund, such as ensuring there are trustees, administration is taken care of properly and all sorts of other duties as outlined in the Pension Funds Act.


It is important that employers be aware that they have an important role to play, even in an Umbrella Fund.  Members should also make themselves aware of these rules, because good governance is the obligation of all parties.


Let’s look at these obligations:



Member contributions are taken from salary each month, usually matched by a like contribution from the Employer and sometimes even more to cater for costs of administration and risk benefits that might be provided.  The employer therefore has a duty to pay over these contributions to the Fund in time, or face penalties and interest.  In terms of an FSB PF Circular recently issued, the directors are held personally liable for unpaid contributions.


Benefit Structure

Benefits and the structure of the Fund and its operations must be regularly reviewed by the sponsoring employer.  Change is a persistent driver and the employer should be up to date with what is happening in the industry overall, so as to be able to offer optimum benefits within its affordability to its employees.  This will help the employer become an employer of choice for skilled, valuable employees.  Obviously, a high level of communication with the service providers to the Fund is absolutely key to this



Annual benefit statements for the members are usually distributed via the employer.  Other communication includes Fund updates, member communications concerning Fund changes, changes in salary and the like.  Obviously, the employer is also responsible for communicating to the Fund when people resign, die or are retrenched.  Accurate information must be shared between the employer and Fund at all times.


Access to Fund

A lot of Funds provide electronic access to members so they can access their information.  Some do not, so it’s the employer who will enable this facility and provide adequate methods of getting the information.


Ongoing Review

The employer must regularly review its decision to join a specific fund and keep itself updated on developments in the Fund, in the overall industry and with its employees to ensure overall satisfaction and service levels are kept.  Every year, for instance, the Employer should be provided with the Annual Report and Financial Statements of the Fund and these should, in turn, be available to members who can scrutinise them to check how their investments are performing.