NBC takes fund to court after lost deal

Chemicals sector walks away from workers’ benefits group

Employee benefits group NBC Holdings has found itself on the back foot after the Chemical Industries National Provident Fund (CINPF) decided to cut ties with the firm following an independent probe finding NBC had charged it excessive fees over the past five years.

The CINPF is a large pension fund whose members are employees in the chemical industry in South Africa, with assets under management of nearly R6-billion.

The board of trustees of the CINPF in September last year appointed Gobodo Forensic and Investigative Accounting to conduct an investigation into the CINPF administered by NBC. One of the terms of reference of the probe was to investigate if fees levied by NBC were industry-related and in the best interest of CINPF or its members. Gobodo found the fees by NBC were excessive.

“We further conclude that the current fee[s] being charged by NBC are based on an assessment of market offerings not in the best interest of CINPF, with it being apparent that were CINPF to test the market they would be able to negotiate a better fee structure,” reads a report by Gobodo’s Deon Wilson.

“In this regard, we conclude that the associated fees as levied by NBC are recorded to have increased by 25.40% in respect of ‘admin’ between 2017 and 2019 and by 336.11% in respect of investment consulting between 2016 and 2017. Accordingly, we recommend that CINPF consider going to the market with a view to securing better rates.”

The CINPF then went ahead and appointed Akani Retirement Fund Administrators to take over the administration of the fund.

Akani was awarded the CINPF contract in December last year, but the move was interdicted by NBC through a court order. The matter will be heard in the high court in Pretoria next month.

A source with intimate knowledge of the ma er said Akani presented a better proposition for the CINPF members.

“A comparative analysis between Akani’s R100 per member versus NBC’s R191 per month will be key. So, for 21 000 CINPF members NBC charges R50-million per annum versus Akani’s R25-million. So, if CINPF moves to Akani, they will realise an immediate 50% or R25-million saving per annum,” the source said.

“So, when you do the numbers taking into account inflation-related fee increases over a period of five years, CINPF has lost an estimated R126-million, monies which could have been invested elsewhere to generate returns for workers.”

Sunday World has seen e-mail communication implicating NBC CEO Bassie Maisela in trying to get Cosatu-affiliated Chemical, Energy, Paper, Print, Wood and Allied Workers’ Union (Ceppwawu) members to revolt against the CINPF’s decision to dump the NBC in favour of Akani.

Head of legal department at NBC, Leib Van Syl, on behalf of Maisela did not directly respond to allegations: “Please be advised that the facts and circumstances surrounding the questions raised are currently before the high court (Gauteng Local Division, Johannesburg) under case no. 2020/03656,” read part of a written response.

“NBC has every confidence that the questions raised will be properly ventilated in the course of the judicial process. We hold ourselves available to deal with the questions raised as soon as the application and/ or any other proceedings arising therefrom have been adjudicated upon,” Van Zyl added.

 

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