Although they may not make a lot of noise, the organisations these four men head have an important influence on your financial well being. The office of the Ombudsman for Long-Term Assurance and the Pension Funds Adjudicator deal with thousands of complaints from disgruntled life assurance policyholders and pension fund members respectively every year; the Life Offices' Association, which represents most life assurance companies, is one of the most financially powerful institutions in the country; and the Institute of Retirement Funds is central to the enormous retirement fund industry at a time when major changes, which will affect how you plan for your retirement, are under way. We introduce you to the men in charge.
Honest broker
Petrus Millar Nienaber, known as Peet to his friends, is the fourth retired judge to hold the position of Ombudsman of Long-Term Assurance.
With his unassuming manner, you would never guess his jurisdiction was the highest court in the land, the Supreme Court of Appeal of South Africa.
Nor would you expect to find the appellations SC, BA LLB (Stell) PhD (Cantab) Hon LLD (RAU) after his name. In Nienaber, life assurance policyholders have one of the most astute legal minds in the country looking after their well being.
The pressure on the ombudsman's office is enormous, and two of Nienaber's greatest assets for the job may be the empathy and humour that lurk behind the legal demeanour.
He set the tone early in his career in law by graduating with a BA (Law) degree and then an LLB, both cum laude, from the University of Stellenbosch in 1953 and 1955.
He was awarded the Strakosch scholarship for further study at the University of Cambridge, and spent 1957/8 at Cambridge's Fitzwilliam College (then Fitzwilliam House) writing a doctoral thesis entitled, rather dauntingly, "Anticipatory Repudiation in English and South Africa Law".
Nienaber returned to South Africa in 1959 to take up the post of senior lecturer in the Department of Private Law at the University of Pretoria. In 1961, at age 29, he was appointed professor and eventually made head of the Department of Private Law at the University of South Africa (Unisa).
In 1967, Nienaber left academia and joined the Pretoria Bar. He took silk as a Senior Counsel in 1980 and was chairperson of the Pretoria Bar Council from 1980 to 1982, when he was appointed a judge of the Natal Bench. Eight years later, he was elevated to the Appellate Division. Over the next few years, Nienaber was invited to accept an honorary appointment as Professor Extraordinarius in the Department of Private Law at Unisa and awarded an honorary doctorate by the Rand Afrikaans University (RAU).
Nienaber is a long-standing contributor to LAWSA (the authoritative publication on South African law), and is the author of numerous articles published in various legal periodicals, including the Cambridge Law Journal, the Tydskrif vir Romeins-Hollandse Reg, the Tydskrif vir Suid-Afrikaanse Reg, De Jure and the South African Law Journal.
When Nienaber's term at the Supreme Court of Appeal ended, he was snapped up for the position of ombudsman.
In this capacity, Nienaber has set himself the target of maintaining and "perhaps even improving the quality and efficiency of the service our office provides to policyholders and assurers alike".
He is the first to admit there are differences between the jobs of ombudsman and judge.
"As a judge, one listens to evidence and to arguments from counsel before arriving at a conclusion based on the appropriate principles of law," Nienaber says.
"As an ombudsman, one's first aim is to provide answers to enquiries and to broker settlements of disputes. One is therefore more directly and personally involved in dealing with the respective parties.
"The complaints resolution structure is more informal and flexible than the legal process. When an adjudication is eventually made, it is done without the benefit of research and argument from counsel, and is based not just on strict law, but also on considerations of equity and fair play," he says.
In Nienaber's first year as ombudsman, his office finalised some 4 600 complaints, of which 34 percent were settled wholly or partially in favour of complainants.
And the complainants to his office are not the only ones who get fed up with the life assurance industry. Nienaber's gripe with the financial services industry is "the time and effort wasted in telephoning help-line numbers, and, generally speaking, the futility of seeking prompt and meaningful responses to enquiries or complaints".
The best thing about his job, he says, is finding fair and just solutions to genuine problems between policyholders and their life assurance companies. The worst is the amount of office administration involved.
So how can you best avoid contributing to his load by becoming a complainant? Nienaber says the single best piece of advice he can give to people planning to buy a life assurance product is, "Consult a properly qualified and trustworthy intermediary".
Assured leader
The Life Offices' Association (LOA) represents the country's life assurance companies in other words, it represents most of the organisations that collectively control the single biggest pot of money in the country: the savings of many millions of ordinary South Africans.
As the chairperson of the LOA, Desmond Smith heads an incredibly influential organisation that sets many of the trends in the broader financial services industry.
He is in the hot seat at a time when the industry is facing great challenges, including:
- The HIV/Aids pandemic, which will continue to have significant consequences for the industry and policyholders;
- The Financial Services Charter, which aims to improve the lot of black South Africans;
- Demands for better consumer protection and greater transparency from an industry that has a history of patronising its clients and deciding for them what they need; and
- The consequences of volatile investment markets.
Born in Port Elizabeth 56 years ago, Smith graduated with a BSc (cum laude) from the University of Stellenbosch and then qualified as a Fellow of the Institute of Actuaries (London) in 1973. In 1992, he completed Harvard's International Senior Management Programme.
Smith joined Sanlam in 1968 as an actuarial student and worked his way up the ranks to managing director in 1993. Smith retired from Sanlam at the end of 1997 and is currently deputy chairperson and managing director of the Reinsurance Group of America (South Africa), and chairperson of Santam.
This is Smith's second term as chairperson of the LOA and he is also a past-president of the Pensions Institute of Southern Africa and of the Actuarial Society of South Africa. Currently, Smith is chairperson of the Council of Stellenbosch University and serves on the advisory board of the university's Graduate School of Business. He is a member of the advisory committee on Long-term Insurance and the council of the Ombudsman for Long-term Insurance. Smith also serves on the Independent Commission for the Remuneration of Public Office-bearers.
In short, Smith knows his way around the life assurance industry. And he is always ready to spring to its defence. Asked for his pet peeve with the financial services industry, Smith says he has no major gripe. His perception - and he admits it's "clearly subjective" - is that "the life industry attracts more than its fair share of negative attention and comment".
"Obviously some is justified, but let's be balanced in such attention/comment! And having said that, let the industry itself be more pro-active in promoting the positives of the industry," he adds.
Asked what his intentions are for his term of office, Smith says he plans to be "a pro-active participant in helping to shape an environment conducive to the business of its members.
"I intend keeping the LOA relevant and credible," he says, without elaboration.
Like many other people, Smith knows what it is like to make incorrect investment choices.
His mistake was to be taken in some years ago by the now defunct Gold Coin Exchange, which created a totally artificial market in gold coins by rating them on their "quality" determined by the number of flaws and scratches on the coin.
As happens with every investment bubble that is not based on true value, the bubble burst, taking Smith "and many others for a couple of bob", as he puts it.
"There is one born every day, including yours truly!" he admits candidly. "Lesson to be learnt? Don't let greed dictate your investment decisions."
Smith believes life assurance companies are one source of true value for investors, particularly if they are looking to save for the long term. Risk assurance, on the other hand, has ensured that many families have been able to survive financially after the loss of a breadwinner, he says.
Smith says his best investment was to be in property acting on the advice of his wife, Estelle.
When not promoting the life assurance industry or running the reinsurance company, you will find Smith on the golf course.
His best advice to consumers and investors is to get your finances on track and, when buying a life assurance product, "make darn sure you have a capable adviser. The decision as to which product is appropriate for your needs is more important than which life company you source it from."
On a mission
Anesh Soonder takes over as executive director of the Institute of Retirement Funds (IRF) at a time when it is being suggested that South Africa's R900 billion-retirement fund industry is facing a crisis.
Call it a crisis or not, there is no doubt the industry is grappling with the aftermath of huge problems. These include:
- R600 million in losses to members of the building industry caused by the mismanagement of their retirement savings by the now-defunct financial services company Fedsure;
- Various investment scandals in which the trustees of retirement funds failed to keep a proper rein on investment managers, who lost many millions of rands; and
- Massive unmanaged conflicts of interest, particularly among service providers who work in their own best interests to the disadvantage of fund members.
It is also a time of self-examination for the IRF itself. Over the years, the IRF has allowed itself to become increasingly dominated by the service providers to the retirement industry, particularly the big life assurance companies, rather than by the retirement funds themselves, through their trustees.
Soonder, a lawyer by training, who is completing a Master of Laws thesis on "Pension Sharing on Divorce", says the IRF is a non-political body which represents and promotes the interests of the retirement industry, to the ultimate benefit of the members of retirement funds.
"Its principal aim is to protect and advance the interests of pension, provident, retirement annuity and similar funds, their trustees, members and persons associated with such funds," Soonder says.
As an executive director with a mission to transform perceptions of the IRF, Soonder has his work cut out for him this year. Finance Minister Trevor Manuel has given notice that he wants to address the issue of how retirement fund savings are taxed, while the Financial Services Board is redrafting the Pension Funds Act, with its eye on many of the recent scandals.
Soonder says the thing that irritates him most about the financial services industry is that certain service providers "will do and say anything and everything for financial reward at the expense of unsuspecting trustees and members".
What he enjoys most about his job, Soonder says, is knowing that what the IRF does ultimately benefits fund members, who may not have the time or skills to do it for themselves.
One thing the Durban-born Soonder has no doubts about is the need for retirement planning, and he is as interested in having a financially secure retirement as anyone else. In fact, Soonder puts retirement security at the top of his financial goals. He contributes to a sponsored retirement fund and supplements it with a retirement annuity.
In doing so, he says, he accepts that a sponsored fund is unlikely to provide for what he wants in retirement and that he has to save more than that.
Like everyone else, Soonder has had his investment ups and downs. His worst mistake, he says, was trying to play the stock market to make quick money. His conclusion: "It does not always work."
He has, however, succeeded in property, which he believes is a stable and tangible asset, and from which he has earned positive returns.
Soonder works about 10 hours a day on average, but has a range of other interests, including camping, playing golf and reading about world leaders. His favourite holiday destination is the United States, a country from which we can learn many lessons, he says, particularly about investing in ourselves.
Soonder says the best piece of advice he can give you, as a retirement fund member, is to ensure your fund's trustees are acting "in your best interests and always avoid conflicts of interest".
Whatever their shortcomings, Soonder believes it is a good thing to have member-elected trustees looking after members' interests. Although trustees can delegate some of their responsibilities, in the same way that you, the fund member, delegate your responsibilities to them, the trustees are ultimately responsible for any shortfalls that may occur, he says.
"If you do not constantly monitor your trustees, it is you who will have to live with the shortfalls," Soonder says. "It is in your interests as a member to ensure your trustees are acting in the best interests of your fund."
Absolute determination
Vuyani Ngalwana, the new Pension Funds Adjudicator, has his work cut out for him. In the year that his position was vacant, his office built up a backlog of more than 450 cases. But Ngalwana, who is a specialist in constitutional and pension law, is confident that he and his staff will overcome the backlog and address the various other challenges facing them.
Unlike the ombudsmen for life assurance, short-term insurance and banking, who are appointed by their industries, the Pension Funds Adjudicator occupies a statutory position created seven years ago following changes to the Pension Funds Act.
The amendments to the law heralded a new era for members of retirement funds by creating a process by which complaints could be dealt with fairly, quickly and without need for expensive litigation.
Ngalwana is only the second person to be appointed Pension Funds Adjudicator. His predecessor, John Murphy, resigned to take up a position with the United Nations, and he must have been a tough act to follow, since it took the Financial Services Board and the Minister of Finance a year to fill the position.
Without an adjudicator at the helm, the staff in his office were presented with a considerable problem. The law vests the power to make determinations in the person who holds the title of adjudicator and not in the office of the adjudicator. So the staff could continue investigating complaints before Ngalwana's appointment, but the finalisation of the cases had to wait until he took office.
"I am confident we can overcome the backlog and improve our turnaround time within six months if we reconsider the manner in which we dispose of cases," Ngalwana says. "It has been the practice of this office to deal with every case with a view to preparing a formal determination in the end.
"Not all cases require this kind of effort. In any event, the legislation never envisaged that the tribunal would write judgments' in the current form, citing previous decisions of the High Court, Supreme Court of Appeal and Constitutional Court. We may have to do that, but only in very few cases. In others, all that may be required is a decision and reasons in brief that the parties can understand," he says.
Currently, Ngalwana has a legal team of seven, and he plans to appoint another three or four people.
One of the challenges facing his office is that the adjudicator has limited powers with which to do a job with far-reaching implications. The decisions of the adjudicator can be taken on review to the High Court and there is more than one forum that consumers with complaints can approach, such as the Labour Court. Yet, certain industries, such as bargaining-council retirement funds and state pension funds, fall outside of his jurisdiction.
Ngalwana believes there should be one forum with exclusive jurisdiction to deal with pension-related matters, except when there is an issue of constitutionality, which would need to be dealt with by the Constitutional Court. He plans to provide input on the jurisdiction of his office when the Pension Funds Act is rewritten later this year.
Born in Cape Town in 1967, Ngalwana attended various primary schools in Guguletu and started his high schooling at Langa High School. When he failed a maths and science Olympiad at the University of Cape Town in Grade 9, despite getting 90 percent aggregates at Langa High, he realised something was wrong with the standard of education he was receiving. He found out which schools had the highest number of A students and then wrote to the headmaster of one of them, chosen at random: the Cape Town private boy's school, Bishops. After passing an aptitude test, he was offered a place at the school.
After matriculating, he obtained BA and LLB degrees from the University of Cape Town. Now he also has a post-graduate diploma and master's in income tax law.
Ngalwana practiced at the Cape Bar for five years before joining Southern Life (the former life assurance company) as a legal adviser in July 1995.
In 2002, he joined the Asset Forfeiture Unit, where his brief was to tighten up the asset forfeiture laws and prepare pleadings that could be argued in court.
Ngalwana is married to Lulama Nongogo, a human rights lawyer. He has two children - aged 11 and six - from a previous relationship.
He is an avid reader and enjoys chess and long-distance running. "I tried golf, but I was no good at it, and I hate to do anything I'm not good at," he says.
This article was first published in Personal Finance magazine, 3rd Quarter 2004. See what's in our latest issue