High rate of compliance allows for rapid investment

Awie de Swardt, managing director of Futura SA Administrators

Awie de Swardt, managing director of Futura SA Administrators

The Transport Sector Retirement Fund (TSRF) is operating at around 99% compliance with regards to Section 13A of the Pensions Fund Act, according to Awie de Swardt, managing director of Futura SA Administrators, contracted to Sanlam to manage TSRF’s front office function.

De Swardt says this is despite challenges due to a staff turnover of approximately 50% every year in the transport industry, which makes it difficult for transport industry employers to maintain accurate employee data, pay contributions over before the Section 13A due date, and complete their reconciliations.

He explains that Section 13A places certain obligations on employers insofar as the payment of member contributions is concerned, and what the implications are if they are not paid over in time.

Sanlam were appointed as front office administrators to the TSRF in 2014 and involved Futura SA a specialist section 13B licensed company to assist with section 13A compliance, after the Bargaining Council ceased to administer the contribution payments.

“We introduced contribution payment processes with the twin goals of ensuring timely payment of contributions and receiving clean data from employers, which allows claims to be paid and investments to be made quickly.

“However, it took a while for the TSRF’s Board of Trustees to perfect the Section 13A process, because it is one thing to comply with the law, but it is a totally different thing to communicate it effectively and get employers on board.

“With almost 3 000 participating employers, which vary in size from one-person shows with four or five employees where the owner’s wife does the administration to large corporations with 1 000 trucks, the fund had to think out-of-the-box in terms of communication and engaging owners and members.

“TSRF had to educate the employers with regards to the implications of Section 13A and what non-compliance could do to their businesses.

“From the March 1 2014 it became a criminal offence for employers to deduct pension fund contributions and not pay them over by the due date.

“However, we have found that the personal interaction assisting employers to comply has gone a long way to making it as easy as possible for the employer to pay the members’ contributions.

“We decided to be proactive and put a process in place that automatically sends out reminders to employers to pay contributions. We also have dedicated consultants who assist employers with any payroll issues so that they can pay their contributions in time.

“Furthermore, we introduced a web-based front end, so the employer is able to log onto the system no matter where the company is in the country; even if the owner is on leave, she can pay no matter where she is, as long as there is internet access. The data is submitted electronically with unique reference numbers, and if the payment correctly matches the bill, they are reconciled immediately without any manual labour or the chance for mistakes.

“At this point almost 70% of contributions are automatically reconciled without any manual intervention from an administrator being necessary.

“Our success is based on reliable technology, good controls, simplicity and an easy-to-use system. Good communication is also critical, both between the fund and employers and the fund and members.”

De Swardt reports that the fund receives around R100-million in contributions every month.

“On a monthly basis we are 99.1% reconciled for the entire 2018, which, for the transport industry, is highly efficient and beneficial to the members of the fund, because if contributions aren’t up to date, or data is not accurate, then members’ claims cannot be settled.”

However, de Swardt says Section 13A compliance is an ongoing process. If employers fail to comply then a legal process has to be followed with the employer to ensure the employee’s contribution is invested as quickly as possible. This includes informing the Financial Sector Conduct Authority if it gets to 60 days after the due date that the member’s contributions should have been paid. After 90 days the person responsible for making the contribution payments can be held criminally liable; the penalty is strict, with severe consequences.

TSRF members travel all over the country, so Futura has ensured that members have access to the fund through dedicated walk-in centres.

“While we have three TSRF-branded and dedicated walk-in centres, members also have access to the fund through any Sanlam office throughout the country.”

De Swardt contends that the fund, which focuses heavily on compliance, has been highly successful in its development of Section 13A compliance, particularly taking into account the complexity of the transport sector regarding staff turnover, many small companies, and, in the current economic conditions, many companies closing and new companies opening.

“I believe that due to TSRF’s proactive strategy of assisting employers to submit their contributions correctly and on time has created a positive spirit of compliance over the last few years.”