PRIVATE SECURITY SECTOR PROVIDENT FUND 2017 STRUCTURE AND GOVERNANCE 22 AUGUST 2017

The History The PSSPF was created after extensive negotiations between Employer and Labour parties during at a national negotiation process in the late 1990s and was eventually promulgated via Sectoral Determination 6, commonly referred to as SD6, by the Minister of Labour on 30 March 2001.

The History continue In terms of this government gazette every employer and every employee in the private security sector are legally bound to participate in the Fund, the only exceptions being – Managers (as defined in SD6 and the BCEA) and Those employed in the Cash in Transit sector, as they fall within the jurisdiction of the National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI) and not SD6.

EXEMPTIONS The only exception to participation in the PSSPF is if the employer security service provider (as well as all his employees) had already established a provident fund prior to 30 March 2001 or could produce documentary proof that they had already commenced negotiations to establish their own provident fund by that date. These employers would have to apply for exemption from participation in the PSSPF annually and, as part of the exemption criteria, would have to satisfy the PSSPF – • That their fund’s benefits were equal or better than that of the PSSPF • That their fund’s finances were equal to or better than that of the PSSPF

BENEFITS The PSSPF currently offers the following benefits – 39 times monthly salary as a death benefit 39 times monthly salary as a permanent and total disability benefit A R30,000 funeral benefit for the member and spouse (including cultural and common-law marriages), with reduced benefits on a sliding scale for minor children and still births. This cover also includes a tomb stone and counselling, amongst other support structures Cover for loss of body parts, benefit calculated on a sliding scale according to the level of such loss.

Fund Investment value The PSSPF investment portfolio current value is close to R6 billion and realising an annual growth of close to 14%, net after costs.   Very few funds can consistently match that growth!

DEVELOPMENTS IN THE FUND A New Board took office with effect from 1 September 2016, their details and the Committees they serve under are available on the PSSPF website (www.psspfund.co.za). PSSPF has appointed a new administrator effective 1 September 2016 – SALT Employee Benefits. There is steady progress in clearing the claims backlog and SALT has paid 68 351 claims to date. The Fund through SALT is developing: A web based system (EPIC) Where Employers facilitate automatic uploads of schedules, print compliance Certificates and this project is on the brink to be rolled out to the first pilot Employers. A mobile application to provide members with real time, reliable access to their fund values and other information. Members will be able to view and update their information and can also access the application on the web. It is extending its reach throughout the country through the expansion of the mobile office project. Access to the fund has been increased through the deployment of these mobile services and other initiatives. In addition, the fund uses approved tracing agents to trace beneficiaries. All approved tracers are listed on the PSSPF website (www.psspfund.co.za).

HOW IS THE FUND GOVERNED? The Fund believes good governance assists the Board of Trustees to deliver a long-term stakeholder value. A Risk Officer was employed to provide reasonable assurance regarding the achievement of objectives in terms of effectiveness and efficiency of operations, reliability of financial reporting and compliance with laws and regulations. A complete Risk Management, Compliance and Audit Software Solution (BARNOWL) will be launched soon. The Fund’s employees are also at the heart of its operations as they actively interface with members. Therefore, the Fund objective is to always attract and retain the appropriate skills and talent to ensure that the human resource function can support all of the Fund’s business areas.

UNALLOCATED CONTRIBUTIONS The current situation: Unallocated inherited from ACA – R457 million. Unallocated Salt - R 91,4 million as end of April. A special Task Team has been set up to reduce the Unallocated Contribution amount significantly during the current year Unallocated contributions Currently at R283m

CONCERNS What is of serious concern is the exorbitant level of non- compliance in the private security sector, especially in employers’ failure or refusal or omission to participate therein, thereby depriving their employees from the abovementioned benefits.  

For Example:  Security Businesses registered (and active) with PSIRA: 9001 Security Businesses in Guarding 6847 Security Businesses participating in the PSSPF: 3451 Totally compliant security companies: 523 Security officers registered (and active) with PSIRA 497 394 Security officers registered (and active) with the PSSPF: 242 677

COMPLIANCE continued The Fund plays multiple roles in respect of criminal prosecutions, inter alia, initiating the registration of criminal charges and thereafter interacting with SAPS investigators, the NPA and providing evidence in court. Of the 3,451 participating employers – the Fund has identified 2,928 employers that are non-compliant, which results in challenges experienced by the Fund and its members in respect of members’ allocations and benefits. In April 2017, 469 AODs (394 in 2016), amounting to R361 million (R275 million in 2016) were secured by the Fund and a total of R202 million has thus far been recovered by the fund (R149 million in 2016). As at 10 May 2017, the Fund has litigated against 256 non-compliant employers. Judgment has been granted against 21 employers, 186 matters are currently within the court process, and 100 matters have been handed over for criminal litigations. The Pension Fund Adjudicator received 166 complaints for the month of April 2017 from members and has issued 125 determinations against employers for the same period.

TYPES OF NON-COMPLIANCE The employer simply refusing to register with or participate in the PSSPF (Remember that this is a statutory fund and not elective!) This, in effect, gives the employer an immediate 7.5% advantage (the employer contribution) in their pricing structure. The employer actually deducting the employee’s contribution, but willfully failing to match same and pay the total (15% of basic salary) over to the PSSPF administrators. This gives him a 15% advantage.

THE CONSEQUENCES TO SO Who knows how many thousands of security officers are blissfully unaware that, although they see provident fund deductions on their salary advices monthly, they enjoy no retirement benefits, death cover, funeral cover or disability cover.

LITIGATION But the best is still to come ….. The Pension Funds Act and the fund rules permit the fund to litigate via a civil process in respect of both of the mentioned scenarios, claiming contributions from the employer from the date of establishment of the PSSPF, together with penalties, legal costs and late payment interest.   But the best is still to come …..

PFA AMENDMENT The recently amended Pension Funds Act has recriminalised the second scenario painted above (deducting, but not paying over contributions), in terms of which – if found guilty – the directors of such security company can, jointly and severally, in their personal capacities be criminally prosecuted and could face a fine of up to R10 million and/or 10 years imprisonment.   This is in addition to civil proceedings to ensure that the security officers’ benefits and retirement savings are recovered.

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