Alexander Forbes defends “bulking” of funds

Alexander Forbes in South Africa this week confirmed the arrest of two of its former employees for allegedly accessing pension fund surpluses but dismissed allegations that the company was the focus of the Financial Services Board (FSB) investigations. The new developments at Alexander Forbes follows ongoing investigations by FSB into allegations of illegally accessing pension fund surpluses totalling N$213 million in mid-1990.

Alexander Forbes said in a notice posted on the Namibia Stock Exchange that the investigation has culminated in arrests in the past week of several individuals including its former employees. “Alexander Forbes is not the subject matter of the FSB investigation,” said the statement. Alexander Forbes has said it has cooperated fully with the FSB's investigators and will continue to do so if or when asked. It said it received absolutely no compensation in excess of administration and consulting fees in line with industry norms. On bulking funds, Alexander Forbes said grouping together of the accounts enabled retirement fund clients to secure higher interest rates. It also received income from the banks as compensation.

The firm said two years ago it had started disclosing the arrangements to clients and in September 2004, the firm had stopped receiving payment from the banks while the bulking arrangements continued to benefit clients. “On reflection, Alexander Forbes recognises that in relation to this matter it has not in the past, met the disclosure standards it aspires for,” it said.