BonDia had an interesting news item, worth pondering. It reported a few days ago that the STA union read through the annual report of its pension-fund, APFA, and found some interesting deviations.
I was surprised. Usually, annual reports are designed to be intimidating and unapproachable, so no one reads them. But in this case STA HIRED an expert to go through the document.
Just to prove that point I remember reading that ENRON Corporation, managed to hang on from 1985 to 2001, committing systematic accounting fraud because its annual reports were so complex, and ginormous, that not a single person, assigned to read and control, ever managed to get thru them.
I paid attention to APFA, when it published a double-spread of company results in Awemainta on July 29th, 2019. The headline of that spread declared that after a difficult financial year in 2018, the fund is recuperating in the first two-quarters of 2019. I thought it would be a good topic for an article. I tried to get an interview with the director but she was on vacay, and then my short attention span wandered.
4,096 pensioners, 961 former participants, 7,100 active participants, 100% coverage, Awg 2,639 million pension obligations, and Awg 2.918 million in capital.
The STA union listed a number of good points, it raised the issue that pension-fund directors get favorable mortgage rates, 3.25%, versus 6% granted to members. The union also found some substantial borrowed amounts buried in the report that did not divulge the interest rate at all.
While you perhaps are not sure how you feel about it — don’t folks closer to the dish eat more — the rules of Good Governance cover this issue, and all fund-members, directors, employee, members, must be treated EQUALLY.
They all generated the capital together, and must similarly enjoy the fruit of their sacrifices.
The union also raised the issue of director salaries – 20 times the rate of the island’s minimum salary, and while we believe that people in top positions should be compensated handsomely in order to prevent fraud and motivate them to perform, the Dutch capped salaries at the level of the Prime Minister and according to my source, APFA directors earn more than our diligent MinPres.
Moreover, directors enjoyed a 14% salary increase when employees received 3%. It’s good to remember that most regular GOA salaries have been frozen since 1986, except for an occasional, marginal cost of living increase.
National entities such as the Central Bank the Pension Funds should be holier-than-the-Pope, and stick to the rules of Good Governance. Why? Because we all follow their lead.