Pensioners panic as funds disappear

PENSIONERS in the Highway area are distraught after they discovered money had been removed from their money market accounts in an effort to prop up the collapsed African Bank.

The Highway Mail has received numerous calls and emails from concerned parties enquiring whether or not their money would be returned.

One pensioner, who wished to remain anonymous, said two per cent of her total amount had been removed from her account without any consent or forewarning.

“As a pensioner I chose to deposit my life long savings into a secure account at STANLIB. But now my trust has been shattered when money can be taken from your account without notification to the client,” he said.

Another worried pensioner, Sylvie Edelstein, said more than R900 had been removed from her account without permission. “It may not seem like a lot of money to some, but when you are no longer earning an income this is a lot of money. I rely on it to get by every month,” said Edelstein. She was later reimbursed R200. She also confronted her bank, who denied any transaction being made.

The South African Reserve Bank formulated a rescue plan to bail out African Bank, which needed more than R8-billion to avoid collapse, and the money market accounts from various South African banks that were exposed to the sinking bank, were affected.

Despite the money markets accounts from various banks being affected, Bongani Mageba, the retail managing director for STANLIB, commented on the issue.

According to Megeba, the African Bank losses and its subsequent curatorship had caused much angst for all who were affected.

“A money market fund, by its nature, is a low risk fund, although not a no risk fund, operating within specific mandates. The STANLIB Money Fund had a limited exposure to ABIL (1.74 per cent), which was within the mandate of the Fund.

“There was a reduction of units as a result of the South African Reserve Bank’s proposal of restructuring ABIL and devaluing the existing investments by 10 per cent. The overall impact on the return for the year as a result of the devaluation was 0.16 per cent,” said Mageba.

He noted that the ABIL exposure had been put into a retention fund for clients and will only become accessible to clients once ABIL is no longer illiquid.

“This was a mechanism approved by the FSB (Financial Services Board) which protects investors and treats customers fairly,” he said.

“This assists, as existing investors would have greater and greater exposure if other investors left the Fund, and would expose new clients who were entering the Fund to the illiquid ABIL fixed income investments,” said Mageba. By separating the illiquid ABIL funds from the remaining liquid investments, this situation is avoided.

Many of the complaints received stated that they were annoyed that their banks had not notified them prior to the removal of funds from their various money market accounts.

On behalf of STANLIB’S clients, Mageba said: “Due to the unprecedented nature of the event that transpired, immediate action had to be taken and the communication lead time was not optimal. We regret this and we know from an investor perspective this is not acceptable, we wish it could have been avoided.”