Critical evaluation of possibility of retirements funds members directly claiming damages from their fund's service providers for loss suffered
Date
2020
Authors
Davis, Kent Murlis
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Abstract
This research report proposes that where a service provider of a retirement fund (such as an insurer or asset manager) exercises a high degree of discretion in respect of the investment decisions it makes for, or on behalf of, a retirement fund, if one has regard to the nature of the relationship between such service provider and the members of the retirement fund, a limited fiduciary duty should be imposed on the service provider in favour of the members. It is proposed that the fiduciary duty should be separate from, and in addition to, the fiduciary duties owed by the board of management and should also differ in its content. Further, it is submitted that to the extent a service provider breaches this duty; the members should have a claim against such service provider. Due to the fact that the benefits payable to a member only vest in terms of the rules, any claim for damages would likely occur before a member's right to benefits vests. A member would therefore need to claim for prospective damages and argue that once their benefit vests, they will suffer a loss. Despite the courts not recognising claims for prospective loss, it is submitted that in the case of members, compelling reasons exists to allow a claim for prospective loss provided the claim for prospective loss is established as a matter of reasonable probability.
Description
Submitted in partial fulfilment of the requirements for the degree of Master of Laws by Coursework and Research Report at the University of the Witwatersrand, Johannesburg 2019
Keywords
UCTD, RETIREMENT FUND, Investment decisions, service provider, Fiduciary duty