NBC Holdings, the first black-owned and managed employee benefits company in South Africa, pioneered the establishment of defined contribution funds in the late 1980s. Today NBC is a leading force in the South African employee benefits arena, providing a comprehensive range of products and services to 120 registered pension and provident funds, representing the retirement fund savings of more than 350,000 members.
The NBC model of doing business in the employee benefit space was borne out of a thorough analysis of the needs of its clients, especially black employees. Max Maisela, the founder of NBC and key driver of the NBC business model, conducted extensive research into the needs of ordinary workers in the 1980s in South Africa.
He found high levels of distrust in defined benefit pension funds amongst workers who were sceptical of reaching a defined retirement age without losing their jobs at some time during their working lives. This was compounded by the notoriously poor in-service withdrawal benefits of these funds coupled with a failed attempt by government to impose benefit preservation. Poor literacy levels amongst workers and the lack of representation for members on the trustee boards of these funds added to the problem.
During his quest to find a satisfactory solution to the needs of the workers, Max Maisela developed closer ties with the trade union movement. With their support, he pioneered defined contribution retirement funds, a process that transformed the industry fundamentally.
His proposal to establish defined contribution funds through negotiation whereby contribution levels, benefit structures, member representation and rules were mutually acceptable to employers and their shop stewards was deemed so radical that it was initially received with scepticism.
However, Maisela persisted and it was not long before the management of progressive companies began to see the wisdom of the approach as a sustainable solution for retirement and group-risk benefit provision for their shop-floor workers.
This model of member representation was subsequently legislated and it is now a norm in the South African employee benefits industry. The NBC model was founded on innovation and the genuine interest to address the needs of ordinary members. To this day, NBC continues to abide by this member-centric culture.
"For instance," says Maisela, "most members of funds administered by NBC could not historically access normal bank mortgage...