Big bucks for trustees

2012-09-08 11:30

Council for Medical Schemes shocked by fees, but schemes say skills cost money

The trustees of your medical schemes, who are supposed to be volunteering their services, are making a fortune out of your hard-earned money.

Last year, schemes paid trustees about R58 million out of your medical contributions.

This was revealed by the Council for Medical Schemes this week.

In its latest annual report, the council showed how 10 of the 97 medical schemes in South Africa last year used more than R32 million contributed by medical aid members to pay their trustees.

The report revealed that some schemes were paying more than R700 000 on average per trustee every year.

The schemes with the highest trustee fees were Liberty, which topped the list at R703 000; Medshield at R422 000; Spectramed at R380 000; Fedhealth at R297 000; and Discovery at R257 000.

Releasing the annual report in Pretoria this week, the council’s registrar, Monwabisi Gantsho, said: “It is shocking how much some of the trustees were making on average, considering that they are supposed to be volunteering their services.”

There is currently no guideline or legislation that determines and monitors what medical scheme trustees should be paid.

But the council is planning to change that by amending the Medical Schemes Act to include a provision that will allow it to monitor trustee fees.

The head of compliance and investigations at the council, Stephen Mmatli, said there is a serious need to monitor trustee fees.

“Trustees for medical schemes earn so much that they don’t want to vacate their seats once they are elected to the board because it becomes an incentive, yet medical schemes are non-profit entities.

“Being a trustee is not a job and trustees cannot be paid a restraint of trade because they are simply volunteering their services,” Mmatli explained.

But medical schemes disagree, as they say trustees should be paid for their services.

Fedhealth’s principal officer, Peter Jordaan, said trustees had a fiduciary duty and were ultimately responsible for the decisions of the scheme.

“They interact with stakeholders if and when required, and their compensation is therefore commensurate with the work done on a yearly basis.”

Discovery and Medshield echoed similar sentiments.

Said Milton Streak, principal officer for Discovery: “Rewarding trustees is essential because trustees are independent professionals and businesspeople who are required to give up substantial amounts of their time to serve the needs of the scheme and its members.”

Medshield explained that its trustees were qualified, had the necessary experience and were instrumental in starting the schemes self-administration process from scratch.

“Self-administered schemes are run like a business, thus making them no different to a business in the private sector.

“In order to attract the correct calibre of personnel, the scheme has to pay trustees market-related fees.”

Mmatli acknowledged that trustees took major decisions and should be incentivised, but added that fees should not be so high because their work
was voluntary.

Medical Aids

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