The Office of the Pension Funds Adjudicator (OPFA) plays a critical role in protecting retirement fund members’ best interests. To this end, the OPFA regularly engages with various stakeholders, including industry bodies, funds, administrators, the media and members of the public. It pays particular attention to members of retirement funds but also reaches out to communities through a series of roadshows to explain its role and outline its complaints procedures. The increased media coverage of the latest determinations and speeches by the PFA has further raised the profile of the OPFA. The combination of all these activities have made the OPFA more visible and accessible.
This is evident by the almost 30% percent increase in complaints (7 010) that came before the OPFA during the past financial year, compared to 5 405 complaints received during the previous reporting period. There was a 21% decrease in the number of determinations (2 879) from the previous reporting period (3 651) but this is partly due to some 1 000 matters having been settled without requiring a formal determination.
Summary Of Notable Adjudicator Determinations Over This Period
Death Benefit
Fund will not pay benefit to a spouse it is not aware of
A pension fund is not obliged to pay a benefit to a “qualifying spouse” if the pension fund had not been notified of this spouse. This is the basis on which Pension Funds Adjudicator Muvhango Lukhaimane dismissed a complaint by a woman who was aggrieved that she had not been paid a benefit upon the death of her husband. His former wife received the benefit instead. The deceased had failed to inform the pension fund of the existence of his second wife as required by the fund rules.
Mr B was a member of the Sasol Pension Fund (first respondent). He became a pensioner due to medical disability on 1 June 2007 and passed away on 19 August 2014. Mr B. had divorced his former spouse, Y, in December 2007. Their minor daughter, Z, was born on 31 August 2004.
The complainant and the deceased were married on 28 March 2009. But the deceased had failed to inform the fund of this marriage, as required by the fund rules. In its response the Sasol Pension Fund submitted that the board was not aware of the complainant and the allocation of the death benefit to the deceased’s former spouse and minor child was done in terms of its rules. They were the qualifying spouse and child in terms of the rules. The death benefit was therefore paid to the deceased’s divorced spouse and minor child.
Ms. Lukhaimane said the rules of the first respondent made it clear that a qualifying spouse ‘is a person, who, at the member’s death or retirement is his legal spouse or partner and that the member or pensioner has notified the fund of the existence of such qualifying spouse’. Therefore, as the deceased failed to inform the first respondent of his marriage to the complainant, the former spouse who was his legal spouse at the time of retirement is the ‘qualifying spouse’ in terms of the rules of the Fund and Z is the ‘qualifying child.’ The case was dismissed.
Housing Loan
The onus is on the employee to check that loan deductions are made
It is the duty of an employee to ensure that amounts are deducted from his salary to repay a housing loan granted in terms of the Pension Funds Act, says Pension Funds Adjudicator Muvhango Lukhaimane.
Employee SN Fortuin applied for a housing loan of R25 000 from the Cape Municipal Pension Fund (first respondent), administered by Alexander Forbes Financial Services (Pty) Ltd (second respondent) on 25 April 1999 and this was granted on 4 May 1999. The loan repayments, deducted by his employer, commenced with effect from 31 July 1999, as per the agreement.
However, between April 2000 and November 2002, the employer stopped deducting from the complainant’s salary resulting in interest accruing on the arrear amounts. Interest on the arrears resulting from the non-payment was added to the capital to be repaid by the complainant. Consequently his home loan balance was not reducing but increasing.
The complainant argued it was not his fault that deductions were not made from his salary, resulting in arrears and requested the Office of the Pension Funds Adjudicator to write off the loan.
In her determination, Ms. Lukhaimane said that by accepting the housing loan, the complainant accepted that the primary responsibility to repay the loan was his. She dismissed the claim, saying that the complainant received monthly salary advices from the employer, which would have reflected whether or not any housing loan repayments were made. The case was dismissed.
Quantum Of A Withdrawal Benefit
Amendment to a rule must be approved before it can be applied
A rule amendment cannot be applied before it has been approved by the Registrar of Pension Funds, the Pension Funds Adjudicator has yet again declared. MA Hobe (complainant) was a member of the Municipal Employees Pension Fund (first respondent) from 1 April 2006 to 22 August 2013, administered by Akani Retirement Fund Administrators (Pty) Ltd (second respondent). Upon termination of the complainant’s employment, a withdrawal benefit of 1.5 times his contributions was paid out. The member was under the impression it would be 3 times his contributions, as per the fund rules.
However, the board of the first respondent had resolved to amend the rules with effect from 1 April 2013 based on the actuary’s advice that the fund would fail to meet its future liabilities if it continued paying resignation benefits of contributions multiplied by three. The second respondent added that the Registrar approved the rule amendment with retrospective effect from 1 April 2013.
Ms. Lukhaimane said that Rule amendment 5 was only approved by the Registrar on 1 April 2014. Therefore, at the time of the termination of the complainant’s employment, Rule amendment 5 had not yet been approved by the Registrar and was thus invalid.
Ms Lukhaimane ordered the first respondent to recalculate the complainant’s benefit as his contributions multiplied by three. As a punitive measure, she also ruled that interest at the rate of 15.5% per annum from 27 February 2014 to the date of payment of the balance of the benefit must be paid to the complainant.
Withholding Of A Benefit
PFA slams pension fund for disregarding rules
The Pension Funds Adjudicator ordered a pension fund to pay a complainant, the CEO of the same fund’s administrator, his withdrawal benefit although he was being investigated for allegedly defrauding his employer of more than R2,3 million. Muvhango Lukhaimane also brought to the attention of the Registrar of Pension Funds the pension fund and administrator’s dereliction of duties and disregard of rules.
The complainant was a member of the Salt Umbrella Provident Fund (first respondent) and was employed by Salt Employee Benefits (Pty) Ltd (second respondent) from February 2007 until 20 June 2013. The second respondent laid charges of theft and fraud against the complainant with the Commercial Crimes Unit of the South African Police Services and the matter was still under investigation.
Following the termination of his employment with the second respondent, the complainant applied for the payment of his withdrawal benefit which was not paid. The complainant submitted that there was a labour dispute between himself and the second respondent which was referred to the Commission for Conciliation Mediation and Arbitration. The complainant submitted there was neither a civil nor a criminal judgment against him, as a result of a complaint lodged by the second respondent. He had also not signed an admission of wrong-doing to the second respondent. As a result, the first respondent had no basis to withhold his withdrawal benefit.
In her determination, Ms. Lukhaimane said that the Principal Officer of the first respondent, when informed in June 2013 of the intention by the second respondent to have the complainant’s benefit withheld, not only decided on the issue, which she had no right to do, but endorsed the second respondent’s intention to investigate. She said further that it will be a travesty of justice to allow the first respondent to continue to withhold his benefit when no formal application to withhold was submitted by the second respondent. She ordered the first respondent to pay the complainant his withdrawal benefit with interest at the rate of 15.5% from 1 July 2013. The respondents were also ordered to pay the complainant’s legal costs.
