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Complaints of contributions not being paid to pension funds

01 July 2019 Pension Funds Adjudicator
Muvhango Lukhaimane, Pension Funds Adjudicator

Muvhango Lukhaimane, Pension Funds Adjudicator

The Pension Funds Adjudicator is receiving several complaints about contributions not being paid on behalf of members to pension funds.

In one recent matter that came up before Muvhango Lukhaimane, the complainant submitted that Afripoint Contracting Solutions (Pty) Ltd (third respondent) had failed to timeously register him as a member of the Transport Sector Retirement Fund (first respondent) and pay all contributions on his behalf.

The complainant was employed by the third respondent from September 2015 to January 2017. Following the complainant’s termination of service, a withdrawal benefit became due to him but was not paid although the third respondent deducted provident fund contributions from his salary every month. He submitted that he was not provided with a benefit statement.

The second respondent, Salt Employee Benefits (Pty) Ltd, filed a response in its capacity as the first respondent’s administrator and submitted that the complainant was registered as a member of the first respondent in May 2016. It stated that it last received contributions from the third respondent in January 2017.

It submitted further that the third respondent indicated that it liquidated effective 31 January 2017. However, it has not been provided with the liquidation documents.

The second respondent provided the complainant’s contribution schedule indicating that contributions were paid on his behalf for the period May 2016 to January 2017 with a fund credit of R7 227.35.

The second respondent said the first respondent issued audited benefit statements annually to all active members.

In her determination, Ms Lukhaimane said the third respondent had a duty to pay contributions and submit schedules to the first respondent indicating on whose behalf payment was being made. The first respondent in turn had a duty to pay out benefits to members.

Ms Lukhaimane was critical of frequent failure by the first respondent to provide complainants with benefit statements.

“By not providing members with their benefit statements, members are denied the opportunity to see if contributions are being paid or not.”

She said the third respondent was liquidated effective 31 January 2017.

“Due to the fact that the third respondent is no longer operating as a business, there is no legal entity against which an order for payment of arrear contributions can be made.

She said the first respondent must apply to the Financial Sector Conduct Authority for the appointment of the liquidator. Thereafter, the total moneys available in the first respondent after payment of all expenses incurred in the liquidation should be applied to provide benefits for all members of the first respondent that are employees of the third respondent as recommended by the actuary and approved by the liquidator.

“Therefore, the first respondent needs to be proactive in order to avoid the increase in unclaimed benefits. This Tribunal encourages early intervention to ensure that members receive their benefits timeously,” Ms Lukhaimane said.

The first respondent was ordered to pay the complainant the fund credit it was currently holding on his behalf from the second respondent for the period May 2016 to January 2017 plus interest at the rate of 10% per annum from February 2017 until date of payment.

In another matter, it was complained that Tactpro Protection Services CC (second respondent) had failed to timeously register as a participating employer with the Private Security Sector Provident Fund (first respondent).

The complainant was employed with the second respondent as a security officer from 20 February 2016 to 3 November 2017.

Following his exit from service, the complainant became entitled to a withdrawal benefit from the first respondent. However, he had not been paid any benefit.

The complainant also stated that the second respondent did not pay his full salary and was not provided with payslips. He averred that the second respondent also failed to pay its portion of provident fund contributions to the first respondent. He provided a copy of his payslip for June 2017 which reflects a provident fund deduction of R226.85. He also provided a copy of his completed withdrawal claim form which was stamped by the second respondent.

The first respondent submitted that the second respondent commenced participating in it on 1 November 2016 and was non-compliant in terms of section 13A of the Act. It stated that fund contributions were received from the second respondent for the last time in March 2017. It confirmed that the complainant became its member on 1 November 2016 and there was no record of his exit from the fund.

The first respondent stated that the second respondent was in arrears with contributions for the period February 2017 and April 2017 to date. It provided a contributions history which reflected contribution payments in respect of the complainant for the period November 2016 to December 2016 and January 2017. It averred that further contributions will be allocated to the complainant’s record once it received payment of the arrear contributions from the second respondent.

In further submissions, the first respondent stated that the second respondent did not remit the same amount of contributions deducted from the complainant’s salary as his current fund credit amounts to R0.01. This was after it was provided with the complainant’s payslip which reflects a provident fund deduction of R226.85.

The second respondent acknowledged that contributions were deducted from the complainant’s salary from March 2017 until June 2017, which were not paid over to the first respondent. It indicated that it deliberately and/or negligently failed to effect deductions from the complainant’s salary from July 2017 until November 2017.

The second respondent stated it had a contract with the Makana Municipality and it was difficult to honour payments of salaries of employees as its client is practically bankrupt and could no longer keep up with the payment of invoices. This led to a situation where it could not honour its statutory commitments in relation to payment of contributions.

In her determination, Ms Lukhaimane said the second respondent acknowledged that it was in arrears with contributions due to the fact that its client failed to honour payments of its invoices. It undertook to remedy the situation and requested a reasonable time to do so.

“The issue of non-payment of invoices by clients is a real issue in this (security) industry and it normally results in the employer being unable to honour its statutory duty to pay contributions in respect of its employees.

“Thus, it is a systemic problem in this industry which prejudices both employer and members in terms of payment of contributions and affect the final benefit payable upon exit from service.”

The second respondent was ordered to pay to the first respondent the arrear contributions together with late payment interest. The first respondent was also ordered to pay the complainant his withdrawal benefit.

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