FANews
FANews
RELATED CATEGORIES

Adjudicator slams abuse of withholding pension benefits

01 July 2021 The Office of the Pension Funds Adjudicator (OPFA)
Muvhango Lukhaimane

Muvhango Lukhaimane

The Pension Funds Adjudicator has ordered the Alexander Forbes Retirement Fund to pay out a complainant’s withdrawal benefit which he became entitled to in 2013.

The reason provided by the fund for not paying the benefit was that the withdrawal form had not been signed by the complainant’s employer, Scoin Trading (Pty) Ltd.

The complainant stated that he completed the withdrawal claim form in 2017, however, the employer refused to sign same. He further stated that he last completed the withdrawal claim form which was provided to him by the fund in January 2021 to no avail.

The fund stated that at the time it received the complaint, it was not in possession of his withdrawal claim form. It stated that it contacted the employer and informed it to urgently submit the complainant’s claim form. However, it is yet to receive a response.

The fund stated that it is yet to receive a specific reason from the employer for refusing to sign the complainant’s withdrawal benefit and requested from the Adjudicator that the complaint against it be dismissed.

In a response to the complaint, the fund stated that a fraud occurred within the department managed by the complainant and that the employer would like to recover the loss it incurred from the complainant’s withdrawal benefit.

The Adjudicator found that the facts indicate that the fund did not receive any instructions from the employer to withhold the complainant’s withdrawal benefit and the complainant was not aware of the alleged fraud allegations levelled against him.

The employer did not even lodge a criminal case against the complainant or advance any case that warrants the withholding of the complainant’s withdrawal benefit.

The employer’s submissions were found to be without any merit. Almost eight years have passed since the complainant left employment and the Adjudicator found that this is a clear abuse of process by the employer.

The determination comes at a time in the retirement funds industry where the issue pertaining to the withholding of withdrawal benefits at the behest of the employer has sparked debate. Several Adjudicator findings as well as that of the Financial Services Tribunal have found that in order to prevent abuse of the process by the employer, funds must act with care and consider representations by the member about why the benefit should not be withheld. The current determination is a prime example of how this process can be abused.
The Adjudicator ordered the complainant to provide the fund with all documents necessary for his benefit to be paid and ordered the fund to make payment thereafter of the benefit together with interest.

Quick Polls

QUESTION

How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?

ANSWER

Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now