Financial Services Tribunal upholds PFA’S rulings on fund transfers

Muvhango Lukhaimane

The Financial Services Tribunal has dismissed an application by the Municipal Employees’ Pension Fund for reconsideration of a determination by the Pension Funds Adjudicator on a complaint by a member relating to pensionable service upon retirement which greatly impacts benefits.

The complainant had been in government employment for many years and his pension fund benefit built up as a member of the Government Employees’ Pension Fund before he changed jobs and transferred to the Municipal Employees’ Pension Fund. The latter fund had, allegedly, failed to take proper account of the effect of the transfer and the transfer value.

The Municipal Employees’ Pension Fund allocated to the complainant the period of 23 years and two months while he alleges that it should have been 41 years and two months.

Muvhango Lukhaimane, the Pension Funds Adjudicator (PFA), upheld the complaint and ordered the Municipal Employees’ Pension Fund to reverse the buying of service with the complainant’s transfer value from the Government Employees’ Pension Fund; to calculate the complainant’s retirement benefit using a pensionable service period of 41 years and two months; and to pay the balance of the retirement benefit to the complainant.

The Municipal Employees’ Pension Fund did not act on the PFA’s determination and also ignored the PFA’s letter of intent attaching the report of the independent actuary appointed by the PFA. It instead applied to the Financial Services Tribunal for reconsideration of the application.

In its decision, the Financial Services Tribunal said Rule 47A of the Municipal Employees’ Pension Fund states inter alia that the period of service recognised by the rules of the Government Employees’ Pension Fund shall be regarded as pensionable service by the local authority’s fund. Further, the contributions paid by the member to the Government Employees’ Pension Fund shall be regarded as contributions paid to the local authority’s fund.

The Financial Services Tribunal said the Municipal Employees’ Pension Fund, in its reconsideration application, does not deal with the primary finding of the PFA that it was not entitled under the rule to buy years of service with the transfer value. The PFA had said that fairness required that a transferred member must have the same benefits as a comparable member who was not transferred from the Government Employees’ Pension Fund.

The Municipal Employees’ Pension Fund relied on the provisions of its Rule 24A which deals with the transfer from funds other than the Government Employees’ Pension Fund, ignoring the express and different words of the rule that deals with Government Employee’s Pension Fund transfers.

This application by the Municipal Employee’s Pension Fund to the Financial Services Tribunal for reconsideration of the PFA’s determination was dismissed, as was also another one since the Municipal Employee’s Pension Fund had used the same argument in its submission.