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FSB asked to act against errant fund administrator

01 June 2017 Muvhango Lukhaimane, PFA
Muvhango Lukhaimane, Pension Funds Adjudicator.

Muvhango Lukhaimane, Pension Funds Adjudicator.

The Pension Funds Adjudicator has expressed concern that despite referring several matters of non-compliance on the part of Akani Retirement Fund Administrators to the Financial Services Board (FSB), there was no improvement in its conduct.

Muvhango Lukhaimane has again referred the latest complaint against Akani Retirement Fund Administrators - which she said has “become a law unto itself - to the FSB for necessary corrective action to be taken.

SS Ratlala of Johannesburg brought a complaint against Bokamoso Retirement Fund (first respondent) and Akani Retirement Fund Administrators (Pty) Ltd (second respondent) concerning the deduction of his withdrawal benefit following the termination of his service.

The complainant commenced employment with the second respondent from 1 July 2012 until 31 August 2014. Following the termination of his service, a portion of the complainant’s withdrawal benefit was deducted and paid over to the second respondent.

The complainant submitted that when he resigned from his employment with the second respondent, he was informed that he owed the second respondent an amount of R17 305.96. This amount represented the refund in respect of the performance bonus paid to him during his employment.

He said the Principal Officer of the first respondent and the second respondent’s finance manager indicated that he needed to authorise the first respondent to deduct the said amount from his withdrawal benefit. He averred that although he was aware of the fact that the said deduction was not permissible in terms of the Pension Funds Act, he provided the said authorisation. He submitted that he granted the said authorisation so that his withdrawal benefit could be paid.

He requested the Tribunal to order the first respondent to refund him the money that was wrongfully deducted from his withdrawal benefit.

The first respondent said that on the strength of correspondence from the complainant that he owed the second respondent an amount of R17 000 and had authorised it to deduct the said amount from his withdrawal benefit and pay it over to the second respondent, it deducted the debt from the complainant’s benefit and paid him the remainder of the benefit.

In her determination, Ms Lukhaimane said Section 37A of the Act provided that pension benefits can only be attached if the requirements set out therein have been met, namely; a member must have caused damage to the employer by reason of any theft, dishonesty, fraud or misconduct and in respect of which a member has admitted liability or where judgment has been obtained against the member.

She said the first respondent’s interpretation of the correspondence sent by the complainant that it amounted to an acknowledgement of liability, was highly misplaced.

“The complainant submitted that the amount he owed the second respondent was in respect of a performance bonus refund.

“Essentially, the second respondent sought a refund of the performance bonus from the complainant. Evidently, the receipt of a performance bonus by the complainant does not relate to damage suffered by the second respondent due to any theft, dishonesty, fraud or misconduct perpetrated by the complainant.

“Therefore, the first respondent could not attach the complainant’s withdrawal benefit under the current circumstances.

“The first respondent acted unlawfully in deducting the complainant’s benefit.

“In the circumstance, the first respondent must be ordered to pay the complainant’s withdrawal benefit which is equivalent to the amount deducted and paid over to the second respondent, together with interest.

“In the premise, the conduct of the respondents deserves deprecation in the strongest terms.

“As key players in the pension fund industry, the respondents are expected to observe the application of the Act and act in utmost good faith, which was certainly absent in the present instance.

“What is of grave concern is that this Tribunal has referred countless matters of non-compliance involving the second respondent to the FSB

“In essence, the second respondent has become law unto itself, which cannot be countenanced. In light of the above concerns, this Tribunal refers this matter to the FSB for necessary corrective action to be taken against the respondents,” said Ms Lukhaimane.

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