Naming and shaming in the pension fund space
What should you do if you have a problem with your pension fund or pension fund administrator? If you’re unable to resolve the problem using the fund’s existing complaint resolution channels then your best bet is to lodge a complaint with the Office of the Pension Fund Adjudicator (OPFA). The statutory body resolves disputes brought to its attention by pension fund members “in a procedurally fair, economical and expeditious manner.” One of the major challenges for the Pension Funds Adjudicator (PFA), Mamodupi Mohlala, is the rising number of unresolved complaints at the office. By the end of the 2008/2009 year the office will be suffocating under approximately 14 982 cases, despite dealing with 8 275 complaints in the period. In an effort to reduce this backlog the PFA recently ‘named and shamed’ those pension funds with the worst complaint records.
A quick look at the PFA Scorecard
The PFA determines the worst performing fund by assessing its performance using a recently introduced Scorecard. The initiative was announced by Mohlala in August last year. “The need to conclude complaints as quickly as possible is paramount for members, and the scorecard will not only measure the fund’s performance, but will also add pressure to the funds to resolve complaints in good time,” said Mohlala. The PFA estimates that 960 of the 4 800 annual complaints handled by the office could be resolved at fund level. A major drive in this regard is for trustees to be held accountable for resolving member complaints speedily. “A complaint once lodged shall be properly considered and replied to in writing by the fund or the employer who participates in the fund within 30 days after receipt thereof,” said Mohlala.
How does this Scorecard work? It simply assesses private pension funds based on a number of criteria, including:
· The response times to complaints lodged against the fund
· The quality of responses to these complaints
· Default determinations (if any) granted against the fund
· The number of dismissals granted in complaints against the fund, and the relief granted to complainants
· The type and nature of the complaints lodged
· Whether there were any attempts made to resolve a complaint prior to lodgement with the OPFA
And the worst performer is
On Monday, 28 September 2009, websites iafrica.com and fin24.com each carried a Sapa release titled Worst pension fund named. This article revealed Mohlala had singled out the Private Security Sector Provident Fund (PSSPF) as the worst overall performing pension fund over the 12 months ending September 2009. There were 345 complaints against the PSSPF and 157 against the Central Retirement Annuity Fund (CRAF). We checked the PSSPF website and discovered the fund had some 255 199 members at February 2008, generating approximately 1.35 complaints per thousand members. Only two funds, the Lifestyle Retirement Annuity fund and the Professional Provident Society fund obtained an acceptable (70% or higher) rating. “There is a clear indication that the funds are failing to meet the standard required of them,” Mohlala said.
Can we read anything into the result? According to Sapa only 390 pension funds were assessed in the period under review! And 207 of these funds had received one or more complaints. Although thin on news about the problems in the private pension space the Sapa article suggests the PFA is serious about addressing its backlog and taking underperforming pension funds to task. But that’s not all on the Adjudicators plate. Mohlala used the opportunity to drum up support for additional funding for her Office. She indicated the R2.91 paid to the adjudicator per member per annum was insufficient. “We will make a submission to the Financial Services Board to request that contributions in relation to levies be revised,” she said. And she believes those funds responsible for the majority of the complaints should carry a larger share of the administrative costs incurred by the Office.
Editor’s thoughts: While we appreciate the PFA’s predicament regards its spiralling annual case load it remains unacceptable for this body to carry more than 10 000 unresolved cases. Even if the Scorecard initiative results in more cases being solved at fund level the OPFA has its work cut out to reduce the backlog. Have you had recent dealings with the Pension Funds Adjudicator? We’d love for you to share your experiences. Add your comments below, or send them to [email protected]
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