Office of Pension Funds Adjudicator comes of age

Muvhango Lukhaimane, The Pension Funds Adjudicator.

Despite an almost 30% increase in new complaints received by the Office of the Pension Funds Adjudicator, service levels and quality increased significantly owing to improved processes, cooperation with stakeholders, regular monitoring and continuous management of staff performance.

Writing in the 2014/2015 Annual Report of the OPFA, Pension Funds Adjudicator Muvhango Lukhaimane said much focus was placed on monitoring and evaluating the efficiencies and effectiveness of processes.

A stakeholder management strategy was implemented to ensure that the OPFA responded to all stakeholders promptly, adequately and proactively.

“It was in most respects a year of coming of age,” said Ms Lukhaimane.

During the reporting period, 7010 new complaints were received, representing an increase of 29.7% on the previous financial year.

Responses submitted by funds and employers had also improved in terms of content and timeous submission. Such responses contributed to the turnaround times being brought within acceptable levels.

“What remains of concern is that funds, administrators and employers scarcely provide complainants (members or beneficiaries) with information in writing when they initially raise enquiries with them or where information is provided, this is contrary to what the fund, employer or administrator subsequently submits to this Tribunal in writing when requested to do so.

“If funds and administrators were to improve on their communication with complainants, some complaints would not be lodged in the first place whilst others would be lodged for a different reason,” Ms Lukhaimane said.

During the year under review, 2879 determinations were issued, representing a decrease of 21.1% from the prior period.

The Pension Funds Adjudicator reported that compliance with determinations had improved. Where respondents were asked to notify the OPFA of decisions taken in implementing an order, in most instances this was done timeously.

A total of 15 appeals were lodged against determinations in terms of section 30P of the Pension Funds Act.

Only one complaint that came before the OPFA was finalised through conciliation, whilst 1 000 matters were settled.

“Although it is appreciated that matters are settled without a need for a formal determination, what is of concern is that in most instances members and beneficiaries are often paid only after lodging complaints with the OPFA.

“It is not clear why complainants are made to wait, often for periods of more than 12 months, before their benefits are paid.

“Whilst these complaints may be negligible when compared to the number of benefits that the pension funds industry pays out annually, it is nevertheless disconcerting as the financial distress that might befall a complainant whilst waiting for his or her benefit, may be irreparable.” Ms Lukhaimane said.

A total of 1 947 complaints were regarded as out of jurisdiction upon receipt, whereas 470 had to be investigated first in order to determine jurisdiction. A total of 625 of the 1 947 matters would have been within the jurisdiction of the OPFA had they been lodged within the prescribed time limits. This might point to the number of unclaimed benefits retained within funds.

Ms Lukhaimane said that often members would spend much time trying to resolve a matter with the fund or the employer and by the time the member lodged the complaint with the OPFA, the matter would have prescribed.

Some funds, employers and administrators adopted a legalistic approach of raising prescription as a defence and then not dealing with the merits of the complaint at all.

However, many funds and administrators would still respond to the merits of a complaint even if it had prescribed, especially where for some reason, they were still holding a benefit for the complainant.

Minister of Finance Nhlanhla Nene said in a message in the annual report that South Africa has one of the most developed financial services industries in the world which enables many peopleto save during their working lives so they can supporttheir post-retirement life.

“As the arbiter between the saver and the pension fund industry in times of dispute, the Office Pension Funds Adjudicator (OPFA) has worked diligently to ensure that the system is fair to all who make use of it.

“In order for the OPFA to function effectively and to best serve the people of South Africa, it is critical that theOffice has strong governance mechanisms, effective processes and committed staff.

“It has been my pleasureto observe that the restructuring of organizational processes during the year under review has improved efficiencies and turnaround times,” he said.

Abel Sithole. Chairman of the Financial Services Board said the past financial year saw substantial delivery by the OPFA.

“Despite being an independent dispute resolution forum, the OPFA has placed great value on its engagement with various stakeholders, including industry bodies, funds, administrators, the media and members of the public.

“Particular attention has been paid to the primarystakeholder grouping - members of retirement funds – andthe OPFA reached out to communities through a series of roadshows to explain its role and outline its complaints procedures.”

He said it was disturbing that the nature of benefits being complainedof during the past 12 months has remained the samewhen compared with the previous period. Withdrawal benefits and death benefits made up almost 80% of all complaints that were finalised.