Office of Pension Funds Adjudicator rises to its challenges

19 January 2021 The Office of the Pension Funds Adjudicator (OPFA)
Muvhango Lukhaimane, the Pensions Funds Adjudicator

Muvhango Lukhaimane, the Pensions Funds Adjudicator

Despite the challenges of the COVID-19 pandemic, the pensions watchdog body has been firing on all cylinders.

The Office of the Pensions Funds Adjudicator (OPFA) has reported that in the 2019/20 year under review, 11 179 new complaints were received, 2% less than the previous year ((11 399).

Muvhango Lukhaimane, the Pensions Funds Adjudicator, said the number of complaints received seemed to have stabilised, even though at a very high number.

“This has continued to place a strain on our resources, especially staff. The OPFA has worked hard to improve staff agility skills, general competencies and better planning. These efforts are set to bear fruit as the advent of COVID-19 will require that the office do more with less.

“A lot of work lies ahead. The continued non-payment of fund contributions by employers is of great concern.

“Whilst the situation regarding the non-payment of contributions in the big five umbrella funds is not transparent, it would be interesting to see what the termination rate for the nearly one million members has been over the past 10 years, where a semblance of consolidation into these funds has been taking place.”

Ms Lukhaimane said fund administration costs and management fees have continued to rise as a percentage of contributions. This requires that an assessment of the value-add for these costs is made.

Matome Thulare, Deputy Pension Funds Adjudicator, said the high number of complaints against pension funds pointed to an industry that has not sufficiently aligned itself to serve the interests of members.

“The ordinary member of a retirement fund experiences repeated failures of the pension fund board to act in his or her interests and continues to suffer from the pillaging of his pension fund contribution by the impenitent employer.”

He said the bulk of the complaints have to do with non-compliance with section 13A of the Act and the concomitant reduction in benefits. The Financial Services Conduct Authority has indicated that it intends to publish conduct standards relating to the payment of pension fund contributions and it is anticipated that when this happens it would lead to improved levels of compliance.

Thulare said 9 602 complaints were finalised which was 7% lower than last year. This was mainly attributable to the suspension of walk-in complaints in adherence to the health and safety measures introduced by the OPFA and the March 2020 national lockdown that brought all major operations to a standstill.

He said 4 991 complaints were determined; 1 887 were deemed out of jurisdiction; 2170 complaints settled, whilst 554 complaints were closed for other reasons. There were 4 674 reliefs (93.6%) and 317 dismissals (6.4%).

“The trend in the complaints that are settled remains constant and this augurs well for complainants as it ensures expedited resolution of complaints.

“It remains of concern that some of these issues could have been resolved if the funds/administrators communicated with members and provided information timeously or as and when requested,” Thulare said.

There were 5 946 complaints that remained open at the end of the year, 37.48% up from the previous year (4 325).

“This increase in unresolved complaints reflects the delay in receipt of responses and the capacity constraints under which we operated. In the new year we aim to improve efficiency and increase output levels after the completion of the re-engineering exercise,” added Thulare.

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