Pension Fund lambasted by Adjudicator for ignoring emails

Advocate Matome Thulare, Deputy Adjudicator at The Office of the Pension Funds Adjudicator (OPFA)

A pension fund’s reluctance to provide the Pension Fund Adjudicator with a response, despite being written to on no less than four occasions, has been drawn to the attention of the Financial Sector Conduct Authority (FSCA).

The FSCA is responsible for market conduct regulation and supervision, and ensures a fair and stable financial market, where consumers are informed and protected, and where those that jeopardize the financial well-being of consumers are held accountable.

The complainant initially lodged a complaint with the Adjudicator that she had not been paid her divorce benefit by the Municipal Employees Pension Fund. In terms of the divorce settlement agreement, she was entitled to 50% of the member spouse’s pension interest.

After the complaint was lodged, the fund paid her an amount of R55 938.78. She remained dissatisfied with the amount that she had been paid and advised the Adjudicator accordingly.

The Adjudicator wrote to the principal officer of the fund, Ms MM Le Grange, and copied in the administrative manager at Akani Retirement Fund Administrators (Pty) Ltd, Mr Juan Moodley, on four separate occasions, requesting information on how the benefit amount was calculated. All of the emails were ignored.

The Deputy Adjudicator, Advocate Matome Thulare, held that the Office of the Pension Funds Adjudicator deals with high volumes of complaints which need to be dealt with expeditiously.

“It is, therefore, incumbent upon registered and licensed entities such as pension funds and administrators to ensure that enquiries from the Adjudicator are properly responded to. This is especially so since boards of funds and principal officers are required to be fit and proper.

“Administrators must be approved by the regulator before being granted a licence to operate. The failure to respond to enquiries in respect of complaints by such persons is a failure to uphold their fiduciary responsibilities. It impedes on the Adjudicator’s ability to deliver on her mandate, and if allowed to continue, will render the Office ineffectual.”

The Deputy Adjudicator further stated that there is a prerogative by the Financial Sector Conduct Authority to ensure that all financial institutions treat their customers fairly and that it is high time that the regulator scrutinizes the conduct because it is the regulator that permits these persons to operate in the retirement funds sector.

“The Act places a positive duty on a fund or employer to properly consider a complaint lodged in terms of section 30A(1) and to respond to same. There is no reason why such a duty would not extend to complaints lodged with the Adjudicator.”

The Deputy Adjudicator held that the conduct of both the fund and the administrator is undignified and inconsistent with keeping with their fiduciary responsibilities and referred the matter to the FSCA.

Ms Cornelia Buitendag (head of Retirement Funds Conduct Supervision at the FSCA) as well as the FSCA Commissioner, Mr Olano Makhubela were copied in on the determination.

Adv Thulare held that the Adjudicator cannot follow the practice of granting default orders. It is, therefore, necessary for the Adjudicator to act in an inquisitorial fashion and obtain further information and clarity from the complainant which is then submitted to the fund or the administrator for a response.

A default order granted, based on one-sided incorrect facts, could result in financial detriment to the relevant pension fund, more especially so when it comes to defined contribution funds. In other instances, a default order may not be appropriate given the type of relief sought in the complaint.