PFA rules fund acted correctly against dismissed worker

27 July 2015 Muvhango Lukhaimane, PFA
Muvhango Lukhaimane, Pension Funds Adjudicator.

Muvhango Lukhaimane, Pension Funds Adjudicator.

A worker who had been dismissed on suspicion of fraud has failed in his attempt to claim a withdrawal benefit after the Pension Funds Adjudicator (PFA) rejected his complaint.

The worker complained to the Office of the PFA that his previous employer had effected a deduction from his withdrawal benefit following the termination of his service.

He said he was dissatisfied with the decision of the Auto Workers Provident Fund (firstrespondent) to attach and pay his withdrawal benefit over to Moore Road Gas CC (second respondent) on the basis of admission of a liability letter that he deniedany knowledge of.

The complainant had been in the employ of the second respondent from 19 September 2001  until 25 June 2012, at which stage his service was terminated as he was suspected of having committed theft and/or fraud against the second respondent.

As a result thereof, the second respondent instructed the first respondent to withhold the complainant’s withdrawal benefit, deduct and pay it over to it in lieu of the damages allegedly suffered by the second respondent, as the complainant had allegedly signed an admission of liability to the second respondent.

The complainant was aggrieved by the first respondent’s decision to effect a deduction from his withdrawal benefit. He said that following the termination of service, the second respondentinstituted criminal proceedings against him, as a result of which he was arrested on 16 August 2012 and appeared in court 20 August 2012.

He said the criminal case against him was withdrawn in court due to lack of evidence.

He submitted that the Motor Industry Bargaining Council (Mibco) requested him to provide it with proof of the outcome of the case. This could not be obtained at court and he wasreferred to the police station where he could not get assistance as the matter was still under investigation.

The complainant said whenever he enquired about the delay in the payment of hisbenefit, the first respondent would inform him about the pending criminal case. Suddenly he was informed that there was an admission of liability letter which he allegedly signed. He denied knowing about the admission of liability letter.

The first respondent submitted that upon receipt of the complainant’s application for a withdrawal benefit, it had to establish if any portion of such benefit payable to the complainant had to be paid to the second respondent as compensation in respect of any damage caused to the latter by reason of theft, dishonesty, fraud or misconduct by the complainant.

The first respondent said it received a request to withhold the complainant’s withdrawal benefit through Mibco, on the basis of a criminal case which had been laid against the complainant in respect of theft and fraud allegedly committed by the complainant.

The first respondent agreed to withhold the complainant’s benefit in accordance with Rule7(14)(b) of its rules, in the absence of a written admission of liability by the complainant.

In 2014, the second respondent forwarded to it a document dated 3 July 2012 wherein the complainant, in writing, admitted liability to the second respondent in that he had committed theft and fraud amounting to thousands of rands, which copy had been with Mibco since 2012. It annexed a copy of the said document.

It submits that upon receipt of the admission of liability letter and in light of the second respondent’s request as early as 2012 that a deduction be made on the complainant’s withdrawal benefit, the complainant’s withdrawal benefit was paid to the second respondent on 10 October 2014.

The first respondent further submitted that the amount of the complainant’s withdrawal benefit deducted and paid to the second respondent was R82 098.98. The forensic audit indicated that the damage sustained by the second respondent as a result of the complainant’s alleged misconduct amounted to approximately R427 000.

The second respondent submitted that it forwarded the admission of liability letter to Mibco back in 2012 when the alleged fraudulent activity was discovered before it forwarded same to the first respondent recently.

The second respondent confirmed that the complainant’s withdrawal benefit was deducted and paid to it by the first respondent based on legislation and the first respondent’s rules.

In her determination, Ms Lukhaimane said that as a general rule, section 37A of the Act provides that pension benefits shall not be reducible, transferable or executable. The object of section 37A is to protect members’ pension benefits.

However, there are exceptions to this principle in certain circumstances. Section 37D(1)(b)(ii) of the Act is one of the exceptions to the general rule and provides that a registered fund maydeduct any amount due by a member to his employer on the date of his retirement or on which he ceases to be a member of the fund, in respect of “compensation in respect of any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member, and in respect of which the member has in writing admitted liability to the employer”.

She was satisfied that the circumstances in this matter met the requirements of Section 37D(1)(b)(ii) of the Act.

She said the complainant had vociferously disputed having signed an admission of liability letter. She said there was no compelling reason why the second respondent would falsify a document and claim that it was signed by the complainant if that was not the case.

“In the circumstance, this Tribunal is persuaded that the complainant signed the admission of liability letter in respect of the alleged misconduct which led to loss to the second respondent and the said letter, is sufficient to constitute an admission of liability,”said Ms Lukhaimane.

In dismissing the complaint, she said the first respondent had acted within the parameters of the Act when it deducted the complainant’s benefit and paid it to the second respondent.


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