PFA rules that curatorship of fund must be terminated
Muvhango Lukhaimane, Pension Funds Adjudicator.
The Registrar of Pension Funds has been urged by the Pension Funds Adjudicator Muvhango Lukhaimane to approach the High Court seeking an order to terminate the curatorship of a provident fund that has been ongoing for the past 14 years.
LM Phekiso, JT Moshe and RM Khosa jointly complained to the Office of the Pension Funds Adjudicator that SACCAWU National Provident Fund (first respondent) refused to transfer their funds to Massmart Provident Fund.
They said the first respondent has been under curatorship since they became members and they had lost trust in the first respondent.
Responding in its capacity as the first respondent’s administrator, Old Mutual Life
Assurance Company (SA) (Pty) Ltd said the first respondent was placed provisionally under curatorship on 10 September 2002 by the High Court of South Africa and in 2003 the High Court confirmed the Curatorship.
It said the first respondent has been submitting audited financial statements to the Financial Services Board (FSB) on a yearly basis and was in good financial standing.
It stated the communication from the Curator dated March 2015 was included in the
complainants’ annual benefit statements for the year ending December 2014.
It further said the agreement between the employees’ union and Massmart was that members could only transfer once there was a window period agreement between the two funds.
It attached the breakdown of the complainants’ contribution history and the interest
allocated to their records to show growth of their accumulated credits since the date
they joined the first respondent.
The complainants’ employer Jumbo Cash and Carry (Pty) Ltd (third respondent) submitted that the agreement it entered into with SACCAWU required that all employees be given the choice of either joining the first respondent or Massmart Provident Fund.
It stated that an employee had 30 days from the date of employment to make this decision. However, once made, that decision was binding on all parties, including the employee, employer and the respective chosen fund.
It submitted that the agreement between itself and SACCAWU did not allow for any
transfers to take place unless on termination of employment.
It further stated the current agreement was still in effect and enforceable on all parties.
The third respondent said that in September 2013, SACCAWU requested it to confirm that it still offered new employees the choice of joining either the first respondent or Massmart Provident Fund.
This request was due to the significant decline in employees choosing to join the first respondent. It said that over the past eight years, employees who belonged to the first respondent had reduced from 50% of all its employees to less than 10%.
It said it had numerous requests from employees to transfer from the first respondent to Massmart Provident Fund. However, the terms of the agreement did not allow for this.
The FSB submitted that the Registrar of Pension Funds was concerned that the curatorship of the first respondent had been on-going for almost 14 years.
It stated that in 2011, the Registrar approached the Court seeking an order for the termination of the curatorship and the judge at the time found no good cause to discharge the Curator as it would not have been in the interest of the first respondent and the members.
It said it was now generally agreed by all parties that the curatorship must be terminated in the interest of the first respondent. All the parties must agree on the principles prior to the Registrar approaching the Court.
The FSB said the first respondent was still subject to the Act and the Curator managed and controlled it subject to the Pension Funds Act and the rules.
In her determination, Ms Lukhaimane said what the board may do with the fund’s assets was set forth in the rules.
In terms of rule 2.5.1 of the first respondent’s rules, the complainants can only transfer their funds to Massmart Provident Fund once they cease to be eligible employees and exit the first respondent.
“The rules of the first respondent do not allow for the complainants’ funds to be transferred to Massmart Provident Fund.
“By allowing the complainants to transfer their funds to Massmart Provident Fund, the first respondent will be acting contrary to its rules.”
Ms Lukhaimane said the curator was appointed to take control of the business of the first respondent in order to bring the latter to a healthy financial state.
“However, given the number of complaints this Tribunal is receiving and the curator’s submission that the fund is now in a healthy financial state, it is imperative for the Registrar to consider finalising the process of terminating the curatorship of the first respondent as it is not in the best interest of the members.
“This Tribunal notes with concern that the third respondent’s employees on the first respondent have reduced from 50% to less than 10%.
“It is important for the Registrar to note that placing the first respondent under curatorship for such a long time also means that the third respondent is unable to negotiate a window period with SACCAWU to allow its employees that want to belong to the Massmart Provident Fund to transfer out.
“Most new employees of the third respondent opt to belong to the Massmart Provident Fund due to the dissatisfaction on the first respondent’s performance. Thus, it is on this basis that this complaint is referred to the Registrar for the necessary intervention.
“It is, therefore, this Tribunal’s conclusion that the first respondent is not in a position to accede to the complainants’ request.
“The first respondent must keep its members abreast of all the developments of its curatorship and progress on the Registrar’s approach to the Court for termination of its curatorship,” Ms Lukhaimane ruled.
