PFA ruling concerning the maladministration of a member's RA fund investment

The Pension Funds Adjudicator issued an important ruling in D Zotta v The South African Retirement Annuity Fund and Another regarding the failure of the fund to properly carry out a fund member’s instruction as to how his value in the fund should be invested upon his reaching retirement age.

The complainant was a member of the fund from 1 December 1996 until 1 December 2005 when he attained retirement age. The member instructed the fund to utilise his pension fund benefit in a certain way which was within the parameters of the Income Tax Act 58, 1962. For some inexplicable reason, the fund omitted to carry out the member’s instruction but instead carried out an instruction which had already been revoked by the member. The member was aggrieved by this state of affairs and he lodged the complaint with the Office Of The Pension Funds Adjudicator seeking an order directing the fund and its administrator to execute his investment instruction.

Both the fund and its administrator conceded the administrative error on their part in failing to give effect to the member’s instruction, but argued, however, that the member had to repay part of the benefit already effected to him in order for the respondents to execute his lawful instruction.

In analysing the legal issues involved in the case, the adjudicator came to the conclusion that the complainant had to be put in the same position he would had been in had his lawful instruction been properly executed in the first place. The respondents were ordered jointly and severally to carry out the member’s lawful instruction.

Click here to read the full determination (PDF file 35kb)