With more than 10 000 cases outstanding they’d better get busy

We recently read that the Pension Funds Adjudicator (PFA) is sitting on a backlog of some 10 000 cases. When looking at the two latest determinations from that office its little surprise this situation exists. One of these cases was received at the office in October 2005, taking almost three years to complete.

Although we understand the complex issues that arise in dealing with such complaints we cannot accept that a process which essentially involves a series of communications between claimant, respondent and adjudicator should take this long to finalise. It might be time to seriously reconsider the amount of time allowed for respondents to make their submissions. After all, we’re functioning in the digital age where a 21 working day turnaround time for correspondence is simply untenable. It would be like running an email customer support centre with a seven day response time.

Yet another ‘landmark’ ruling

The first determination we’ll look at today was once again introduced by the PFA as a ‘landmark ruling.’ The claimant in the case was Barker while the respondent was M1 Latex Products Provident Fund and Two Others. Two issues were raised: the first that the withdrawal benefit paid to the complainant was incorrect, and the second that the contribution rates used by the first respondent to calculate such benefit were incorrect.

The history of the case is as follows: Barker became a member of M1 Latex Products Provident Fund “by virtue of her employment with the third respondent” in October 1995. When the complainant resigned in June 2005 she took issue with certain aspects around her withdrawal benefit: “Firstly, because the third respondent deducted monthly fund contributions from her salary despite the fund rule stipulating that employees do not have to contribute to the first respondent.” Her second gripe was with the “quantum of the monthly contributions that were made on her behalf.” The claimant felt these contributions were less than they should have been in terms of the rules of the fund. We guess the problem can be summarised: I’m unhappy that you withheld contributions; but since you did so anyway I’m unhappy with the size of contribution you withheld…

As it turns out the provident fund rules in this case make it clear that the fund is non-contributory. The PFA therefore ruled that the third respondent repay “all provident fund deductions made from the respondent’s salary.” As for the second part of the complaint, the PFA determined that “the third respondent pay the difference in contributions between what was already paid to the first respondent and the correct contribution rates computed for the complainant so that the first respondent could pay the complainant her correct withdrawal benefit.” It sounds like a win-win situation for the respondent who’ll get her withdrawal benefit in addition to a refund of the amounts withheld from her salary!

SAPS in the dock

The second case was between the complainant SP Mtambo and three respondents. These respondents include the SA Local Authorities Pension (first respondent), Old Mutual Life Assurance Company (second respondent) and the South African Police Services (third respondent). Mtambo was employed by the third respondent as a municipal police officer from 16 October 1986 until 30 December 2002 at which time he was declared medically unfit to work. He became a member of the first respondent through this employment relationship. After applying (on 3 March 2003) to the SA Local Authorities Pension for an ill-health retirement benefit, Old Mutual advised (3 September 2003) that “his application for an ill-health retirement benefit had been declined by the board of trustees of the first respondent.” Mtambo was then paid a withdrawal benefit of R212 223.85.

The complainant believes the board’s decision was incorrect and that he should have received an ill-health retirement benefit and not a withdrawal benefit. He also contended that the withdrawal benefit was insufficient. It seems the main reason for the decline of the ill-health retirement benefit was the late submission of the application. The PFA determined that such fault did not lie with Mtambo. “I find that the third respondent ought reasonably to have submitted the complainant’s application for an ill-health retirement benefit within the prescribed period of six months following his discharge on the basis of ill-health,” she said. It’s alarming to note that the SAPS failed to respond to repeated PFA requests for information. One would think that government departments would be quick to cooperate with the regulatory institutions established to ‘police’ various Acts.

The PFA determined that the SAPS “submit the complainant’s ill-health retirement claim and provide reasons for the late submission thereof…” It also ordered the SA Local Authorities Pension Fund to “consider the complainant’s entitlement to an ill-health retirement benefit had the SAPS submitted the claim timeously…” A decision would have to be made within 15 days of the determination. The PFA instructed that should the ill-health retirement claim be approved the SA Local Authorities Pension Fund were to calculate the benefit due, less any deductions and with interest at 15.5% per annum from 31 January 2003.The SAPS would have to pay any benefit thus determined to the complainant within 14 days of receiving such advice.

Catching up the backlog

Although not every case reaches the determination stage it seems the PFA will have to spark to get through the massive backlog that currently exists. Ignoring any new cases that arrive at its doors it will have to finalise approximately eight complaints each day for the next five years to clear its inbox. And that’s going to take some doing!

Editor’s thoughts:
The PFA is not the only body responsible for huge administrative delays in the insurance industry. We’ve heard absolute nightmare stories about simple S14 transfers for example… Do you think the insurance industry needs to speed up its correspondence and decision making processes? Add your comment below, or send it to gareth@fanews.co.za