Withdrawal and death benefits top the complaints list

27 October 2015 Muvhango Lukhaimane, PFA
Muvhango Lukhaimane, The Pension Funds Adjudicator.

Muvhango Lukhaimane, The Pension Funds Adjudicator.

Complaints about withdrawal and death benefits continue to engage the Office of the Pension Funds Adjudicator.

According to the 2014/2015 Annual Report of the OPFA, the nature of benefits that were complained of remained the same as per the previous period, with withdrawal benefits and death benefits representing almost 80% of all complaints finalised.

A high number of complaints were about non-compliance with section 13A of the Pension Funds Act in respect of employers not timeously remitting contributions and contribution schedules.

Many complaints also related to fund administrators who were either involved in rebuild processes that took excessively longer than expected owing to non-compliance with section 7D of the Act relating to proper recordkeeping and accounting or had long periods where contributions had gone unallocated.

Apart from the Private Security Sector Provident Fund, the following former bargaining council funds contributed to the number of complaints related to non-compliance with sections 13A and 7D of the Act: the Road Freight and Logistics Provident Fund, the Metal Industries Provident Fund, the Autoworkers Provident Fund and the Motor Industry Provident Fund.

The void left by the Pension Funds Amendment Act where both the OPFA and the Registrar have no authority over complaints relating to the period prior to January 2008 when the Act did not apply to bargaining council funds has resulted in a situation where members are without protection where contributions cannot be accounted for in that period.

“Unfortunately, the boards of management of these funds and the bargaining councils that were previously responsible for the administration of these funds - and continue to be delegated to collect contributions on behalf of these funds - have chosen to adopt a purely technical approach.

“Once it is established that the period falls outside the OPFA’s jurisdiction, they do not seek to resolve the issue on behalf of the member,” said Pension Funds Adjudicator, Muvhango Lukhaimane.

She said boards of management of umbrella funds operated by administrators also needed to take responsibility for compliance with section 13A of the Act regarding the enforcement process for outstanding contributions.

The propensity of these boards of management to apply for the partial liquidations of the non-compliant employer without first following the statutory recovery process jeopardised the long-term retirement provisions of fund members, further placing strain on the fiscus to provide for social security.

Ms Lukhaimane said communication between funds and members remained key, especially information pertaining to the kind of benefits due to members and the circumstances under which these may be accessed.

“It is, therefore, of concern to note that provision of benefit statements ranks fourth as far as the nature of complaints closed is concerned, apart from the fact that within the complaints related to withdrawal benefits, the secondary complaint is often the lack of provision of a benefit statement.

“The number of instances where death benefit allocations have been set aside owing to boards misdirecting themselves by considering irrelevant information, thus fettering their discretion, remains of concern.

“By now, the provisions of section 37C should be well ingrained in the assessment procedures and investigative processes that funds adhere to.”

She added that whilst the OPFA considered each case on its merits, it was imperative that those funds that still had predetermined formulas for the provision of pension for surviving spouses, obtained legal opinions on the consideration of multiple spouses, persons married in accordance with religious rites and those married in terms of customary law.

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