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PFA - Landmark ruling for School employees

15 March 2006 Janet Cannan

The Pension Funds Adjudicator issued an important ruling in respect of the payment of withdrawal benefits.

In Webber v Willow Ridge Primary School/Hollard Umbrella Fund, the member was employed as a secretary at Willow Ridge Primary School from January 1999 until 5 June 2002 when she was dismissed. After her dismissal, the member started making enquiries to the school and the administrators of the fund requesting the payment of her cash withdrawal benefit from the fund. In October 2005 she had still not received her withdrawal benefit and lodged a complaint with the Adjudicator.

The Adjudicator examined the evidence and firstly concluded that the employer in a pension fund must act in good faith towards the members. Furthermore, in terms of the Act, in this instance there was no basis for the fund to withhold the benefit or effect a deduction from the benefit.

In order for the fund to pay a benefit, the employer must complete a notification form indicating the date and reason for dismissal. This enables the fund to determine what type of benefit is payable. In this matter, the employer failed to complete the notification form. The Adjudicator held that the conduct of the employer is to be deprecated as notwithstanding provisions of the Act that it may not withhold a members benefit in terms of section 37D unless certain requirements have been met, the employer abused its powers by refusing to complete the withdrawal notification form without any good reason in law.

The Adjudicator was also unhappy with the conduct of the fund and in particular, the board of management as in terms of the law, the board must take all reasonable steps to ensure that the interests of members are protected at all times and it must act with due care and diligence. Furthermore, the board must ensure that proper control systems are in place. Apart from the aforementioned duties imposed on the board, common sense dictates that as soon as the fund became aware of the withdrawal of the complainant (if no notification was received from employer or the member, the contribution schedules should have revealed that the member had left service or something was amiss) it should have requested a withdrawal notification form from the employer. When the employer failed to submit the form it should have put the employer to terms and if necessary instituted proceedings against the employer in this Tribunal requesting relief in the form of an interdict requiring the employer to complete the form. Instead, the fund has done nothing to the obvious financial detriment of the member.

The fund was ordered to accept the withdrawal form completed by the member and to pay the benefit, within 14 days of the order. The employer was ordered to pay interest on the cash benefit from 30 May 2002 until date of payment.

The ruling can be found on http://www.pfa.org.za/

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